What are the primary issues that Citigroup should have considered before the merger?
What will be an ideal response?
Citigroup’s primary intent before the merger was increase of their profitability and revenues. They believed that
cross marketing would produce the results that they desired. Before the merger they probably should have done due diligence on the feasibility of this project. Eventually they did achieve some of the targets that they set but they did
have some disadvantages along the way as described above. The primary question they should have asked should
have been how congruent Citigroup's business was with Travelers businesses. Were there any complications
involved and how would these affect business? Was selling insurance and selling banking products congruent in
terms of the independent insurance agents business? What about the effects of incidents such as September 11 on
the overall merged entity? How would shareholders react to a loss in one company? What was the extent of
revenues that cross marketing would bring in over time and what would be the cost of obtaining independent given
the high price of training given the large scope of knowledge? These are the questions that Citigroup should have
asked before the merger.
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Define what a stakeholder is.
What will be an ideal response?
During its first year of operations, a company granted employees vacation privileges and pension rights estimated at a cost of $21,500 and $15,000. The vacations are expected to be taken in the next year and the pension rights are expected to be paid in the future 5-30 years. What is the total cost of vacation pay and pension rights to be recognized in the first year?
A) $15,000 B) $36,500 C) $6,500 D) $21,500