Chapter 10: Mergers and Acquisitions

CHAPTER 10: MERGERS AND ACQUISITIONS

TRUE/FALSE QUESTIONS
1. A firm engages in an acquisition when it purchases a second firm.
True
False
Answer: True Page: 311 Dii!"#$%: Eas C&a'$er O()e!$i*e: 1
!. For a firm to gain a controlling share in an acquisition" it must purchase more than
#1$ of the acquired firm%s assets.
True
False
Answer: False Page: 311 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
3. &hen the management of a target firm wants the firm to 'e acquired this is (nown
as a hostile ta(eo)er.
True
False
Answer: False Page: 311 Dii!"#$%: Eas C&a'$er O()e!$i*e: 1
*. A pri)atel held firm has not sold an shares on the pu'lic stoc( mar(et.
True
False
Answer: True Page: 311 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
#. +n an acquisition a tender offer can onl 'e made with the support of the
management of the acquired firm.
True
False
Answer: False Page: 311 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
,. &hen the assets of two similar-si.ed firms are com'ined" this is (nown as a
merger.
True
False
Answer: True Page: 311 Dii!"#$%: Eas C&a'$er O()e!$i*e: 1
/. &hile mergers tpicall 'egin as a transaction 'etween equals" that is" 'etween
firms of equal si.e and profita'ilit" the often e)ol)e after a merger such that one
firm is more dominant in the management of the merged firm than the other.
True
False
Answer: True Page: 31! Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
101
1art +++
0. &orldwide" the total )alue of announced merger and acquisition acti)ities was o)er
210 trillion in !000" !001" and !00! and increased su'stantiall in !003.
True
False
Answer: False Page: 31! Dii!"#$%: Moderate C&a'$er O()e!$i*e: !
3. +n !003 o)er #0$ of the acquisitions in the 4nited 5tates were in high-technolog
industries.
True
False
Answer: False Page: 31! Dii!"#$%: Moderate C&a'$er O()e!$i*e: !
10. The price of each of a firm%s shares multiplied ' the num'er of shares outstanding
is (nown as the firm%s current mar(et )alue.
True
False
Answer: True Page: 313 Dii!"#$%: Moderate C&a'$er O()e!$i*e: !
11. +n all acquisitions 'idding firms will 'e willing to pa a price for a target up to the
)alue that the firm adds to the 'idder once it is acquired.
True
False
Answer: True Page: 313 Dii!"#$%: Moderate C&a'$er O()e!$i*e: !
1!. The acquisition of strategicall unrelated targets will generate su'stantial economic
profits for 'oth the 'idding and the target firms.
True
False
Answer: False Page: 31* Dii!"#$%: Moderate C&a'$er O()e!$i*e: !
13. +f there is an hope that mergers and acquisitions will 'e a source of superior
performance for 'idding firms" it must 'e 'ecause of some sort of strategic
relatedness 'etween 'idding and target firms.
True
False
Answer: True Page: 31* Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
1*. +n principle" the Federal Trade Commission will allow an acquisition in)ol)ing
firms with headquarters in the 4nited 5tates that could ha)e the potential for
generating monopol or oligopol profits in an industr.
True
False
Answer: False Page: 31* Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
10!
Chapter 10: Mergers and Acquisitions
1#. According to the Federal Trade Commission a firm engages in a hori.ontal merger
when it acquires former suppliers or customers.
True
False
Answer: False Page: 31* Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
1,. +n a product e6tension merger a firm acquires complementar products through
merger and acquisition acti)ities.
True
False
Answer: True Page: 31# Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
1/. 7espite the popularit of conglomerate mergers in the 13,0s" most mergers and
acquisitions among strategicall related firms are di)ested shortl after the are
completed.
True
False
Answer: False Page: 31# Dii!"#$%: 8ard C&a'$er O()e!$i*e: 3
10. 7i)ersification economies are achie)ed ' the a'ilit of firms to dictate prices '
e6erting mar(et power.
True
False
Answer: False Page: 31, Dii!"#$%: 8ard C&a'$er O()e!$i*e: 3
13. To 'e economicall )alua'le" lin(s 'etween 'idding and target firms must meet the
same criteria as di)ersification strategies.
True
False
Answer: True Page: 31, Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
!0. +f 'idding and target firms are strategicall related" then the economic )alue of
these two firms com'ined is greater than their economic )alue as separate entities.
True
False
Answer: True Page: 31/ Dii!"#$%: Moderate C&a'$er O()e!$i*e: *
!1. Firms should pursue merger and acquisition strategies onl to o'tain )alua'le
economies of scope that outside in)estors find too costl to create on their own.
True
False
Answer: True Page: 31/ Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
103
1art +++
!!. The e6istence of strategic relatedness 'etween 'idding and target firms is sufficient
for the equit holders of 'idding firms to earn economic profits from their
acquisition strategies.
True
False
Answer: False Page: 31/ Dii!"#$%: Moderate C&a'$er O()e!$i*e: *
!3. +n an initial pu'lic offering" a firm 9tpicall wor(ing with an in)estment 'an(er:
sells its equit to the pu'lic at large.
True
False
Answer: True Page: 310 Dii!"#$%: Moderate C&a'$er O()e!$i*e: *
!*. ;ne stud that re)iewed *0 empirical merger and acquisition studies in the finance
literature concluded that acquisitions" on a)erage" increased the mar(et )alue of
'idding firms ' a'out !# percent and left the mar(et )alue of the target firms
unchanged.
True
False
Answer: False Page: 313 Dii!"#$%: Moderate C&a'$er O()e!$i*e: *
!#. 5trateg researchers ha)e found that in mergers and acquisitions" the more
strategicall related 'idding and target firms are" the more economic )alue these
mergers and acquisitions create.
True
False
Answer: True Page: 313 Dii!"#$%: Moderate C&a'$er O()e!$i*e: *
!,. +n mergers and acquisitions the owners of the 'idding firm appropriate the
economic )alue created ' the transaction.
True
False
Answer: False Page: 313 Dii!"#$%: Moderate C&a'$er O()e!$i*e: *
!/. The cumulati)e a'normal return for a merger or acquisition can 'e positi)e or
negati)e depending on whether the stoc( in question performs 'etter or worse than
what was e6pected without an acquisition.
True
False
Answer: True Page: 3!0 Dii!"#$%: Moderate C&a'$er O()e!$i*e: #
!0. Free cash flow is simpl the amount of cash a firm has to in)est after all positi)e
net present-)alue in)estments in its ongoing 'usinesses ha)e 'een funded.
True
False
Answer: True Page: 3!1 Dii!"#$%: Moderate C&a'$er O()e!$i*e: #
10*
Chapter 10: Mergers and Acquisitions
!3. Managerial hu'ris is the well founded 'elief held ' managers in 'idding firms that
the can manage the assets of a target firm more efficientl than the target firm%s
current management.
True
False
Answer: False Page: 3!! Dii!"#$%: Moderate C&a'$er O()e!$i*e: #
30. The mar(et for corporate control is the mar(et that is created when multiple firms
acti)el see( to acquire one or se)eral firms.
True
False
Answer: True Page: 3!3 Dii!"#$%: Moderate C&a'$er O()e!$i*e: #
31. The difference 'etween the une6pected )alue of an acquisition actuall o'tained '
a 'idder and the price the 'idder paid for the acquisition is a profit for the equit
holders of the target firm.
True
False
Answer: False Page: 3!# Dii!"#$%: Moderate C&a'$er O()e!$i*e: #
3!. ;ne of the main reasons wh 'idding firms do not o'tain competiti)e ad)antages
from acquiring strategicall related target firms is that se)eral other 'idding firms
)alue the target firm the same wa.
True
False
Answer: True Page: 3!, Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
33. ;ne of the (es for a 'idding firm to earn superior performance in an acquisition
strateg is to ma(e sure that multiple 'idders are pursuing the same target.
True
False
Answer: False Page: 3!/ Dii!"#$%: Eas C&a'$er O()e!$i*e: ,
3*. &hen acquiring a pu'licl traded firm a 'idder has to release all the information it
has a'out the potential )alue of that target in com'ination with itself.
True
False
Answer: False Page: 3!/ Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
10#
1art +++
3#. A thinl traded mar(et is a mar(et where there are onl a small num'er of 'uers
and sellers" where information a'out the opportunities in this mar(et is not widel
(nown" and where interests 'esides purel ma6imi.ing the )alue of a firm can 'e
important.
True
False
Answer: True Page: 3!0 Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
3,. Mergers and acquisitions designed to create )ertical integration should 'e managed
through the M-form structure.
True
False
Answer: False Page: 33, Dii!"#$%: 8ard C&a'$er O()e!$i*e: /
3/. 1erhaps the most significant challenge in integrating 'idding and target firms has to
do with cultural differences.
True
False
Answer: True Page: 33/ Dii!"#$%: Moderate C&a'$er O()e!$i*e: /
30. The integration of merged firms in an international conte6t is often confounded '
the need to disco)er how different countr cultures can wor( together.
True
False
Answer: True Page: 330 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 0
33. An indi)idualistic firm has indi)iduall oriented compensation policies while the
collecti)ist firm has group-'ased compensation policies.
True
False
Answer: True Page: 333 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 0
*0. Emploees in uncertaint acceptance firms are encouraged to reinforce the
'oundaries of traditional thin(ing while emploees in uncertaint a)oiding firms
are encouraged to thin( outside the 'o6.
True
False
Answer: False Page: 333 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 0
10,
Chapter 10: Mergers and Acquisitions
MULTIPLE CHOICE QUESTIONS
*1. A firm engages in a9n: <<<<<<<< when it purchases a second firm.
A. acquisition
=. >oint )enture
C. strategic alliance
7. equit alliance
Answer: A Page: 311 Dii!"#$%: Eas C&a'$er O()e!$i*e: 1
*!. &hen one firm acquires a9n: <<<<<<<<< of another firm it has acquired enough of
that firm%s assets so that the acquiring firm is a'le to ma(e all the management and
strategic decisions in the target firm.
A. mar(et sta(e
=. equit share
C. controlling share
7. equit sta(e
Answer: C Page: 311 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
*3. A <<<<<<<<< acquisition occurs when the management of a target firm wants to 'e
acquired.
A. hostile
=. admira'le
C. strategic
7. friendl
Answer: 7 Page: 311 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
**. &hen a firm has not sold shares on the pu'lic stoc( mar(et it is (nown as
A. closel held.
=. pri)atel held.
C. pu'licl traded.
7. a small cap stoc(.
Answer: = Page: 311 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
*#. The difference 'etween the current mar(et price of a target firm%s shares and the
price a potential acquirer offers to pa for those shares is (nown as a9n:
A. acquisition premium.
=. acquisition discount.
C. acquisition margin.
7. acquisition price.
Answer: A Page: 311 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
10/
1art +++
*,. &hen 5ears and ?mart" two retail firms of relati)el equal si.e in the 4.5. agreed
to com'ine their assets" this was an e6ample of a9n:
A. >oint )enture.
=. acquisition.
C. merger.
7. equit agreement.
Answer: C Page: 311 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
*/. +n !000" !001 and !00! the worldwide total )alue of announced merger and
acquisition acti)ities was o)er
A. 2!.# trillion.
=. 21.# trillion.
C. 23.0 trillion.
7. 2#.0 trillion.
Answer: = Page: 31! Dii!"#$%: Moderate C&a'$er O()e!$i*e: !
*0. +n !003" o)er <<<<<< pu'licl traded firms in the 4nited 5tates engaged in merger
and acquisition acti)ities.
A. 300
=. *00
C. #00
7. !00
Answer: 7 Page: 31! Dii!"#$%: Moderate C&a'$er O()e!$i*e: !
*3. The price of each of a firm%s shares multiplied ' the num'er of shares outstanding
represents the firm%s
A. total equit 'ase.
=. current mar(et )alue.
C. total mar(et share.
7. current mar(et share.
Answer: = Page: 313 Dii!"#$%: Moderate C&a'$er O()e!$i*e: !
#0. +n an unrelated acquisition" if # firms are interested in acquiring a firm and each of
the 'idding firms had a current mar(et )alue of 230"000 while the current mar(et
)alue of the target firm is 2!0"000 this acquisition is li(el to generate economic
profits of <<<<<<<< for the acquiring firm.
A. 210"000
=. 2!0"000
C. 2#0"000
7. 20.00
Answer: 7 Page: 313 Dii!"#$%: 8ard C&a'$er O()e!$i*e: !
100
Chapter 10: Mergers and Acquisitions
#1. +f an electronics manufacturer were to acquire a chain of retail electronic stores to
sell their products" this would 'e an e6ample of a <<<<<<< merger.
A. )ertical
=. hori.ontal
C. mar(et e6tension
7. product e6tension
Answer: A Page: 31* Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
#!. +f e=a were to acquire a smaller online auction compan" this would 'e an
e6ample of a <<<<<<<<<< merger.
A. conglomerate
=. )ertical
C. mar(et e6tension
7. hori.ontal
Answer: 7 Page: 31* Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
#3. +n a <<<<<<<<< merger" firms acquire complementar products through their
merger and acquisition acti)ities.
A. )ertical
=. mar(et e6tension
C. product e6tension
7. hori.ontal
Answer: C Page: 31# Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
#*. &hen e=a acquired =aa.e.com" and +ndian auction firm" in order to enter the
+ndian online auction mar(et this was an e6ample of a <<<<<<<<< merger.
A. product e6tension
=. mar(et e6tension
C. conglomerate
7. )ertical
Answer: = Page: 31# Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
##. +f there are no )ertical" hori.ontal" product e6tension" or mar(et e6tension lin(s
'etween firms" the FTC defines the merger or acquisition acti)it 'etween firms as
a <<<<<<<<<< merger.
A. conglomerate
=. )ertical
C. hori.ontal
7. product e6tension
Answer: A Page: 31# Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
103
1art +++
#,. <<<<<<<<<<< economies are scale economies that occur when the phsical
processes inside a firm are altered so that the same amounts of input produce a
higher quantit of outputs.
A. 1ecuniar
=. 7i)ersification
C. Technical
7. @ertical
Answer: C Page: 31, Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
#/. &hich of the following is a source of di)ersification economiesA
A. Mar(eting
=. 1roduction
C. 5cheduling
7. 1ortfolio management
Answer: 7 Page: 31, Dii!"#$%: 8ard C&a'$er O()e!$i*e: 3
#0. <<<<<<<<<< economies are achie)ed ' the a'ilit of firms to dictate prices '
e6erting mar(et power.
A. 1ecuniar
=. Technical
C. 7i)ersification
7. 1roduction
Answer: A Page: 31, Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
#3. <<<<<<<<< economies are achie)ed ' impro)ing a firm%s performance relati)e to
its ris( attri'utes or lowering its ris( attri'utes relati)e to its performance.
A. Technical
=. 7i)ersification
C. 1ecuniar
7. Mar(et
Answer: = Page: 31, Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
,0. &hich of the following is a financial moti)ation for wh 'idding firms might want
to engage in merger and acquisition strategiesA
A. To increase le)erage opportunities
=. To capture economies of scale
C. To adopt more efficient production or organi.ational technolog
7. To engage in )ertical integration
Answer: A Page: 31, Dii!"#$%: 8ard C&a'$er O()e!$i*e: 3
130
Chapter 10: Mergers and Acquisitions
,1. &hich one of the following is not one of the reasons that Bensen and Cu'ac( listed
as to wh 'idding firms might want to engage in merger and acquisition strategiesA
A. To reduce production or distri'ution costs
=. To gain mar(et power in product mar(ets
C. To e6pand indi)idual manager%s power within an organi.ation
7. To eliminate inefficient target management
Answer: C Page: 31, Dii!"#$%: 8ard C&a'$er O()e!$i*e: 3
,!. +n a related acquisition" if there is one target firm" ten 'idding firms and the )alue
of each of the 'idding firms as a stand alone entit is 2#0"000" and the )alue of the
target firm as a stand alone entit is 230"000" the mar(et )alue of the com'ined
entit will 'e
A. 20.00.
=. less than 200"000.
C. 200"000.
7. more than 200"000.
Answer: 7 Page: 31/ Dii!"#$%: Moderate C&a'$er O()e!$i*e: *
,3. &ealth indi)iduals who pro)ide capital to entrepreneurs to help them grow their
'usiness are (nown as
A. 'usiness angels.
=. )enture capitalists.
C. stoc(holders.
7. CE;s.
Answer: A Page: 310 Dii!"#$%: Moderate C&a'$er O()e!$i*e: *
,*. <<<<<<<<< firms tpicall raise mone from numerous smaller in)estors" which
the then in)est in a portfolio of entrepreneurial firms.
A. =usiness angel
=. @enture capital
C. Closel held
7. 1ri)ate equit
Answer: = Page: 310 Dii!"#$%: Moderate C&a'$er O()e!$i*e: *
,#. +n a9n: <<<<<" a firm" tpicall wor(ing with an in)estment 'an(er" sells its equit
to the pu'lic at large.
A. FTC
=. merger
C. +1;
7. acquisition
Answer: C Page: 310 Dii!"#$%: Moderate C&a'$er O()e!$i*e: *
131
1art +++
,,. Cesearch suggests that" on a)erage" acquisitions increased the mar(et )alue of
target firms ' a'out <<<<<< percent and <<<<<<.
A. #0D left the mar(et )alue of the 'idding firms unchanged.
=. !#D left the mar(et )alue of the 'idding firms unchanged.
C. #0D increased the mar(et )alue of the 'idding firms ' !#$.
7. !#D increased the mar(et )alue of the 'idding firms ' 1#$.
Answer: = Page: 313 Dii!"#$%: Moderate C&a'$er O()e!$i*e: #
,/. Managers of 'idding firms continue to engage in merger or acquisition strategies
e)en though the usuall do not generate profits for 'idding firms in order to
A. ensure sur)i)al.
=. generate free cash flow.
C. reduce agenc pro'lems.
7. reduce managerial hu'ris.
Answer: A Page: 313 Dii!"#$%: Moderate C&a'$er O()e!$i*e: #
,0. &hich of the following actions should 'idding firm managers ta(e to help earn
superior performance in an acquisition strategA
A. 5hare information with other 'idders.
=. 7ela the closing of the deal.
C. A)oid winning 'idding wars.
7. ;perate in competiti)e acquisition mar(ets.
Answer: C Page: 3!, Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
,3. A thinl traded mar(et is a mar(et where
A. there are onl a small num'er of 'uers and sellers.
=. man firms are implementing acquisition strategies.
C. information a'out opportunities in this mar(et is widel (nown.
7. where the onl important interest is to ma6imi.e the )alue of a firm.
Answer: A Page: 3!0 Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
/0. To ensure that the owners of target firms appropriate whate)er )alue is created ' a
merger or acquisition" managers in these target firms should
A. create a thinl traded mar(et for their firm.
=. see( information from 'idders.
C. close the acquisition deal quic(l.
7. limit the num'er of 'idders in)ol)ed in the 'idding competition.
Answer: = Page: 33! Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
13!
Chapter 10: Mergers and Acquisitions
/1. <<<<<<<< is 9are: a maneu)er in which a target firm%s management purchases an
of the target firm%s stoc( owned ' a 'idder" and does so for a price that is greater
than the current mar(et )alue of that stoc(.
A. 5tandstill agreements
=. 1oison pills
C. 5har( repellents
7. Ereenmail
Answer: 7 Page: 333 Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
/!. Firms using <<<<<<<< fend off an acquisition ' ta(ing o)er the firm or firms
'idding for them.
A. shar( repellents
=. a crown >ewel sale
C. the 1ac Man defense
7. a golden parachute
Answer: C Page: 33* Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
/3. A <<<<<<<< is a compensation arrangement 'etween a firm and its senior
management team that promises these indi)iduals su'stantial cash pament if their
firm is acquired and the lose their >o's in the process.
A. white (night agreement
=. greenmail agreement
C. shar( repellent
7. golden parachute
Answer: 7 Page: 33# Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
/*. Mergers and acquisitions used to create di)ersification strategies should 'e
managed through the
A. M-form structure.
=. functional structure.
C. 4-form structure.
7. Matri6 structure.
Answer: A Page: 33, Dii!"#$%: Moderate C&a'$er O()e!$i*e: /
/#. The most significant challenge in integrating 'idding and target firms has to do
with
A. accounting differences.
=. cultural differences.
C. operational differences.
7. logistic differences.
Answer: = Page: 33/ Dii!"#$%: Moderate C&a'$er O()e!$i*e: /
133
1art +++
/,. A9n: <<<<<<<<<< firm has emploees that ma(e quic( decisions on their own
while the <<<<<<<<<<<< firm has emploees who consult with others 'efore
ma(ing decisions.
A. collecti)isticD indi)idualistic
=. power respectD power tolerance
C. indi)idualisticD collecti)istic
7. power toleranceD power respect
Answer: C Page: 333 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 0
//. Emploees in <<<<<<<<<< firms are deferential to senior managers while
emploees in <<<<<<<<<< ma or ma not 'e deferential depending on how
effecti)e senior managers ha)e 'een in the past.
A. power respectD power tolerance
=. indi)idualisticD collecti)istic
C. power toleranceD power respect
7. collecti)isticD indi)idualistic
Answer: A Page: 333 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 0
/0. &hich cultural dimension refers to an indi)idual%s emotional response to new
opportunitiesA
A. 5ocial orientation
=. 1ower orientation
C. Eoal orientation
7. 4ncertaint orientation
Answer: 7 Page: 333 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 0
/3. Emploees in <<<<<<<<<<<<< firms are willing to wor( long hours to accomplish
o'>ecti)es while emploees in <<<<<<<<<<<<<< will lea)e when wor( 'egins to
interfere with their qualit of life.
A. uncertaint accepting firmsD uncertaint a)oiding firms
=. aggressi)e goal 'eha)iorD passi)e goal 'eha)ior
C. uncertaint a)oiding firmsD uncertaint accepting firms
7. passi)e goal 'eha)iorD aggressi)e goal 'eha)ior
Answer: = Page: 333 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 0
00. Emploees in <<<<<<<< firms focus on the 'enefits of hard wor( while emploees
in <<<<<<<<<<< firms focus on the 'enefits of traditional was of doing things.
A. short-term outloo(D long-term outloo(
=. aggressi)e goal 'eha)iorD passi)e goal 'eha)ior
C. long-term outloo(D short-term outloo(
7. passi)e goal 'eha)iorD aggressi)e goal 'eha)ior
Answer: C Page: 333 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 0
13*
Chapter 10: Mergers and Acquisitions
1FE is a leading consumer goods compan in the 4nited 5tates that has grown its 'usiness
through a com'ination of international growth" alliances" acquisitions and mergers. +n !003"
1FE acquired the 'eaut care compan &ella to acquire products that would complement its
current product. +n !00* 1FE acquired AE-8utchison Gtd to esta'lish a stronger presence in the
Chinese consumer goods products mar(et. +n !00# the consumer goods compan 1FE acquired
Eillette" another consumer goods compan in a deal worth appro6imatel 2#/ 'illion dollars.
01. +f 1FE%s 'id for Eillette was in)ited ' Eillette%s management this would 'e an
e6ample of a
A. hostile acquisition.
=. >oint )enture.
C. friendl acquisition.
7. merger.
Answer: C Page: 311 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
0!. +f Eillette%s total mar(et )alue on the da the deal was announced was 2*0.30
'illion" 1FE%s 2#/ 'illion offer would represent a9n:
A. 10$ acquisition premium.
=. 0!$ acquisition discount.
C. 0!$ acquisition premium.
7. 10$ acquisition discount.
Answer: A Page: 311 Dii!"#$%: 8ard C&a'$er O()e!$i*e: 1
03. 5ince 'oth 1FE and Eillette are 'oth consumer products firms this acquisition is
'est descri'ed as a
A. )ertical merger.
=. hori.ontal merger.
C. mar(et e6tension merger.
7. conglomerate merger.
Answer: = Page: 31* Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
0*. 1FE%s acquisition of &ella in !003 is an e6ample of a
A. mar(et e6tension merger.
=. conglomerate merger.
C. )ertical merger.
7. product e6tension merger.
Answer: 7 Page: 31# Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
0#. 1FE%s purchase of AE-8utchison Gtd in !00* is an e6ample of a
A. conglomerate merger.
=. )ertical merger.
C. mar(et e6tension merger.
7. conglomerate acquisition.
Answer: C Page: 31# Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
13#
1art +++
0,. +f one of the reasons 1FE acquired Eillette was to gain greater mar(et power in
(e industries this would 'e an e6ample of <<<<<<<<<<< economies.
A. technical
=. pecuniar
C. di)ersification
7. )ertical
Answer: = Page: 31, Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
0/. +f 1FE wanted to increase the pro'a'ilit that it would 'e a'le to earn superior
economic performance from its acquisition of Eillette" 1FE should
A. share information a'out Eillette with other potential 'idders.
=. share information a'out strategic fit potential 'etween 1FE and Eillette with
Eillette.
C. wait to su'mit its 'id for Eillette until there are multiple interested 'idders.
7. close the acquisition deal as quic(l as possi'le.
Answer: 7 Page: 3!, Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
00. +f Eillette%s managers wanted to ma6imi.e the )alue that Eillette recei)ed from its
acquisition ' 1FE the should
A. see( information from 1FE a'out the )alue that 1FE will recei)e from its
acquisition of Eillette.
=. not engage in negotiations with an 'idder 'ut 1FE.
C. close the acquisition as quic(l as possi'le.
7. stop the acquisition.
Answer: A Page: 33! Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
03. +f 1FE%s acquisition of &ella had 'een delaed 'ecause it had to o)ercome a
stipulation in &ella%s corporate 'laws requiring that more than #0$ of &ella%s
'oard of directors had to appro)e the ta(eo)er" this would 'e an e6ample of
A. the 1ac Man defense.
=. a poison pill.
C. greenmail.
7. a shar( repellent.
Answer: 7 Page: 33* Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
30. The most significant challenge 1FE is li(el to face in integrating each if the
acquired companies into 1FE%s operations are li(el to 'e <<<<<<<<<< differences
'etween 1FE and each of the companies.
A. logistical
=. cultural
C. operational
7. distri'ution
Answer: = Page: 33/ Dii!"#$%: Moderate C&a'$er O()e!$i*e: /
13,
Chapter 10: Mergers and Acquisitions
ESSA+ QUESTIONS
,1- Dis!"ss $&e .ieren!es (e$ween /ergers an. a!0"isi$i1ns an. .ieren$ia$e (e$ween
rien.#% an. "nrien.#% a!0"isi$i1ns-
A firm engages in an acquisition when it purchases a second firm. An acquiring firm can use
cash it has generated from its ongoing 'usinesses to purchase a target firm" it can go into de't
to purchase a target firm" it can use its own equit to purchase a target firm" or it can use a mi6
of these mechanisms to purchase a target firm. Also" an acquiring firm can purchase all of a
target firmHs assets" it can purchase a ma>orit of those assets 9greater than #1$:" or it can
purchase a controlling share of those assets 9i.e." enough assets so that the acquiring firm is
a'le to ma(e all the management and strategic decisions in the target firm:. Acquisitions can
'e friendl 9when the management of the target firm wants to 'e acquired: or unfriendl 9when
the management of the target firm does not want to 'e acquired:. 5ome unfriendl acquisitions
are also (nown as hostile ta(eo)ers. &hen the assets of two similar si.ed firms are com'ined"
this transaction is called a merger.

Page: 311 Dii!"#$%: Moderate C&a'$er O()e!$i*e: 1
,2- I $&ere are 3 (i..ers 4ea!& 1 w&i!& &as a !"rren$ /ar5e$ *a#"e 1 630700087 in$eres$e.
in a $arge$ ir/ $&a$ &as n1 s$ra$egi! re#a$e.ness wi$& an% 1 $&e (i..ing ir/s an. &as a
!"rren$ /ar5e$ *a#"e 1 62370007 i.en$i% $&e e!1n1/i! 'r1i$s $&a$ wi## (e earne. (%
(1$& $&e (i..ing ir/9s e0"i$% &1#.ers an. $&e $arge$ ir/9s e0"i$% &1#.ers an. .is!"ss
$&is !ase-
The economic )alue created for 'oth the target firm and the 'idding firm will 'e .ero. The
)alue for the 'idding firm will 'e .ero 'ecause the )alue of an one of the 'idding firms
when com'ined with the target firm e6actl equals the sum of the )alue of these firms as
separate entities. The price of this acquisition will quic(l rise to 2!#"000 'ecause an 'id
less than 2!#"000 will generate economic profits for a successful 'idder which will" in turn"
generate entr into a 'idding war for a target. Therefore the price will quic(l rise to its
)alue" and economic profits will not 'e created. Alternatel the target firm%s equit holders
will also gain .ero economic profits since the mar(et )alue of the target firm has not 'een
increased it has onl 'een capitali.ed in the form of a cash pament from the 'idder to the
target. The target was worth 2!#"000 and that is e6actl what these equit holders will
recei)e.
Page: 313 Dii!"#$%: 8ard C&a'$er O()e!$i*e: !
,:- I.en$i%7 an. .ieren$ia$e (e$ween $&e i*e .ieren$ FTC !a$eg1ries 1 /ergers an.
a!0"isi$i1ns-
The fi)e different FTC categories of mergers and acquisitions include )ertical mergers"
hori.ontal merger" product e6tension merger" mar(et e6tension merger" and conglomerate
merger. A )ertical merger occurs when a firm acquires former suppliers or customers. +n a
hori.ontal merger a firm acquires a former competitor. A product e6tension merger occurs
when a firm gains access to complementar products through an acquisition. +n a mar(et
e6tension merger a firm gains access to complementar mar(ets though an acquisition.
13/
1art +++
Finall in a conglomerate merger there is no strategic relatedness 'etween a 'idding firm and
a target firm.
Page: 31*-31# Dii!"#$%: Moderate C&a'$er O()e!$i*e: 3
,;- I.en$i% $&e $&ree '1$en$ia# s1"r!es 1 s$ra$egi! re#a$e.ness (e$ween (i..ing an. $arge$
ir/s $&a$ were .e$ai#e. (% L"(a$5in in 1,<: an. $&e 1"r genera# reas1ns w&% (i..ing
ir/s /ig&$ wan$ $1 engage in /erger an. a!0"isi$i1ns as .e$ai#e. (% =ensen an.
R"(a!5 in 1,<:-
The three potential sources of strategic relatedness 'etween 'idding and target firms that
Gu'at(in identified in 1303 include:
Technical economies which are scale economies that occur when the phsical
processes inside a firm are altered so that the same amounts of input produce a higher
quantit of outputs.
1ecuniar economies that are achie)ed ' the a'ilit of firms to dictate prices '
e6erting mar(et power.
7i)ersification economies that are achie)ed ' impro)ing a firm%s performance
relati)e to its ris( attri'utes or lowering its ris( attri'utes to its performance.
The four general reasons that 'idding firms might want to engage in merger and acquisitions
as detailed ' Bensen and Cu'ac( in 1303 include:
To reduce production or distri'ution costs.
To pursue financial moti)ations such as gaining access to underutili.ed ta6 shields"
a)oiding 'an(ruptc costs" to increase le)erage opportunities" and to gain other ta6
ad)antages.
To gain mar(et power in product mar(ets.
To eliminate inefficient target management.
Page: 31, Dii!"#$%: 8ard C&a'$er O()e!$i*e: 3
,3- I $&ere is 1ne $arge$ ir/ wi$& a !"rren$ /ar5e$ *a#"e 1 6207000 as a s$an.>a#1ne
en$i$%7 an. i*e (i..ing ir/s7 ea!& 1 w&i!& &as a !"rren$ /ar5e$ *a#"e 1 6:07000 as a
s$an.>a#1ne en$i$% an. $&e *a#"e 1 $&e $arge$ ir/s an. an% 1 $&e (i..ing ir/s
!1/(ine. is 6?070007 es$i/a$e 'ri!e $&e (i..ing ir/s w1"#. (e wi##ing $1 'a% 1r $&e
$arge$ ir/ an. $&e re$"rn $1 s$1!5&1#.ers 1 (i..ing an. $arge$ ir/s w&en $&ere is
s$ra$egi! re#a$e.ness (e$ween ir/s-
+f 'idding and target firms are strategicall related" then the economic )alue of these two firms
com'ined is greater than the economic )alue of these two firms as separate entities. The
mar(et )alue of the target firm as a stand-alone entit is 2!0"000" and the mar(et )alue of the
'idding firms as stand-alone entities is 230"000. The )alue of an of the 'idding firms and the
target com'ined is 2,0"000. =idding firms will 'e willing to pa a price for a target up to the
)alue that a target firm adds once it is acquired. Thus" the ma6imum price 'idding firms are
willing to pa is still the difference 'etween the )alue of the com'ined entit 9here" 2,0"000:
and the )alue of a 'idding firm on its own 9here" 230"000:.
130
Chapter 10: Mergers and Acquisitions
The price for actuall acquiring the target firm in this scenario will rapidl rise to 230"000
'ecause an 'id less than 230"000 has the potential for generating profits for a 'idding firm. At
this 230"000 price" the successful 'idding firm earns .ero economic profits. After all" this firm
has acquired an asset that will generate 230"000 of )alue and has paid 230"000 to do so.
8owe)er" the owners of the target firm will earn an economic profit worth 210"000. As a
stand-alone firm" the target is worth 2!0"000D when com'ined with a 'idding firm" it is worth
230"000. The difference 'etween the )alue of the target as a stand-alone entit and its )alue in
com'ination with a 'idding firm is the )alue of the economic profit 9210"000: that can 'e
appropriated ' the owners of the target firm.
Thus the e6istence of strategic relatedness 'etween 'idding and target firms is not a sufficient
condition for the equit holders of 'idding firms to earn economic profits from their
acquisition strategies. +f the economic potential of acquiring a particular target firm is widel
(nown and if se)eral potential 'idding firms can all o'tain this )alue ' acquiring a target" the
equit holders of 'idding firms will" at 'est" earn onl .ero economic profits from
implementing an acquisition strateg. +n this setting" a Istrategicall relatedJ merger or
acquisition will create economic )alue" 'ut this )alue will 'e distri'uted in the form of
economic profits to the equit holders of acquired target firms.
Page: 31/ Dii!"#$%: 8ard C&a'$er O()e!$i*e: *
,?- Des!ri(e an. .is!"ss i*e reas1ns w&% (i..ing ir/s /ig&$ s$i## engage in a!0"isi$i1ns
e*en i7 1n a*erage7 $&e% .1 n1$ !rea$e *a#"e 1r a (i..ing ir/9s s$1!5&1#.ers-
The fi)e possi'le moti)ations to engage in mergers and acquisitions e)en though the do not
generate profits for 'idding firms include to ensure sur)i)al" to in)est free cash flow" agenc
pro'lems" managerial hu'ris" and the potential for a'o)e-normal profits.
T1 ens"re s"r*i*a#- E)en if mergers and acquisitions" on a)erage" generate onl .ero
economic profits for 'idding firms" it ma 'e necessar for 'idding firms to engage in these
acti)ities" to ensure their sur)i)al. +n particular" if all of a 'idding firmHs competitors ha)e
'een a'le to impro)e their efficienc and effecti)eness through a particular tpe of
acquisition" then failing to ma(e such an acquisition ma put a firm at a competiti)e
disad)antage. 8ere" the purpose of a merger or acquisition is not to gain competiti)e
ad)antages 'ut rather to gain competiti)e parit.
T1 in*es$ ree !as& #1w- Free cash flow is simpl the amount of cash a firm has to in)est
after all positi)e net present-)alue in)estments in a firmHs ongoing 'usinesses ha)e 'een
funded. Free cash flow is created when a firmHs ongoing 'usiness operations are )er
profita'le 'ut offer few opportunities for additional in)estment. +n this conte6t" merger and
acquisition strategies are a )ia'le option" for 'idding firms" on a)erage" can e6pect to generate
at least competiti)e parit. 1ut differentl" while mergers and acquisitions ma not 'e a source
of superior profits" there are worse things ou could do with our free cash flow.
Agen!% 'r1(#e/s- Another reason wh firms might continue to engage in mergers and
acquisitions" despite earning onl competiti)e parit from doing so" is that mergers and
acquisitions 'enefit managers directl" independent of an )alue the ma or ma not create
133
1art +++
for a 'idding firmHs stoc(holders. Merger and acquisition strategies can 'enefit managersK
e)en if the do not directl 'enefit a 'idding firmHs equit holdersKin at least two was. First"
managers can use mergers and acquisitions to help di)ersif their human capital in)estments in
their firm. 5econd" managers can use mergers and acquisitions to quic(l increase firm si.e"
measured in either sales or assets. +f management compensation is closel lin(ed to firm si.e"
managers who increase firm si.e are a'le to increase their compensation.
Manageria# &"(ris- Managers can fall )ictim to managerial hu'ris or the unrealistic 'elief"
held ' managers in 'idding firms" that the can manage the assets of a target firm more
efficientl than can the target firmHs current management. This notion can lead 'idding firms
to engage in acquisition strategies e)en though there ma not 'e positi)e economic profits
from doing so.
T&e '1$en$ia# 1r a(1*e>n1r/a# 'r1i$s. A final reason wh managers might continue to
pursue merger and acquisition strategies is the potential that these strategies offer for
generating profits for at least some 'idding firms. The empirical research on returns to 'idding
firms in mergers and acquisitions is )er strong. ;n a)erage" 'idding firms do not gain profits
from their merger and acquisition strategies. 8owe)er" >ust 'ecause 'idding firms" on average,
do not earn profits on these strategies does not mean that all 'idding firms will alwas fail to
earn profits. +n some situations 'idding firms ma 'e a'le to gain competiti)e ad)antages from
merger and acquisition acti)ities.
Pages: 313-3!3 Dii!"#$%: Moderate C&a'$er O()e!$i*e: #
,@- I.en$i% an. .is!"ss siA r"#es $&a$ ir/s (i..ing 1n a $arge$ ir/ in an a!0"isi$i1n
s&1"#. 1##1w $1 in!rease $&e '1ssi(i#i$% $&a$ an a!0"isi$i1n s$ra$eg% wi## earn s"'eri1r
'er1r/an!e-
+n pursuing an acquisition there are si6 rules that firms 'idding on a target firm should follow
to increase the possi'ilit that the target firm will earn superior performance. These rules
include:
Sear!& 1r *a#"a(#e an. rare e!1n1/ies 1 s!1'e- =idding firms should see( to
acquire targets with which the en>o )alua'le and rare lin(ages. ;perationall" the
search for rare economies of scope suggests that managers in 'idding firms need to
consider not onl the )alue of a target firm when com'ined with their own compan"
'ut also the )alue of a target firm when com'ined with other potential 'idders. This is
important 'ecause it is the difference 'etween the )alue of a particular 'idding firmHs
relationship with a target and the )alue of other 'idding firmsH relationships with that
target that defines the si.e of the potential economic profits from an acquisition.
Bee' in1r/a$i1n awa% r1/ (i..ers- ;ne of the (es to earning superior
performance in an acquisition strateg is to a)oid multiple 'idders for a single target.
;ne wa to accomplish this is to (eep information a'out the 'idding process" and
a'out the sources of economies of scope 'etween a 'idder and target that underlie this
'idding process" as pri)ate as possi'le.
Bee' in1r/a$i1n awa% r1/ $arge$s- 4nless it is illegal to do so" 'idding firms
must not full re)eal the )alue of their economies of scope with a target firm.
!00
Chapter 10: Mergers and Acquisitions
A*1i. winning (i..ing wars- +f a num'er of firms 'id for the same target" the
pro'a'ilit that the firm that successfull acquires the target will gain competiti)e
ad)antages is )er low. Therefore it is to a 'idding firm%s ad)antage to a)oid a
'idding war.
C#1se $&e .ea# 0"i!5#%- All the economic processes that ma(e it difficult for 'idding
firms to earn economic profits from acquiring a strategicall related target ta(e time
to unfold. +t ta(es time for other 'idders to 'ecome aware of the economic )alue
associated with acquiring a targetD it ta(es time for the target to recruit other 'iddersD
information lea(age 'ecomes more of a pro'lem o)er timeD and so forth. A 'idding
firm that 'egins and ends the 'idding process quic(l ma forestall some of these
processes and there' retain some superior performance for itself from an
acquisition.
O'era$e in $&in#% $ra.e. a!0"isi$i1ns /ar5e$s- A thinl traded mar(et is a mar(et
where there are onl a small num'er of 'uers and sellers" where information a'out
opportunities in this mar(et are not widel (nown" and where interests 'esides purel
ma6imi.ing the )alue of a firm can 'e important. +n the conte6t of mergers and
acquisitions" thinl traded mar(ets are mar(ets where onl a few 9often onl one:
firms are implementing acquisition strategies. These unique firms ma 'e the onl
firms that understand the full )alue of the acquisition opportunities in this mar(et.
E)en target firm managers ma not full understand the )alue of the economic
opportunities in these mar(ets" and e)en if the do" the ma ha)e other interests
'esides ma6imi.ing the )alue of their firm if it 'ecomes the o'>ect of a ta(eo)er.
Pages: 3!,-3!3 Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
30. I.en$i% an. .is!"ss $&e $&ree r"#es $&a$ $arge$ ir/ /anagers s&1"#. 1##1w $1
/aAi/iCe $&e 'r1(a(i#i$% 1 earning e!1n1/i! 'r1i$s r1/ $&eir /erger an. a!0"isi$i1n
s$ra$egies-
The three rules that managers of target firms should follow to ma6imi.e the pro'a'ilit of
earning economic profits from their merger and acquisition strategies include:
See5 in1r/a$i1n r1/ (i..ers- Target firms must inform themsel)es a'out the
resources and capa'ilities of current and potential 'idders. +n this wa" target firms can
'ecome full aware of the )alue that the hold for 'idders" and the are more li(el to
'e a'le to e6tract this full )alue in the acquisition process.
In*i$e 1$&er (i..ers $1 )1in $&e (i..ing !1/'e$i$i1n- ;nce a target firm is full
aware of the nature and )alue of the economies of scope that e6ist 'etween it and
current 'idding firms" it can e6ploit this information ' see(ing other firms that ma
ha)e the same relationship with it and then informing these firms of a potential
acquisition opportunit. = in)iting other firms into the 'idding process" the target
firm increases the competiti)eness of the mar(et for corporate control" there'
increasing the pro'a'ilit that the )alue ' an acquisition will 'e full captured ' the
target firm.
De#a% ("$ .1 n1$ s$1' $&e a!0"isi$i1n- To increase the pro'a'ilit of recei)ing more
than one 'id" target firms ha)e a strong incenti)e to dela an acquisition. The
o'>ecti)e" howe)er" should 'e to dela an acquisition to create a more competiti)e
mar(et for corporate control" not to stop an acquisition.
!01
1art +++
Page: 33! Dii!"#$%: Moderate C&a'$er O()e!$i*e: ,
33. Des!ri(e $&ree /a)1r !&a##enges $&a$ ir/s in$egra$ing a!0"isi$i1ns are #i5e#% $1 a!e-
Although" in general" organi.ing to implement merger and acquisition strategies can 'e seen as
a special case of organi.ing to implement corporate di)ersification strategies or )ertical
integration strategies" implementing merger and acquisition strategies can create special
pro'lems. Most of these pro'lems reflect the fact that operational" functional" strategic" and
cultural differences 'etween 'idding and target firms in)ol)ed in a merger or acquisition are
li(el to 'e much greater than these same differences 'etween the different parts of a
di)ersified or )erticall integrated 'usiness that was not created through acquisition. The
reason for this difference is that the firms in)ol)ed in a merger or acquisition ha)e had a
separate e6istence" separate histories" separate management philosophies" and separate
strategies.
;ne of the most significant challenges in integrating 'idding and target firms has to do with
cultural differences. 5impl 'ecause a firm has 'een acquired does not mean that the culture in
that firm will rapidl change to 'ecome more li(e the culture of the 'idding firm. +ndeed"
cultural conflicts can last for )er long periods of time. +ndeed" the difference 'etween the
relati)e success of CenaultHs acquisition of Lissan and 7aimler-ChrslerHs acquisition of
Mitsu'ishiKdiscussed in the opening case of this chapterKhas largel 'een attri'uted to the
ina'ilit of Mitsu'ishi to modif its traditional management culture.
;perational" functional" strategic" and cultural differences 'etween 'idding and target firms can
all 'e compounded ' the merger and acquisition processKespeciall if that process was
unfriendl. 4nfriendl ta(eo)ers can generate in target firm management anger and animosit
toward the management of the 'idding firm. Cesearch has shown that top management
turno)er is much higher in firms that ha)e 'een ta(en o)er compared to firms not su'>ect to
ta(eo)ers" reflecting one approach to resol)ing these management conflicts.
The difficulties often associated with organi.ing to implement a merger and acquisition
strateg can 'e thought of as an additional cost of the acquisition process. =idding firms" in
addition to estimating the )alue of the strategic relatedness 'etween themsel)es and a target
firm" also need to estimate the cost of organi.ing to implement an acquisition. The )alue that a
target firm 'rings to a 'idding firm through an acquisition should 'e discounted ' the cost of
organi.ing to implement this strateg. +n some circumstances" it ma 'e the case that the cost
of organi.ing to reali.e the )alue of strategic relatedness 'etween a 'idding firm and a target
ma 'e greater than the )alue of that strategic relatedness" in which case the acquisition should
not occur. For this reason" man o'ser)ers argue that potential economies of scope 'etween
'idding and target firms are often not full reali.ed.
Pages: 33,-330 Dii!"#$%: Moderate C&a'$er O()e!$i*e: /
!0!
Chapter 10: Mergers and Acquisitions
100. Dis!"ss "ni0"e !&a##enges $1 /erger an. a!0"isi$i1n s$ra$egies in an in$erna$i1na#
!1n$eA$ an. i.en$i% $&e i*e .i/ensi1ns 1 !"#$"re-
+ntegrating acquired or merged firms in an international conte6t is often confounded ' the
need to disco)er how different countr cultures can wor( together. The most influential stud
of cultures around the world" ' Eeert 8ofstede" suggests that cultures can 'e descri'ed as
)aring along the fi)e dimensions including social orientation 9+ndi)idualism to Collecti)ism:"
power orientation 91ower Cespect to 1ower Tolerance:" 4ncertaint ;rientation 94ncertaint
Acceptance to 4ncertaint A)oidance:" goal orientation 9Aggressi)e Eoal =eha)ior to 1assi)e
Eoal =eha)ior: and time orientation 9Gong-Term ;utloo( to 5hort-Term ;utloo(:. 7ifferences
along each of these dimensions create potential challenges when integrating acquisitions
conducted across countr and cultural 'orders. These differences are rarel eas to resol)e.
Pages: 330-3*0 Dii!"#$%: Eas C&a'$er O()e!$i*e: 0
!03