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BUSA 4980 Exam 2 Questions And Answers Latest Update
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BUSA 4980 Exam 2 Questions And Answers Latest Update
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Solution 2024/2025Pepper
BUSA 4980 Exam 2 Questions And Answers
Latest Update
What do we know about M & A's? ANS✔✔ -Deals, in general, are more likely
to destroy value than create value
-Studies show that more than 50% of M&As fail
-Employee turnover for the acquired firm increases significantly within the
following year
Due diligence ANS✔✔ -The process of evaluating a target firm for
acquisition.
-Ineffective due diligence may result in paying an excessive premium for the
target company
winner's curse ANS✔✔ the most optimistic bidder usually over-estimates the
true value of the firm
increased market power ANS✔✔ M&As can be used to counteract
competitive forces in the industry (according to five forces model)
market power is increased by: ANS✔✔ -acquisitions of competitors in the
same industry
-vertical acquisitions of suppliers or distributors of the acquiring firm.
-Acquisition of substitute producers
, Solution 2024/2025
Pepper
entry barriers ANS✔✔ Factors associated with the market or with the firms
operating in it that increase the expense and difficulty for new firms in
gaining immediate market access.
-economies of scale
-differentiated products
cost of new product development ANS✔✔ -Internal development of new
products is often perceived as a high-risk activity
-Acquisitions allow a firm to gain access to new and current products that
are new to the firm
-Returns are more predictable because of the acquired firms' past
experience with its products
increased diversification ANS✔✔ -Using acquisitions to diversify a firm is the
quickest and easiest way to change its portfolio of businesses
-Both related diversification and unrelated diversification strategies can be
implemented through acquisitions
-Generally, the more related the acquired firm is to the acquiring firm, the
greater is the probability that the acquisition will be successful
vertical acquisition ANS✔✔ Buying or taking over a firm in the same industry
in which the acquired firm and the acquiring firm represent different steps
in the production process.
horizontal acquisition ANS✔✔ when one company acquires another
company that is in the same industry and works at the same production
stage.
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