Units 5–8 Review Test 2
Name: ___________________________________________
Part 1 Reading
Text 1
8 points
Questions 1–8
Look at the statements below and the extracts from an article on negotiation.
Which section (A, B, C or D) does each statement 1–8 refer to?
For each statement 1–8 mark one letter (A, B, C or D).
You will need to use some of these letters more than once.
1 You should try work out how the other person negotiating feels, and what they want.
2 You need to know what you can use to show movement during the negotiation.
3 Win-win is better for business over a longer period.
4 You need to know if you can stop negotiating if you have to.
5 A win-win negotiation is where the two parties are working hard together.
6 You need to be creative during the negotiation.
7 This type of negotiation is where one party finishes the negotiation in a better position.
8 You should be able to offer something to encourage the other party to reach agreement.
9
Text 2
5 points
Questions 9–13
Read the article below about hotels and business travellers.
Choose the best sentence from A–E below to fill each of the gaps.
For each question 9–13 , mark one letter.
Do not use any letter more than once.
What do business travellers want from a hotel? Is it just a room, a bed and CNN on cable? What more can a hotel offer business customers?
Hotels do not just cater for business travellers, but offer services for tourists and other types of guests. (9) ____. Business travellers might also be interested in the latest in entertainment like virtual golfing simulators so they can keep up their game without having to join a golf club.
(10) ____. Ten years ago the TV and mini-bar were all that could be found in hotel rooms. Now rooms generally have hi-speed or Wi-Fi Internet connections, as well as a large menu of free and Pay TV options. Even bathrooms are becoming more sophisticated, with extra powerful hair driers, and make-up mirrors which do not steam up! (11) ____.
In every good hotel there should be a range of hotel services available. You should be able to exchange money into the local currency and, of course, there is also room service, for when you just can’t face eating alone in the hotel restaurant. Some hotels now offer baby sitter services (not usually much use for the business traveller!). (12) ____. After a long day of meetings and difficult negotiations, some business people often just want to collapse on their beds and get ready for the next day or their early morning flight, but for others there is always the hotel bar to relax in.
Security is a major issue in hotels. All rooms should have a spy hole and door chain and the lift door should only open on your floor if you have a card key for a room there. Some lifts now have CCTV in them, monitored from the hotel reception or security centre. (13) ____. In Washington the Hamilton Crowne Plaza has introduced a woman-only floor. The rooms have Danielle Steele and Nora Roberts novels, women’s magazines and a special room service menu.
A As modern hotels often have dedicated business centres, with computer, printing and photo-copying facilities, it’s possible to get a lot of work done at the hotel.
B Others even have a personal shopper for those who need help in the local shops and markets.
Text 3
6 points
Questions 14–19
Read the article on mergers and acquisitions and sentences 14–19 below.
For each sentence 14–19 mark one letter (A, B, C or D).
The theory behind mergers and acquisitions is that the two companies together will be stronger, and shareholder value will be created. Often in economically difficult times stronger companies will buy weaker ones and hope that the synergy between the two companies or the cost-savings which can be made will help the company increase market share or become more efficient. Sometimes companies agree to be taken over because they know they cannot survive in a deteriorating situation. They might be nearing bankruptcy or might be trying to avoid the threat of a takeover from another company.
Mergers and acquisitions are not really the same. A merger is when two companies agree to form a new company, which then starts trading. When one company buys another this is an acquisition – the buyer's company continues to exist. A third alternative is some kind of alliance when companies agree to cooperate in a market or development of a new product or service.
Mergers of equals do not often happen – often the takeover is called a merger to make it sound better to stockholders and the media. The key difference between a merger and an acquisition is whether the deal is a friendly or a hostile one. If the deal is friendly then it will often be described as a merger even when it is a takeover. Hostile takeover bids are always acquisitions.
Companies come together for a number of reasons. Of these the most important are staff reductions, economies of scale, and gaining access to key technology and new markets. Most mergers involve job losses, as jobs done in one company are replicated in another one. In a merger of finance and marketing departments, for instance, someone is going to lose their job. Often the CEO of the weaker partner firm loses their job, but departs with a generous compensation package to thank them for agreeing to the merger.
Often the targets of takeovers are smaller and more innovative companies which have unique technology that the larger company wants or needs. By acquiring such companies, the larger company can save R&D costs, have access to innovation and stay competitive.
Companies often try to buy rivals who are operating in different markets or sectors, to increase the reach and size of the company. It is an easy way to enter a new market and avoids all of the costs involved in building up market share. Larger companies can also raise capital more easily than small companies, and with cheaper money can expand even more.
Acquisitions are paid for in cash, stock or a combination of both – a premium of about 10% on the current share price of the takeover target is reasonable. Companies are generally more careful of valuations when cash is involved and less so when the deal is made on the basis of shares. The dream of every investment banker is to be involved in a takeover battle when two or more companies are bidding to buy a third. In such a situation of bid and counter bid there are huge fees to be made as advisors.
14 According to the text, companies might want to be acquired when
A they cannot takeover another company.
B they do not want to merge with another company.
C they are in economic difficulty.
D they want increase their market share.
15 According to the text, a merger is when
A two companies agree to work together to start a new company to provide a new service.
B one of the companies continues to operate after buying the other one.
C two companies become one new one.
D one company launches a hostile takeover bid for another one.
16 According to the text, an acquisition is
A where two companies merge by mutual agreement.
B basically the same as a merger.
C always better for stockholders than a merger.
D where one company takes over another in a hostile bid.
17 According to the text, companies merge because
A they can then spend money on increasing market share.
B CEOs like to agree to mergers and get a generous compensation package.
C they can then reduce costs, widen their market and increase their resources.
D investment bankers like to earn big fees by advising companies to merge.
18 According to the text, companies often acquire competing firms
A because they cannot afford to enter new markets.
B who have desirable new technology or products.
C to raise capital.
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PanPaniicz