The Ryan Motors CEO identifies one particular large Chilean engineerin

QUESTION

The Ryan Motors CEO identifies one particular large Chilean engineering company, Gola Technologies, that she says would be a good fit as a partner for Ryan. Which of the following, if true, weakens her case for the partnership?

A) Gola’s annual profits have risen for three consecutive years.
B) Ryan Motors has fewer financial resources available to it compared to Gola.
C) Gola recently fought off a merger by another Chilean company by launching a poison pill.
D) The Chilean engineering technology industry has surpassed that of Brazil in recent years.
E) Partnerships with foreign companies offer a combination of benefits and drawbacks.

ANSWER

Answer: C
Explanation: C) One disadvantage of partnerships is the sharing of unlimited financial liability, so if Gola recently took on a lot of debt in launching a poison pill, that suggests that Ryan should approach partnership proceedings cautiously. Gola’s recent profitable years and available resources, Choices A and B, if anything, tend to strengthen the Ryan CEO’s argument. Choices D and E say nothing in particular about the potential Ryan-Gola merger.