MGMT 475 STRATEGY EXAM QUESTIONS WITH ACTUAL DETAILED ANSWERS.pdf

MGMT 475 STRATEGY EXAM
QUESTIONS WITH ACTUAL DETAILED
ANSWERS
Horizontal,Evertical,EandErelatedEacquisitionsEtoEbuildEmarketEpower:

-a.concentrateEonEcapturingEvalueEatEmoreEthanEoneEstageEinEtheEvalueEchain.

-b.areErarelyEpermittedEtoEoccurEacrossEinternationalEborders.

-c.areElikelyEtoEundergoEregulatoryEreviewEbyEvariousEgovernmentalEentities.

-d.typicallyEinvolveEaEfirmEpurchasingEoneEofEitsEsuppliersEorEdistributors.E-
ECORRECTEANSWERSareElikelyEtoEundergoEregulatoryEreviewEbyEvariousEgovernmentalEenti
ties.



ManagersEperceiveEinternalEproductEdevelopmentEasEaEhigh-
riskEactivityEandEtendEtoEchooseEacquisitionsEbecauseEapproximatelyE__________EpercentE
ofEinnovationsEareEimitatedEwithinEfourEyearsEafterEpatentsEareEobtained.

a.5

b.10

c.60

d.20E-ECORRECTEANSWERS60



ProblemsEassociatedEwithEacquisitionsEincludeEallEofEtheEfollowingEEXCEPT:

a.excessiveEtimeEspentEonEtheEdueEdiligenceEprocess.

b.largeEorEextraordinaryEdebt.

c.managersEoverlyEfocusedEonEacquisitions.

d.integrationEdifficulties.E-
ECORRECTEANSWERSexcessiveEtimeEspentEonEdueEdiligenceEprocess



Currently,EtheErationaleEforEmakingEanEacquisitionEincludesEallEofEtheEfollowingEEXCEPTEto:

,a.decreaseEtaxesEpaidEbyEshareholders.

b.overcomeEentryEbarriers.

c.increaseEmarketEpower.

d.increaseEdiversification.E-ECORRECTEANSWERSdecreaseEtaxesEpaidEbyEshareholders



Magma,EInc.,EacquiredEVulcan,EInc.,EthreeEyearsEago.EEffectiveEintegrationEofEtheEtwoEcom
panies'EcultureEwasEneverEachieved,EandEtheEtwoEfirms'EassetsEwereEnotEcomplementary.E
ItEisEveryElikelyEthatEMagmaEwill:

a.restructure.

b.goEpublicEthroughEanEIPO.

c.reviewEitsEtactical-levelEstrategies.

d.reviewEtheEdueEdiligenceEinformationEcollectedEbeforeEtheEacquisition.E-
ECORRECTEANSWERSrestructure



AfterEaEleveragedEbuyout,E__________EtypicallyEoccur(s).

a.dueEdiligence

b.sellingEofEassets

c.furtherEroundsEofEacquisitions

d.privateEsynergyE-ECORRECTEANSWERSsellingEofEassets



AnEinvestorEisEanalyzingEtwoEfirmsEinEtheEsameEindustry.ESheEisElookingEforElong-
termEperformanceEfromEherEinvestment.EBothEfirmsEareEbasicallyEidenticalEexceptEoneEfir
mEisEinvolvedEinEsubstantialEdownsizing,EandEtheEotherEfirmEisEundertakingEaggressiveEdo
wnscoping.ETheEinvestorEshouldEinvestEinEthe:

a.downscopingEfirmEbecauseEofEreducedEdebtEcostsEandEtheEemphasisEonEstrategicEcontro
lsEderivedEfromEfocusingEonEtheEfirm'sEcoreEbusinesses.

b.downsizingEfirmEbecauseEitEwillEbeEmakingEdecisionsEbasedEonEtacticalEstrategies.

,c.downscopingEfirmEbecauseEtheEhigherEdebtEloadEwillEdisciplineEmanagersEtoEactEinEshar
eholders'EbestEinterests.

d.downsizingEfirmEbecauseEitEisEeliminatingEemployeesEwhoEareEessentiallyE"deadEweight"
EandEareEdraggingEdownEtheEfirm'sEprofitability.E-
ECORRECTEANSWERSdownscopingEfirmEbecauseEofEreducedEdebtEcostsEandEtheEemphasisE
onEstrategicEcontrolsEderivedEfromEfocusingEonEtheEfirm'sEcoreEbusinesses



ThomasEisEanEupper-middle-
levelEmanagerEforEaEfirmEthatEhasEbeenEactivelyEinvolvedEinEacquisitionsEoverEtheElastE10
Eyears.ETheEfirmEhasEgrownEmuchElargerEasEaEresult.EThomasEhasEbeenEdismayedEtoEfind
EthatErecentlyEtheEmanagerialEcultureEofEtheEfirmEhasEbeenEturningEmoreEandEmoreEtoE_
_________Econtrols.

a.bureaucratic

b.tactical

c.strategic

d.organicE-ECORRECTEANSWERSbureaucratic



WhenEaEfirmEisEoverlyEdependentEonEoneEorEmoreEproductsEorEmarkets,EandEtheEintensit
yEofErivalryEinEthatEmarketEisEintense,EtheEfirmEmayEwishEtoE__________EbyEmakingEanEa
cquisition.

a.increaseEitsEeconomiesEofEscale

b.overcomeEentryEbarriers

c.increaseEnewEproductEspeedEtoEmarket

d.broadenEitsEcompetitiveEscopeE-ECORRECTEANSWERSbroadenEitsEcompetitiveEscope



ComparedEwithEdownsizing,E__________EhasE(have)EaEmoreEpositiveEeffectEonEfirmEperfor
mance.

a.acquisitions

b.leveragedEbuyouts

, c.downscoping

d.reconfiguringE-ECORRECTEANSWERSdownscoping



ComparedEtoEinternalEproductEdevelopment,EacquisitionsEallow:

a.immediateEaccessEtoEinnovationsEinEmatureEproductEmarkets.

b.moreEaccurateEpredictionEofEreturnEonEinvestment.

c.slowerEmarketEentry.

d.moreEeffectiveEuseEofEcompanyEcoreEcompetencies.E-
ECORRECTEANSWERSmoreEaccurateEpredictionEofEreturnEonEinvestment



A(n)E__________EoccursEwhenEoneEfirmEbuysEaEcontrolling,EorE100EpercentEinterest,EinEa
notherEfirm.

a.restructuring

b.acquisition

c.spin-off

d.mergerE-ECORRECTEANSWERSacquisition



MarketEpowerEisEderivedEprimarilyEfromEthe:

a.qualityEofEaEfirm'sEtopEmanagementEteam.

b.sizeEofEaEfirmEandEitsEresourcesEandEcapabilities.

c.depthEofEaEfirm'sEstrategy.

d.coreEcompetenciesEofEtheEfirm.E-
ECORRECTEANSWERSsizeEofEaEfirmEandEitsEresourcesEandEcapabilities



__________EisEoftenEusedEwhenEtheEacquiringEfirmEpaidEtooEhighEaEpremiumEtoEacquireE
theEtargetEfirm.

a.ManagementEbuyout