Chapter 7 (Multiple Choice) Study Guide Rated A+

Problems associated with acquisitions include all of the following EXCEPT a. Managers overly focused on acquisitions. b. Integration difficulties. c. Large or extraordinary debt. d. Excessive time spent on the due diligence process. {Ans: D}Transaction costs include all of the following EXCEPT a. charges from investment bankers who complete due diligence for the acquiring firm. b. the loss of key employees following the acquisition. c. managers' time spent evaluating target firms. d. managers' time spent planning the diversification strategy of the firm. {Ans: D}Because acquisitions may become a substitute for innovation, Teva Pharmaceutical's acquisition of Cephalon should be driven by ___________ rather than _________________. a. defensive reasons (to gain sales revenue in the short run); strategic reasons (cost and revenue strategies) b. both strategic and defensive reasons; either one or the other c. strategic reasons; defensive reasons d. avoiding internal R&D expenditures; developing innovation capabilities {Ans: C}The strategy of Citigroup under CEO Sanford Weill was to create a "financial supermarket" where customers shop for a variety of financial services within the same company. This strategy was executed via a series of acquisitions but ultimately failed. This situation was the result of a. Citigroup's managers focusing too much