1. Alpha Industries is considering acquiring Foxtrot Flooring. Foxtrot is worth $20 million to its current owners under its existing operational methods. Due to some opportunities for synergies between the two companies, Alpha believes that Foxtrot is worth $25 million as part of Alpha Industries. What do you predict for a sales price of Foxtrot?
a. Less than $20 million or Alpha will not buy
b. More than $25 million or Foxtrot will not sell
c. Something between $20 and $25 million
d. The different valuations make a sale very unlikely.

2. Which of the following is an example of vertical integration?
a. A custom software company purchasing a competing software firm
b. A soft drink producer buying one of its bottling plants
c. A coal manufacturer purchasing a nuclear power plant
d. A gourmet cheese company purchasing a wine maker

3. In which of the following instances would an acquisition make the most sense?
a. The acquiree is a very profitable company.
b. Synergies exist between the acquirer and the acquiree.
c. Integration costs are low between the two.
d. Synergy benefits outweigh the costs of integration.

4. Giganto Grocery Chain wishes to sell Boldo detergent. Boldo’s manufacturer, CPG Industries, will not supply Giganto unless Giganto agrees to carry all of CPG’s other detergents. This is an example of
a. exclusion.
b. tying.
c. territory restriction.
d. bundling.

5. In which of the following cases might you expect to find a manufacturer granting exclusive territories?
a. A pet supply chain that requires heavy local advertising to drive sales
b. Custom computer sales that require a good deal of consultation
c. A submarine sandwich chain that relies on its nationwide brand reputation
d. All of the above