Lesson 3.2.2
3.2.2 Mergers and takeovers Quiz: Pearson Edexcel Business, Unit 3
20 questions
In partnership with Revision Ninja
Lesson 3.2.2, Mergers and takeovers: 20 multiple choice questions for the Pearson Edexcel Business (9BS0), Unit 3: Business decisions and strategy, written with Revision Ninja.
Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.
The 20 questions
-
What term describes two businesses joining together by mutual agreement?
- Franchise
- Takeover
- Strategic alliance
- Merger
-
What occurs when one business buys a controlling interest in another business?
- Organic growth
- Takeover
- Strategic alliance
- Merger
-
What type of integration occurs between firms at the same stage of production?
- Backward vertical
- Conglomerate
- Forward vertical
- Horizontal integration
-
What type of integration occurs between firms at different stages of production?
- Conglomerate
- Organic growth
- Horizontal integration
- Vertical integration
-
Which primary motive drives businesses to pursue inorganic growth through a takeover?
- Scale economies
- Loss of control
- Overtrading
- High gearing
-
Which financial risk increases significantly when a takeover is funded using heavy borrowing?
- Overcapacity
- Overtrading
- Low liquidity
- High gearing
-
What main financial reward is created when a merger achieves cost synergies?
- Overtrading
- Increased gearing
- Higher profit margins
- Higher unit costs
-
A firm acquires a supplier to control the quality of its raw materials. What is this called?
- Horizontal integration
- Conglomerate diversification
- Forward vertical integration
- Backward vertical integration
-
A firm buys a retailer that sells its products to consumers. Which type of integration is this?
- Horizontal integration
- Forward vertical integration
- Organic growth
- Backward vertical integration
-
A firm acquires a competitor's factory to double its output in the same market. Which is the best description?
- Diversification
- Organic growth
- Horizontal integration
- Vertical integration
-
What is a major financial risk of funding a takeover using bank loans?
- High interest burden
- Stock market collapse
- Loss of ownership
- Dilution of control
-
What operational problem often occurs during rapid growth via a takeover?
- Product differentiation
- Economies of scale
- Overtrading
- Cultural clashes
-
Which issue is most likely to cause a merger to fail?
- Excessive synergies
- Organic expansion
- High market share
- Poor integration
-
Why might competition authorities block a horizontal merger?
- Overtrading
- Increased supply risks
- Reduced competition
- Diseconomies of scale
-
What is a key reason for choosing backward vertical integration?
- Secured supply chain
- Lower market share
- Product differentiation
- Increased competitor rivalry
-
Why is a takeover financially riskier than organic growth?
- Stable cash flow
- High upfront cost
- Gradual market expansion
- Low capital outlay
-
What main financial reward do shareholders expect from successful merger synergies?
- Reduced sales revenue
- Decreased share liquidity
- Higher debt burden
- Increased profitability
-
A company with profits of 4 million pounds acquires a firm with profits of 1.5 million pounds. Ignoring synergies, what is the combined profit?
- 5 million pounds
- 2.5 million pounds
- 5.5 million pounds
- 6 million pounds
-
Why do regulators closely examine horizontal mergers between market leaders?
- Slower decision-making
- Risk of monopoly
- Loss of suppliers
- Diseconomies of scale
-
What type of takeover payment occurs when target shareholders receive shares in the new company?
- Leveraged buyout
- Share swap
- Cash acquisition
- Retained profit
Related quizzes
- Corporate objectives and mission Quiz · 3.1.1 · 20 questions
- Corporate strategy and SWOT analysis Quiz · 3.1.2 · 20 questions
- Corporate strategy and PESTLE analysis Quiz · 3.1.3 · 20 questions
- Objectives and problems of growth Quiz · 3.2.1 · 20 questions
- Organic growth Quiz · 3.2.3 · 20 questions
- Small business survival Quiz · 3.2.4 · 20 questions
- Time-series analysis and sales forecasting Quiz · 3.3.1 · 20 questions
- Investment appraisal Quiz · 3.3.2 · 20 questions
- Decision trees Quiz · 3.3.3 · 20 questions
- Critical path analysis Quiz · 3.3.4 · 20 questions