Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 20, Problem 5DQ
What is synergy? What might cause this result? Is there a tendency for management to over- or underestimate the potential synergistic benefits of a merger? (LO20-1)
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Why so many mergers fail to produce the expected synergistic gains?
Explain why diversification, per se, is probably not a good reason for merger.
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a. Accept the risk
b. Reduce the risk
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d. Transfer the risk
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- Which of the following risk response items would not be affected by an increase in the cost of managing a strategic alliance partnership that was formed to reduce a top organizational risk? a. Risk response net benefit b. Risk response cost c. Risk response benefit d. All of these. e. None of these.arrow_forwardFind a recent merger transaction that failed due to regulatory concerns over market share concentration and reduction of consumer alternatives. Do you support the regulatory concerns? Explain briefly the transaction and your reasoning.arrow_forwardH5. Distinguish between active and passive investment management styles. What are the advantages of each approach? Which approach would a proponent of an efficient market tend to use? Why? Explain with detailsarrow_forward
- How would you describe the competitive landscape and fragmentation levels? I understand the competitive landscape but not fragmentation Levelarrow_forward(a) What is Non-equity Strategic Alliance? Explain! (b) What are the advantages and disadvantages of Non-Equity Strategic Alliance? (discuss implications) (c) What are some examples of Non-Equity Strategic Alliance?arrow_forwardwhy does related diversification strategy and unrelated diversification strategy often failarrow_forward
- Suppose that a firm must choose between two mutually exclusive projects, both of which have negative NPVs. Explain how a firm can legitimately choose between two such projects.arrow_forwardwhich of the following are potential areas for cost reduction with a merger or acquisition? (Check all that apply) A) economies of sale B) economies of vertical integration C) complementary resources D) reduction in EPS E) higher transaction costsarrow_forwardGenerally speaking, why would a company that changes its strategic goals need to change itsperformance measurement system as well? What are some examples of measures that would havebeen appropriate for MPC prior to its change in strategy? Why would those measures fail to supportMPC’s new strategy?arrow_forward
- 43. Which of the following statements is true of tactical decisions? a.Tactical decisions do not have an immediate or limited end in view. b.Tactical decisions are often large-scale actions that serve a smaller purpose. c.Tactical decisions should support alternatives that result in long-term competitive advantage. d.Tactical decisions are long run in nature and will have short-run consequences.arrow_forwardIn case of a firm facing an unfriendly merger, offer might arrange to be acquired by a different, friendly firm. A Moving to another question will save this response.arrow_forwardWhat are options in strategy? Options may involve the organisation in diversifying away from its original markets to expand?arrow_forward
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