Business Strategy and Policy (BUS451) - Spring 2014 -week 7, 2014

week_7_quiz_-q.docx

Question 1

·   In a merger:  

·	·	· One firm buys controlling interest in another firm.
·	·	· Two firms agree to integrate their operations on a relatively coequal basis.
·	·	· Two firms combine to create a third separate entity that seeks to conduct one given function.
·	·	· Two firms agree to share certain information, but their operations remain independent.

10 points

Question 2

·   A (n) ________ is when one firm buys a controlling, or 100% interest, in another firm.  

10 points

Question 3

·   The process of acquiring other firms in the same industry is called:  

10 points

Question 4

·   The process of acquiring suppliers or distributors of the acquiring firm is called:  

10 points

Question 5

·   When the target firm’s managers oppose an acquisition, it is referred to as a(an):  

Question 6

·   The process of evaluating a target firm for acquisition is referred to as:  

10 points

Question 7

·   A leveraged buyout refers to:  

·	·	· A firm restructuring itself by selling off unrelated units of the company's portfolio.
·	·	· A firm pursuing its core competencies by seeking to build a top management team that comes from a similar background.
·	·	· A restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private.
·	·	· An action where the management of the firm and/or an external party buys all of the assets of a business financed largely with equity.

10 points

Question 8

·   Synergy exists when:  

·	·	· Two units are combined into one.
·	·	· Two units create value by utilizing market power in their respective industries.
·	·	· Firms utilize constrained related diversification to build an attractive portfolio of businesses.
·	·	· The value created by business units working together exceeds the value the units create when working independently.

10 points

Question 9

·   _____________ is a reduction in the number of a firm’s employees and, sometimes, in the number of its operating units.  

10 points

Question 10

·   __________________ is a strategy through which a firm changes its set of businesses or its financial structure.  