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Summer-2013
Master of
Business Administration- MBA Semester 4
MF0011–Mergers
and Acquisitions-4 Credits
(Book ID:
1759)
Assignment
(60 Marks)
Note: Answer
all questions (with 300 to 400 words each) must be written within 6-8 pages.
Each Question carries 10 marks 6 X 10=60
Q1. Write the types of mergers and
acquisitions. Explain the steps to a successful merger.
Answer. There are five commonly-referred to
types of business combinations known as mergers:
1. Conglomerate
A merger
between firms that are involved in totally unrelated business activities. There
are two types of conglomerate mergers: pure and mixed.
2. Horizontal Merger
A merger
occurring between companies in the same industry. Horizontal merger is a
business consolidation that occurs between firms who operate in the same space,
often as competitors offering the same good or service.
Q2. Explain the process of merger.
Write down the goals of a merger.
Answer. Steps in a Merger Process:-
1. Planning, which is the most complex part of the
merger process, entails the analysis, the action plan, and the negotiations
between the parties involved. More in detail, the planning stage also includes:
Ø Signing of the letter of intent which
starts off the negotiations;
Ø The appointing of advisors who play
the role of consultants, examining the strengths, weaknesses, opportunities,
and threats of the merger;
Ø Expert report on the consistency of
the share exchange ratio, for all of the companies involved.
Q3. What is creating synergy? Explain
the prerequisites for the creation of synergy.
Answer. Teamwork problems are inevitable
because every individual that comprises a team has different ways of doing one
thing. A Team Peak performance can be achieved if every team member knows their
roles and responsibilities, takes upon them what is their share of the load,
works at their best and furthermore collaboratively sees the whole process
through to completion. I’d like to share with you the basic fundamentals in
creating a positive Synergy:
1. SHARED
VISION, VALUES & GOALS.
2. GOOD
LEADERSHIP & FOLLOWERSHIP.
Q4. Give the meaning of Divesture.
List and explain the reasons for divesture.(Meaning of divesture 2marks;
Listing of reasons for divesture 3marks; Explanation of reasons for divesture
5marks)10 marks
Answer. For a business, divestiture is the
removal of assets from the books. Businesses divest by the selling of ownership
stakes, the closure of subsidiaries, the bankruptcy of divisions, and so on. In
personal finance, investors selling shares of a business can be said to be
divesting their interests in the company being sold.
The partial
or full disposal of an investment or asset through sale, exchange, closure or
bankruptcy. Divestiture can be done
slowly and systematically over a long period of time, or in large lots over a
short time period.
Q5.Explain the key rules of Employee
Stock Ownership Plans. Discuss the two types of ESOPs.
Answer. Key Rules:-
1. Vesting:-
This
discussion refers to "vested benefits," a concept that is unfamiliar
to some ESOP participants. Vesting refers to the amount of time an employee
must work before acquiring a non-forfeitable entitlement to his or her benefit.
Employees who leave the company before being fully vested will forfeit their
benefits to the extent they are not vested in them. An ESOP must comply with
one of the following two minimum schedules for vesting (plans may provide
different standards if they are more generous to participants):
Q6.Explain the following with examples:
Exchange rates, External advantages
in different products, Role of government policies.
Answer. Exchange rates
An exchange
rate between two currencies is the rate at which one currency will be exchanged
for another. It is also regarded as the value of one country’s currency in
terms of another currency. In the retail currency exchange market, a different
buying rate and selling rate will be quoted by money dealers. Most trades are
to or from the local currency. For
example, an interbank exchange rate of 91 Japanese yen (JPY, ¥) to the
United States dollar (US$) means that ¥91 will be exchanged for each US$1 or
that US$1 will be exchanged for each ¥91.
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