WPC 480 Final Exam Questions with Complete Answers
1 view 0 purchase
Module
WPC 480
Institution
WPC 480
Merger - Answer-two firms agree to integrate their operations on a relatively co-equal basis
ex:
at&t and time warner
JP Morgan chase
Acquisition - Answer-Controlling 100% interest to make acquired firm a subsidiary business within its portfolio
ex:
Cisco
Chase
(Hostile) Takeover - Answ...
wpc 480 final exam questions with complete answers
merger answer two firms agree to integrate their
Written for
WPC 480
WPC 480
Seller
Follow
lectknancy
Reviews received
Content preview
WPC 480 Final Exam Questions with
Complete Answers
Merger - Answer-two firms agree to integrate their operations on a relatively co-equal
basis
ex:
at&t and time warner
JP Morgan chase
Acquisition - Answer-Controlling 100% interest to make acquired firm a subsidiary
business within its portfolio
ex:
Cisco
Chase
(Hostile) Takeover - Answer-Target firm did not solicit the acquiring firm's bid but they
eventually agree
ex:
AOL and Time Warner
Bayer and Monsanto
Acquiring firms - Answer-About zero return on the average
Advantages to acquisitions - Answer-- it is a quick way to grow
- there can be synergistic gains
- acquire the necessary strategic capabilities
- overcomes barriers to entry
- can choose a target that fits best
- Enhances reputation with finance providers
Disadvantages to acquisitions - Answer-- can be very expensive
- synergies are not automatic
- can lead to cultural clashes
- there may be legal barriers to overcome
- All parts of the target are acquired (including its problems)
- requires good change management skills
Why are Acquisitions (mergers) done? - Answer-- Increased market power
- Overcome entry barriers
- substitute for product development
- Change scope of business portfolio
- Managerial opportunism
, Market power - Answer-Bigger firms with more resources and capabilities (and
customers) may achieve increased market power
- can sell goods or services at prices above competitive levels
- can drive costs below those of competitors
Horizontal Acquisitions - Answer-Acquisition of a firm in the same industry (bigger, more
resources)
Cost-based synergies - Answer-- Buyer power
- economies of scale
Vertical acquisitions - Answer-Acquisitions of a supplier or distributor to the firm
- Increases a firm's market power by controlling additional parts of the value chain
Entry barriers - Answer-Factors associated with making it expensive and difficult for new
firms to gain market access
- Differentiated products
- Economies of scale
Economies of scale (and scope) - Answer-Cost leadership (Buy competitor, larger firm;
walmart and jet.com)
Often reason behind cross-border acquisitions - Answer-Cultural and political
differences (need local knowledge and initial foothold in new market)
Acquisitions to substitute for new product & capability development - Answer-Gain
access to new products and capabilities
- Special (technological) capability
- Increase knowledge base:
-- Lower risk
Change firm scope - Answer-Reduce dependence on one or more products or markets
(unattractive and mature markets)
- Microsoft bought LinkedIn
- Both related and unrelated diversification strategies can be implemented through
acquisitons
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller lectknancy. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £12.28. You're not tied to anything after your purchase.
