Obtaining Technology: Evaluation and Control

MULTIPLE CHOICE

     1.   It is expected that efforts to obtain technology will ____ in the future.

a.
Increase
b.
Stay the same
c.
Decrease
d.
Not be predictable
e.
Be less than internal development

ANS:  A                    PTS:   1

     2.   It is estimated the effort to obtain technology is responsible for ____ percent of that out of all mergers and acquisitions.

a.
15
b.
35
c.
55
d.
70
e.
90

ANS:  D                    PTS:   1

     3.   It is estimated that ____ percent of alliances/acquisitions fail to meet the expected goals.

a.
25
b.
45
c.
60
d.
75
e.
90

ANS:  C                    PTS:   1

     4.   The key evaluation and control questions that should be addressed during the planning stages of external obtaining of technology include:

a.
What do we do now and what can we do later?
b.
Are we reaching our goals and where do we make adjustments?
c.
What do we do later and where do we make adjustments?
d.
What do we need in a partner and what are our competitors doing?
e.
What do we do now and what are our competitors doing?

ANS:  D                    PTS:   1

     5.   The five places that evaluation and control occurs in a firm include all of the following except:

a.
Examining alliance/acquisition capabilities of the firm
b.
Performing due diligence prior to obtaining the technology
c.
Negotiating the deal
d.
The integration with the acquiring firm position in dominant position
e.
On going evaluation and control

ANS:  D                    PTS:   1

     6.   The conditions encouraging acquisitions would include all of the following except:

a.
More proprietary resources are available and needed
b.
Synergies are networked or reciprocal
c.
Ownership is needed to guarantee control
d.
Market uncertainty is either very low or very risky
e.
Resources are scare from competition

ANS:  D                    PTS:   1

     7.   The conditions that encourage alliances would include all of the following except:

a.
Less proprietary are available or are needed
b.
The synergies are networked or reciprocal
c.
The competitive environment is less intense
d.
The resources are available for competitive
e.
There is a history of success with alliances

ANS:  B                    PTS:   1

     8.   The value of using a checklist for due diligence purposes is based on:

a.
It forms the basis of implementation plans and progress checkpoints during integration
b.
It gives a task list where responsibility and authority can be tracked
c.
It makes the acquisition process easier
d.
There is no added value in having a checklist
e.
It gives people something to focus on besides losing their jobs

ANS:  A                    PTS:   1

     9.   The five nonfinancial factors that need special attention to determine if the managerial factors are in place in a potential takeover target include all of the following except:

a.
The value creation potential
b.
The assessment of the portfolio of technologies
c.
Business divestment
d.
Value of the technology assets
e.
Support of innovation practices

ANS:  C                    PTS:   1

   10.   Due diligence must be well planned and executed to help the organization maintain:

a.
Value and objectivity
b.
Timeliness and the ability to gain competitive advantage
c.
Innovative practices and objectivity
d.
The upside of external activity and value
e.
Forward thinking and value

ANS:  B                    PTS:   1

   11.   The key characteristics of a due diligence checklist include all of the following except:

a.
Clarity of objectives
b.
Comparisons
c.
Competitive understanding
d.
Generalizable to multiple settings
e.
Continuity

ANS:  D                    PTS:   1

   12.   In examining IT issues in a potential alliance/merger the personnel issues that should be examined include all of the following except:

a.
Attrition rates
b.
Number of consulting contracts
c.
Top mangers who do not fit with the culture
d.
Poor performance domains
e.
Chronic trouble spots

ANS:  C                    PTS:   1

   13.   Quaker Oats purchased Snapple 1994 and divested it in 1997 because:

a.
The acquisition was so successful and Quaker Oats wanted to realize its profits
b.
Snapple was able to help the firm improve its technology in production
c.
The acquisition was not as successful as intended but the firms remain together today
d.
The culture clash between Quaker Oats’ mass marketing style and Snapple’s quirkiness in the marketplace
e.
It is used to illustrate the value of having similar cultures in an organization

ANS:  D                    PTS:   1

   14.   When a firm benchmarks it ____.

a.
Places on the sidelines domains that are not a pressing concern in an integration effort
b.
Compares its systems to those of leading firms
c.
Compares its systems to the industry averages
d.
Chooses one firm’s systems to rely on as a rule as it integrates with another firm
e.
Upgrades it systems to those that are the most current in that industry

ANS:  B                    PTS:   1

   15.   About ____ percent of firms divest all or part of the assets from an acquisition or dissolve an alliance in five to seven years.

a.
10
b.
35
c.
50
d.
65
e.
75

ANS:  C                    PTS:   1

   16.   The questions that need to be answered during the negotiation for an alliance or joint venture phase include all of the following except:

a.
Where is the value creation for each organization?
b.
What are the short term and long term objectives for each party?
c.
Which organization is better respected and should have their name on the venture?
d.
How will the alliance or joint venture be governed?
e.
How will the alliance or joint venture be terminated?

ANS:  C                    PTS:   1

   17.   The needed process reviews when evaluating external technology acquisition include what during the integration planning phase?

a.
The major sources of value and potential problem areas
b.
The surprises that are emerging
c.
The areas that need the most attention quickly
d.
How well decision making is taking place
e.
The schedule and meeting deadlines

ANS:  C                    PTS:   1

   18.   In evaluating the due diligence process, the key questions and concerns are:

a.
What information did we miss gathering and what information did we undervalue?
b.
What was the most important thing we learned during the process?
c.
How can we make this process more efficient next time?
d.
Where were the potential synergies that we missed?
e.
When and how do we make up for the missed opportunities?

ANS:  A                    PTS:   1

   19.   The knowledge needed for an alliance during the negotiations should include all of the following except:

a.
Operational requirements
b.
What needs to be protected
c.
The areas where a firm needs help
d.
The financial and operational activities that are the responsibility of each party
e.
Trade secrets of each party

ANS:  E                    PTS:   1

   20.   In an airline alliance the key operational concern is ____.

a.
Services provided
b.
Sharing of physical assets (gates)
c.
Sharing risk
d.
Sharing expertise
e.
Sharing of financial strength

ANS:  B                    PTS:   1

   21.   To evaluate the integration process that occurs when a firm acquires technology from an external source all of the following issues are critical except:

a.
A clear common set of objectives and a definition of success
b.
An appropriate governance model with clear decision-making criteria
c.
A clear plan for integration and evolution of the plan if needed
d.
A set of clear metrics to track and measure success (or the lack of success)
e.
All of these choices are critical issues

ANS:  E                    PTS:   1

   22.   More experience with an alliance partner leads to ____.

a.
More experience to better anticipate risks
b.
Over diversification
c.
Weak performance
d.
Too large of a firm to be useful in the alliance
e.
Greater market accessibility

ANS:  A                    PTS:   1

   23.   The domains that are the greatest risk to the integration include all of the following except ____.

a.
Financial systems
b.
Marketing systems
c.
Core business applications
d.
Network operating environments
e.
Systems compatibility

ANS:  B                    PTS:   1

   24.   The term inertia of success refers to ____.

a.
Firms that have merged and refuse to integrate
b.
A firm that has had such great success that it has grown complacent
c.
A firm that is so successful it does not need to change
d.
An industry is so successful it is leapfrogged
e.
An industry is in a spiral of decline after a product matures on its S curve

ANS:  B                    PTS:   1

   25.   The creation of value when evaluating the acquisition of technology is based on ____.

a.
The emergence of processes and/or products that improve the competitive position of the firm and return on investment
b.
The firm’s financial return only
c.
An accounting based positive return on investment
d.
Assets that are not divested five to seven years later
e.
The firm’s stock price has not declined when the acquisition was announced

ANS:  A                    PTS:   1

   26.   Cost/benefit analyses are tricky when evaluating the current status of an alliance or acquisition because:

a.
The interdependence that is built makes it difficult to measure costs and benefits
b.
Transfer pricing causes problems in understanding who did what
c.
Transaction costs are affected by the agency tendencies of top-level managers
d.
The firms may not care what the partnering firm is doing
e.
There is no reason to be concerned with cost/benefit at this stage

ANS:  A                    PTS:   1

   27.   The key areas to consider in the evaluation of where the blended firm is headed include:

a.
Creation of value, integration of structures, and external factors
b.
Opportunities, threats and the structures and processes of the firm
c.
Strengths, weaknesses, opportunities and threats
d.
Creation of value, integration of technologies, and external factors
e.
Emergence of processes, new ideas and best practices

ANS:  D                    PTS:   1

   28.   Metrics are ____.

a.
The measure of distance used principally in Europe
b.
Measures used in evaluation and control
c.
Used to evaluate whether to proceed with an integration after the acquisition
d.
Descriptions of the top management team of the firm
e.
Relied on only in rare situations

ANS:  B                    PTS:   1

   29.   A Likert type scale ____.

a.
Asks individuals to rate a variety of things as a 1 or 0 – present or not present
b.
Is a specific scale used to rate how technology intensive a firm is
c.
Asks individuals to rate a things typically on a 1-7 scale used to show how much someone agrees or disagrees with a statement
d.
Is a specific scale that is used to evaluate how similar two potential merger partners are
e.
Is a financial measure

ANS:  C                    PTS:   1

   30.   A gap analysis refers to ____.

a.
The difference between goals and outcomes for the firm
b.
The difference in corporation and division goals
c.
The difference in corporation and individual goals
d.
The difference in financial outcomes for firm from industry
e.
The difference in marketing expenditures for firm and competitors

ANS:  A                    PTS:   1

   31.   The easiest gap analysis to conduct is for ____.

a.
Financial fitness
b.
Strategic fitness
c.
Operational fitness
d.
Relationship fitness
e.
Management fitness

ANS:  A                    PTS:   1

   32.   Strategic fitness refers to ____.

a.
The ability of organizations being integrated to have their financial interests aligned
b.
The ability of organizations being integrated to have their strategic interests aligned
c.
Common strategic goals between the corporation and its divisions
d.
Common strategic goals between the firms and individuals that work for it
e.
Agreement on strategic goals in an industry

ANS:  B                    PTS:   1

   33.   The building blocks for relationship fitness include all of the following except ____.

a.
Must be trust between human resources at all levels
b.
There must be a focus on the numbers and how individual costs impact those financials
c.
Oversight of technology should be flexible
d.
Oversight of technology to prevent runaway projects
e.
Be ready to take advantage of opportunity when it presents itself

ANS:  B                    PTS:   1

   34.   The common aspects of an evaluation system in different organizations of an alliance would include all of the following except:

a.
Evaluation of readiness to create an alliance
b.
Top management should be involved in the evaluation process
c.
Ability to quantify all the various dimensions of the alliance
d.
Clear goals for the alliance and focus on those goals
e.
Recognition that evaluation and control are on going processes

ANS:  C                    PTS:   1

   35.   The guiding questions for evaluating the information gathered during an alliance or acquisition blending period include all of the following except:

a.
Does the potential benefit warrant the risk of failure or the cost of management distraction?
b.
Is the strategic rationale well grounded?
c.
Is the integration plan well designed and realistic?
d.
Are top managers establishing a plan and model for long-term success?
e.
In the short run, will employees be compensated for their efforts?

ANS:  E                    PTS:   1

TRUE/FALSE

     1.   Evaluation and control is the most pervasive of the three functions in an organization.

ANS:  T                    PTS:   1

     2.   Evaluation and control is a discrete activity that occurs only after the firm has implemented its plan.

ANS:  F                    PTS:   1

     3.   In alliances there are typically more proprietary resources that are available and needed.

ANS:  F                    PTS:   1

     4.   The synergies sought in alliances are more sequential or clearly separated.

ANS:  T                    PTS:   1

     5.   Evaluation and control occurs in certain parts of the firm only.

ANS:  F                    PTS:   1

     6.   The value of a checklist is not only to help the firm as it implements the alliance or merger but as it forms the basis for evaluation and control.

ANS:  T                    PTS:   1

     7.   In developing a checklist it is critical that a clear response be possible so that a box can be checked.

ANS:  F                    PTS:   1

     8.   The checklist developed for evaluation and control should cover all potential aspects of the alliance/merger.

ANS:  F                    PTS:   1

     9.   Benchmarking is only useful in analyzing the systems of the firm.

ANS:  F                    PTS:   1

   10.   Legal concerns for a merger can be different in different countries. For example, issues for the HP-Compaq merger were raised in Europe not the United States.

ANS:  T                    PTS:   1

   11.   The work done during the due diligence tells the management of the blended firm where the strengths and weaknesses and potential synergies exist.

ANS:  T                    PTS:   1

   12.   Operational requirements for most alliances are the same.

ANS:  F                    PTS:   1

   13.   In the integration effort the new blended firm should worry about completing the integration and not worry about written documentation.

ANS:  F                    PTS:   1

   14.   Determining how to evaluate performance can be hard in some blended organizations.

ANS:  T                    PTS:   1

   15.   For the acquisition of technology to reflect positive outcomes it is important that some type of technology improvement has emerged.

ANS:  T                    PTS:   1

SHORT ANSWER

     1.   Discuss which conditions encourage firms to pursue alliances rather than acquisitions.

ANS: 

·
less proprietary resources are available among the potential partners
·
synergies are more sequential or clearly separated
·
the competitive environment is less intense where cooperation can flourish
·
the market uncertainty is either very low or very high
·
there are resources are available which firms can compete for

PTS:   1

     2.   What are the non-financial concerns for evaluation and control in the due diligence?

ANS: 

·
The value creation potential of the technology or partners
·
Assessment of the portfolio of technologies
·
Business integration commitment of the firms to issues such as teamwork
·
Value of the technology assets
·
Support for innovation practices in the firms

PTS:   1

     3.   Discuss the rules suggested for conducting the due diligence of a potential merger and acquisition target.

ANS: 

·
Objectivity should be maintained.
·
Suspicion about the analysis provided should be maintained.
·
The upside and downside of the potential external activity should be examined.
·
Keep the process as quiet as possible but do not rush the analysis.

PTS:   1

     4.   It was argued in the McKinsey Quarterly that in multiparty negotiations there are three key dimensions need to be understood. Discuss these three dimensions.

ANS: 

·
each party’s position or preferred outcome
·
how much importance they put on each issue
·
each party’s ability to influence the outcome about each issue

PTS:   1

     5.   Discuss the evaluation factors that need to be considered in the negotiation for an alliance.

ANS: 

·
type of businesses involved and what type of operational requirements that exist for the alliance
·
proprietary knowledge in the firm and what needs to be protected and what can be shared
·
the partner’s experience in alliances and where each firm needs help from the alliance
·
the operational and financial commitments of each party
·
what level the individuals involved in the developing the alliance are

PTS:   1

     6.   Discuss the key questions that need to be asked when considering the creation of value by acquiring technology externally.

ANS: 

·
Have we created synergies that improve our ability to compete?
·
What is the return from the investment?

PTS:   1

     7.   Callahan and MacKenzie argue that the questions that need to be examined to measure alliance control include what domains?

ANS: 

·
partner motives
·
partner capabilities
·
partner resources
·
development processes
·
organizational cultures

PTS:   1