The Risk of Failure of an Acquisition Can Be Reduced

question 90

Multiple Choice

The risk of failure of an acquisition can be reduced by

• A) undervaluing the assets of an acquired firm.
• B) ensuring that firms are acquired in the home country.
• C) replacing high-level managers of an acquired firm.
• D) a detailed auditing of operations, financial position, and management culture.
• E) investing only in a firm that is managing to break even.

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Definitions:

Differentiated Products

Goods or services that are distinguished from similar products by characteristics like quality, design, and features.

Standardized Products

Goods that are made to specific standards to ensure consistency and uniformity, facilitating mass production and interchangeability across different brands or producers.

Homogeneous Oligopolists

A market structure where a few firms offer products or services that are similar in nature and hence are close substitutes for each other.

Differentiated Oligopolists

Firms within an oligopoly market structure that sell products or services that are distinguishable from each other through branding, quality, or other features.