GBA 490 Ch. 5-8 Exam Questions and Answers |Complete Solutions Graded A+ |100% Correct
Acquisition Premium the amount by which the price offered exceeds the pre-acquisition
market value of the target company.
Corporate Venturing process of developing new businesses as an outgrowth of a company's
established business operations.
Transaction Costs the costs of completing a business agreement or deal, over and above the
price of the deal. (They can include costs of searching for an attractive target, the costs of
evaluating its worth, bargaining costs, and costs of completing the transaction.)
Related Businesses possess competitively valuable cross-business value chain and resource
commonalities.
Unrelated Businesses have dissimilar value chains and resource requirements
Strategic Fit exists whenever one or more activities constituting the value chains of different
business are sufficiently similar to present opportunities for cross-business sharing.
Economies of Scope cost reductions that flow from operating in multiple businesses.
Corporate Parenting the role that a diversified corporation plays in nurturing its component
businesses through the provision of top management expertise.
Umbrella Brand corporate brand name that can be applied to a wide assortment of business
types.
Restructuring overhauling and streamlining the activities of a business - combining plants
with excess capacity.
, Resource Fit when a businesses have a matching specialized resource requirements along
their value chains.
Internal Capital Market allows a diversified company to add value by shifting capital from
business units generating free cash flow to those needing additional capital to expand and
realize their growth potential.
Portfolio Approach ensuring a financial fit among a firm's businesses. It is based on the fact
that different businesses have different cash flow and investment characteristics.
Cash Hog generates cash flows that are too small to fully fund its growth; thereby requires
cash infusions to provide additional working capital and finance new capital investment.
Cash Cow generates cash flows over and above its internal requirements, this providing a
corporate parent with funds for investing in cash hog businesses, financing new acquisitions, or
paying dividends.
Spin-off an independent company created when a corporate parent digests a business
either by selling shares to the public via IPO or by distributing shares in the new company to
shareholders of the corporate parent.
Companywide Restructuring making major changes in a diversified company by divesting
some businesses and/or acquiring others, so as to put a whole new face on the company's
lineup.
Low-cost leaders have the lowest industry costs, are exceptionally good at finding ways to
drive costs out of their businesses but still provide acceptable product.
Cost driver a factor that has a strong influence on a company's costs.
Acquisition Premium the amount by which the price offered exceeds the pre-acquisition
market value of the target company.
Corporate Venturing process of developing new businesses as an outgrowth of a company's
established business operations.
Transaction Costs the costs of completing a business agreement or deal, over and above the
price of the deal. (They can include costs of searching for an attractive target, the costs of
evaluating its worth, bargaining costs, and costs of completing the transaction.)
Related Businesses possess competitively valuable cross-business value chain and resource
commonalities.
Unrelated Businesses have dissimilar value chains and resource requirements
Strategic Fit exists whenever one or more activities constituting the value chains of different
business are sufficiently similar to present opportunities for cross-business sharing.
Economies of Scope cost reductions that flow from operating in multiple businesses.
Corporate Parenting the role that a diversified corporation plays in nurturing its component
businesses through the provision of top management expertise.
Umbrella Brand corporate brand name that can be applied to a wide assortment of business
types.
Restructuring overhauling and streamlining the activities of a business - combining plants
with excess capacity.
, Resource Fit when a businesses have a matching specialized resource requirements along
their value chains.
Internal Capital Market allows a diversified company to add value by shifting capital from
business units generating free cash flow to those needing additional capital to expand and
realize their growth potential.
Portfolio Approach ensuring a financial fit among a firm's businesses. It is based on the fact
that different businesses have different cash flow and investment characteristics.
Cash Hog generates cash flows that are too small to fully fund its growth; thereby requires
cash infusions to provide additional working capital and finance new capital investment.
Cash Cow generates cash flows over and above its internal requirements, this providing a
corporate parent with funds for investing in cash hog businesses, financing new acquisitions, or
paying dividends.
Spin-off an independent company created when a corporate parent digests a business
either by selling shares to the public via IPO or by distributing shares in the new company to
shareholders of the corporate parent.
Companywide Restructuring making major changes in a diversified company by divesting
some businesses and/or acquiring others, so as to put a whole new face on the company's
lineup.
Low-cost leaders have the lowest industry costs, are exceptionally good at finding ways to
drive costs out of their businesses but still provide acceptable product.
Cost driver a factor that has a strong influence on a company's costs.
