financial per

Question 1

Term: Merger

Answer 1

Explanation:
a business combination where two or more companies come together to form a new entity. It involves negotiated deals, mutual negotiations, and is mostly friendly.

Question 2

Term: Tender Offer

Answer 2

Explanation: A direct offer made by one company to the shareholders of another company to buy their shares at a specified price. It can be hostile when made without the approval of the target company’s board.

Question 3

term: Acquisition

Answer 3

Explanation: A broad term that encompasses any deal where one company purchases another. It can include negotiated deals, tender offers, and can be either friendly or hostile.

Question 4

Term: Corporate Restructuring

Answer 4

Explanation: Significant changes made to a company’s operations, policies, and strategies to improve its performance. It can include mergers, acquisitions, divestitures, layoffs, and other actions to enhance efficiency and adapt to market conditions.

Question 5

Term: Horizontal Mergers

Answer 5

Explanation: Mergers or consolidations between companies in the same industry or business activity.

Question 6

Term: Rationale for Horizontal Mergers
Explanation:

Answer 6

Economies of Scale: Cost savings achieved through larger-scale operations.
Economies of Scope: Benefits from combined utilization of resources and capabilities.
Synergies: Additional value created through the merger.

Question 7

Term: Synergies

Answer 7

Explanation: Additional benefits resulting from the combination of two companies in a merger, such as cost savings, revenue growth, market expansion, or improved product offerings.

Question 8

Term: Government Regulation of Horizontal Mergers

Answer 8

Explanation: Regulatory oversight due to concerns of potential anticompetitive effects. Government bodies review and may impose conditions or block mergers that harm competition and consumer welfare.

Question 9

Term: Vertical Mergers

Answer 9

Explanation: Combinations between companies at different stages of the production or distribution process within an industry.

Question 10

Term: Rationale for Vertical Mergers

Answer 10

Explanation:

Improve Information: Enhance information flow between different stages of production or distribution.
Lower Transaction Costs: Reduce costs associated with coordinating and managing relationships in the supply chain.
Reduce Lock-up Problems: Mitigate constraints on accessing critical inputs or distribution channels.

Question 11

Term: Loss in Economic Discipline

Answer 11

Explanation: Risk associated with vertical mergers where a merged entity may become less motivated to seek cost-effective suppliers or innovate due to reduced competition.

Question 12

Term: Vertical Mergers

Answer 12

Explanation: Combinations between companies at different stages of the production or distribution process within an industry.

Question 13

Term: Traditional Justifications for Vertical Mergers

Answer 13

Explanation: As markets became more sophisticated and globalized, traditional justifications for vertical mergers lost relevance.

Question 14

Term: Rebound of Vertical Integration

Answer 14

Explanation:

Simplicity: Customers desire well-integrated products and experiences (e.g., Apple).
Efficiency and Transaction Cost

Reduction: Vertical integration reduces transaction costs (e.g., Tesla).

Relationship Building with Customers: Vertical integration facilitates direct customer relationships (e.g., Amazon, Netflix).

Need for Speed: Vertical integration allows for faster response to market demands (e.g., Zara).
Geopolitical Uncertainty and the

Environment: Vertical integration addresses uncertainties and environmental concerns (e.g., Ferrero, Ikea, Disney).

Question 15

Term: Conglomerate Mergers

Answer 15

Explanation: Combination of companies operating in unrelated business activities.

Question 16

Term: Rationale for Conglomerate Mergers

Answer 16

Explanation:

Diversification: Achieving risk reduction by combining businesses in unrelated industries.
“Good Managers Can Manage Anything”: Belief that capable managers possess the skills to effectively manage businesses across diverse industries.

Question 17

Term: Benefits of Conglomerate Mergers

Answer 17

Explanation:

Risk Reduction: Reduced exposure to industry-specific challenges by diversifying across multiple industries.

Increased Revenue Streams: Access to diverse sources of revenue from different industries.

Market and Technology Expansion: Opportunity to enter new markets or access new technologies.

Question 18

Term: Challenges of Conglomerate Mergers

Answer 18

Explanation:

Market Navigation: Navigating unfamiliar markets and understanding diverse customer bases.

Managing Diverse Business Models: Handling different operational and strategic requirements across industries.

Resource Allocation: Allocating resources effectively across diverse businesses.

Question 19

Term: Evolving Perspective

Answer 19

Explanation: Over time, the focus of mergers has shifted towards core competencies and strategic alignment.

Question 20

Term: Nature of Strategy

Answer 20

Definition: Long-term plans, policies, and culture of an organization.

Purpose: Guides the organization towards its goals and objectives.

Question 21

Classic successful strategies

Answer 21

– Low-cost leadership
→ Create a sustainable cost advantage over competitors

– Differentiation
→Distinguish the firm through innovation, product quality,…

– Focus or specialisation
→Find and dominate a market niche

Question 22

Term: Strategic Planning Process

Answer 22

Explanation:

Dynamic Process: Ongoing and continuously adapting to changing circumstances.
Input Sources: Requires inputs from all segments of the organization.

Question 23

Term: Integration of Acquisition and Restructuring

Answer 23

Explanation:

Alignment with Strategy: Acquisition and restructuring decisions should be part of the company’s overall strategic plans and processes.
Guiding Principles: Driven by the organization’s long-term goals and competitive positioning.

Question 24

Term: Top Executive Responsibility

Answer 24

Explanation:

Role of Top Executive Group: Ultimate responsibility for strategic planning resides in the top executive group.
Leadership and Oversight: Senior leaders and executives provide direction, decision-making, and ensure alignment throughout the organization.

Question 25

The three key steps in corporate strategic planning include the development of:

Answer 25

• A mission or vision
• A set of strategic objectives
• A set of tactics

Question 26

what is The firm’s strategy

Answer 26

it is a plan for fulfilling the mission and achieving the strategic objectives. To be strategic = to look ahead!

Question 27

Tactics are specific actions to implement the strategy, give three examples

Answer 27

− Expand the firm through organic or inorganic growth
− Divest segments of the firm
− Cooperate with other firms through licensing agreements

Question 28

Examples of analytical tools for strategic planning

Answer 28

− SWOT analysis
Strengths, weaknesses, opportunities, threats
− BCG’s experience curve analysis
Cost per unit declines exponentially as cumulative production increases
− BCG’s product life cycle concept Development, growth, maturity, decline

Question 29

Examples of analytical tools for strategic planning (continued)
− Porter’s five-factor model

what does the Economic attractiveness of industry depends on: (5)

Answer 29

1. Barriers to entry
2. Customer power
3. Supplier power
4. Threat of substitutes
5. Rivalry conduct