BASICS
READING
Types of Mergers
Real Life Mergers
Real Life Mergers
100
What do the letters M&A stand for in business?
M&A stands for mergers and acquisitions.
100
In what year did Amazon acquire Whole Foods?
Amazon acquired Whole Foods in 2017.
100
What is a vertical merger?
A vertical merger occurs when companies at different stages of the same supply chain combine.
100
Exxon and Mobil were both major companies in the oil industry. What type of merger was this?
This was a horizontal merger.
200
What type of M&A transaction occurs when one company purchases most or all of another company's shares in order to gain control of it?
This is an acquisition.
200
A company uses defined processes, a clear hierarchy, strict guidelines, and constant performance measurement. According to the reading, what type of corporate culture does this describe?
This describes a tight corporate culture.
200
What is a conglomerate merger?
A conglomerate merger occurs when companies from substantially different industries or business areas combine.
200
LAN and TAM were both airlines that combined to create LATAM Airlines. What type of merger was this?
This was a horizontal merger.
300
What is the business term for a transaction in which two companies agree to combine and operate as one organization, rather than one company purchasing control of the other?
This is a merger.
300
In the management approach called Tight–Loose–Tight, what should be tight, what should be loose, and what should be tight again?
Purpose and goals should be tight, execution should be loose, and results and accountability should be tight.
300
What is a joint venture?
A joint venture is a business arrangement in which two or more companies collaborate on a specific project or business activity while remaining independent companies.
300
Itaú operated in Brazil and CorpBanca operated in Chile. Both companies were banks, and their combination created Itaú CorpBanca. What type of merger was this?
This was a market-extension merger.
300
Procter & Gamble produced products such as shampoo and toothpaste, while Gillette produced razors and shaving products. The companies offered different but related products to overlapping consumers. According to the merger classification used in this course, what type of merger does this example represent?
This represents a product-extension merger. Because the companies offered different but related products to the same or overlapping market.
400
Two direct competitors in the same industry combine. Their goals include increasing market share, reducing competition, and achieving economies of scale. What type of merger is this?
This is a horizontal merger.
400
A company that gives employees considerable autonomy in decision-making has a:
Loose corporate culture.
400
Company A and Company B create a new project together, but both companies remain independent and continue operating separately. What type of business arrangement is this?
This is a joint venture.
400
In 1977, PepsiCo acquired Pizza Hut. PepsiCo sold beverages, while Pizza Hut sold food. The products were different but complementary and could be consumed together. According to the merger classification used in this course, what type of merger does this example represent?
This represents a product-extension merger.
400
Philip Morris was primarily a tobacco company, while Kraft was a food company. When Philip Morris acquired Kraft, the two companies operated in substantially different industries. What type of merger does this example represent?
Conglomerate merger.
Because the companies operated in substantially different industries and were not direct competitors or part of the same supply chain.
500
Amazon had a tight culture, while Whole Foods had a loose culture. The two companies experienced difficulties after the acquisition. According to the reading, what did the companies fail to investigate before the acquisition?
They failed to investigate their cultural compatibility.
500
Company A manufactures smartphones. Company B manufactures headphones. They serve the same broad consumer market, but they do not compete directly and neither company supplies the other. They decide to combine their businesses. According to the merger classification used in this course, what type of merger is this?
This is a product-extension merger.
500
rupo Aval has expanded through acquisitions and mergers into banking, pensions, investment banking, and other financial services. According to the classification used in this course, what type of conglomerate does Grupo Aval represent?
Grupo Aval represents a mixed conglomerate.
500
In 2008, Colombian oil company Ecopetrol acquired Propilco, a major polypropylene producer and supplier. The acquisition connected Ecopetrol's refining operations with another stage of the petrochemical value chain. According to the merger classification used in this course, what type of merger does this example represent?
This represents a vertical merger.
Because the companies operated at different stages of the same value chain.