Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Dirección Estrategica De La Empresa > Chapter 3: Development Methods: Mergers And Acquisitions > Flashcards

Chapter 3: Development Methods: Mergers And Acquisitions Flashcards

1
Q

Organic development characteristics

A
  • Organic growth
  • Growth of the firm’s own resources
  • Investment in facilities, machinery, staff, etc
  • Slow
  • Similar core competencies
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Inorganic development characteristics

A
  • One firm invests in, purchases, associates with or control other firms
  • Expanding a current business or enteing new ones
  • Materialized in mergers, acquisitions or strategic alliances
  • Fast
  • Culture clash. Risk of integration failure
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Inorganic development types

A
  • Mergers
  • Acquisitions
  • Strategic alliances
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Mergers definition

A

A merger is a mutually agreed decision for joint ownership between two previously separate organisations to forma combined entity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Acquisition definition

A

An acquisition is where an organisation purchases or takes ownership of another organisation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Motives for mergers and acquisitions

A
  • Strategic
  • Operational
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Strategic motives for mergers and acquisitions

A
  • Consolidate to remove competition and gain market power
  • Create market access
  • Acquire new resources and capabilities
  • Size to compete in global markets
  • Vertical integration advantages
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Operational motives for mergers and acquisitions

A
  • Reduce operational costs
  • Fiscal incentives
  • Improve the performance of the acquiring company
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Types of mergers

A
  • Pure merger
  • Merger by absorption
  • Merger with partial asset transfer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Pure merger

A
  • Company A and B. Similar size
  • A new company C is created
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Merger by absorption

A
  • Company B ceases to exit. The assets of company B are absorbed into company A —> A’
  • A’=A+B
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Merger with partial transfer

A
  • A new company C is created
  • B ceases to exist
  • A still exist
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Types of acquisitions

A
  • Public takeover bid
  • Strategic acquisitions
  • Opportunistic acquisitions
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Public takeover bid definition

A

A public takeover bid is a type of acqiuisition in which a company maakes an offer to purchase a public company. The acquiring company generally offers cash, stock or a combination of both in an attempt to assume control of its target.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Types of public takeover bid

A
  • Friendly
  • Hostile
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Friendly public takeover bid definition

A

The target’s top management team recommends accepting the acquirer’s deal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Hostile public takeover bid definition

A

The target’s top management team refuses the acquirer’s offer. The acquirer tries to replace the target’s top management team to get the acquisition approved.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Types of strategic acquisitions

A
  • Horizontal
  • Vertical
  • Related diversification
  • Unrelated diversification
19
Q

Types of opportunistic acquisitions

A
  • Target company is undervalued
  • Improvement in the management of the target company
20
Q

Horizontal strategic acquisitions objectives

A
  • Cost reduction through economies of scale
  • Market power through reduction in competitive intensity. Regulators must approve any large horizontal integration.
21
Q

Vertical strategic acquisitions objectives

A
  • Cost reduction through economies of scope, supply chain integration and reduction of transaction costs
  • Increase market power through control of distribution channels and resources, differentiation and barriers of entry
22
Q

Related diversification strategic acquisitions objectives

A
  • Cost reductions through economies of scope
  • Increase market power through barriers of entry and differentiation
23
Q

Unrelated diversification strategic acquisition objectives

A
  • Financial complementarities through lower financial costs and risk management
  • Increase market power through gains in reputation from the leading company
24
Q

Forms of business reorganization

A
  • Split-Up
  • Spin-Off
25
Q

Characteristics of reorganization

A
  • No growth
  • The existing company (A) reduces its size
  • In general, it fits with either restructuring or retrenchment
  • Goals: strategic, fiscal, anti-trust laws
26
Q

Split-up reorganization characteristics

A
  • An existing company is split into two new ones
  • A no loner exists
27
Q

Spin-off reorganization characteristics

A
  • Part of the assets of A are separated to form a new company
  • A and a are two legally independent companies
28
Q

Process of merger and acquisition management

A
  • Due diligence
  • Organizational and cultural integration
  • Operational integration
  • Anti-trust laws
29
Q

Due diligence steps

A
  • Target choice. Information gathering
  • Price setting. Negotiating
  • Financing method
30
Q

Target choice. Information gathering steps

A
  • Find a firm that fits strategically and organisationally
  • Gather information to value, risk and outcome
  • Use of specialist advice like investment banks, consulting firms or legal firms
31
Q

Price setting. Negotiating steps

A
  • Value tangibles and intangibles
  • Predict future cash-flows
  • Acquisition premium
32
Q

Financing method steps

A
  • Cash or debt payment
33
Q

Organizational and cultural integration aspects to consider

A
  • Organisational structure
  • Processes and systems
  • Human resources policy
  • Organizational culture
34
Q

Post-acquisition integration styles

A
  • Maintenance
  • Symbiosis
  • Preservation
  • Absorption
35
Q

Maintenance Post-acquisition integration style

A

Boundaries of the acquired firm, cultures and organizational systems are kept in place. Push mutual learning

36
Q

Symbiosis Post-acquisition integration style

A

Preserve core competences, exchange know-how. Implement integration processes

37
Q

Preservation Post-acquisition integration style

A

There is little to be gained

38
Q

Absorption Post-acquisition integration style

A

Implement best practices from the acquiring firm. Exploit synergies

39
Q

Operational integration steps

A
  • Cost of restructuring
  • Compatibility of processes
40
Q

Costs of restructuring in operational integration

A
  • Integration of production systems in order to exploit synergies
  • Eliminate redundancy and duplication of processes
  • Relocate activities
41
Q

Compatibility of processes in operational integration

A
  • Supply chain processes
  • IT systems
  • Manufacturing processes
42
Q

Anti-trust laws objectives

A
  • Preserve free market competition
  • Avoid the creation of oligopolies and monopolies
43
Q

Types of anti-trust laws

A
  • Spain: Comisión Nacional de los Mercados y la Competencia
  • Europe: EU competition laws

Dirección Estrategica De La Empresa (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions