Busi 412 Quizzes

True or False: During Ginni Rometty's tenure as CEO of IBM starting in 2012, IBM reshaped and expanded its corporate portfolio by relying primarily on internal development rather than applying a variety of different growth strategies (e.g., internal development, alliances, acquisitions).

False

True or False: Firms can accumulate their capabilities to successfully manage the post-merger integration process as most M&A cases have similar processes and outcomes, which could be easily codified and shared across the organization.

False

True or False: For an individual firm, competitive advantage exists when a combination of businesses or business units is MORE valuable when owned together than if separately owned

False

True or False: Ginni Rometty ignored potential post-acquisition integration problems (e.g., possible employee turnover, cultural differences) that could be detrimental to IBM's M&A activity

False

True or False: When expanding globally, a firm must globalize all parts of the value chain for the focal product/service.

False

Ture or False: Internal and external resource acquisition activities are complementary when one is more effective given the other has also been completed.

True

Bitcoin, a cryptocurrency, has the potential to shake up international trade. A major consideration for firms expanding globally is having to manage business transactions across different currencies, each with different exchange rates. However, for firms buying and selling products/services across international borders, bitcoin can serve as a common international currency. For example, a small business in New Zealand can sell its products to a distribution company in Chapel Hill, NC, without worrying about conversions between the USD and New Zealand Dollar. However, not all countries might be willing to adopt Bitcoin. This can affect which foreign country a focal firm decides to expand into. Which dimensions of the CAGE framework best capture the potential of Bitcoin for global expansion? a. Administrative/Political b. Cultural c. Economic d. Geographic

a. Administrative/Political

Campbell Soup originally manufactured its canned soup products worldwide. Now it offers, other than their original soup products, Pepperidge Farm cookies, Prego sauces, V8 beverages, and Kettle Brand potato chips by expanding into snacks and other convenience food products. They all require similar technology to keep packaged food fresh. What growth strategy BEST describes what Campbell was following? a. Applying the shared resources and capabilities required for diversifying into other products of similar categories b. Innovating new products that could be introduced to an existing market c. Applying the brand reputation for upstream product categories d. Backwardly integrating to provide consistent and high quality services to customers e. Scaling an existing product into new geographies

a. Applying the shared resources and capabilities required for diversifying into other products of similar categories

At multiple stages during the relationship between Disney & Pixar, the contract between the two firms was revised. As Pixar grew more successful, they wanted a greater cut of the revenues. What problem associated with contracting does this best highlight? a. Dividing future value created and profits generated b. Haggling, opportunistic behavior c. Valuing/Pricing intangible resources d. The fundamental paradox of information e. Uncertainty, "bounded rationality" of managers

a. Dividing future value created and profits generated

Which following statement does NOT increase the costs of engaging in an alliance? a. Having multiple partners in an alliance can reduce free-riding problems by facilitating resource exchange among the partners. b. A potential partner has a high incentive to misappropriate the focal firm's knowledge by applying the knowledge in the partner firm's other area of operations to pursue its own private benefits c. Information asymmetry between a potential partner and the focal firm makes it difficult for the latter to evaluate the true value of resources that the potential partner owns d. Resource exchange between partners require intangible resources that are hard to be priced e. A partner has many other alternative ways to create value besides engaging in the focal relationship

a. Having multiple partners in an alliance can reduce free-riding problems by facilitating resource exchange among the partners.

Choose all apply: Why was /is Alipay/Ant successful in the commercial payments space in China? a. It was utilized by Alibaba's giant user base b. Amazon entered into China c. WeChat was struggling d. Deteriorating consumer confidence in commerce quality control e. China's lack of institutional infrastructure (e.g. banking, legal, consumer protection etc)

a. It was utilized by Alibaba's giant user base d. Deteriorating consumer confidence in commerce quality control e. China's lack of institutional infrastructure (e.g. banking, legal, consumer protection etc)

Choose all that are correct: According to Coca-Cola's case, now that Coca-Cola Enterprises (CCE) has been acquired, what are the following business models that Muhtar Kent is considering? a. Keep CCE and remain vertically integrated b. Launch new products to fully utilize the current bottling and manufacturing systems c. Sell CCE to rivals such as Pepsi or DPS d. Keep manufacturing, but franchise distribution e. "Fix" CCE and refranchise the bottling business

a. Keep CCE and remain vertically integrated d. Keep manufacturing, but franchise distribution e. "Fix" CCE and refranchise the bottling business

Choose all that apply: Regarding the Disney-Pixar case, which of the following statements are NOT true? a. The first partnership between Disney and Pixar enabled the two firms to establish an efficient communication system, reducing the length and complexity of the second contract b. Intensified competition in film studios reduced the industry's attractiveness, reducing the need to renegotiate with or acquire Pixar c. Disney and media commenters were concerned about the possibility that the acquisition could destroy Pixar's creativity and the risk that core creative talents might leave d. Many analysts believed that the acquisition would be very expensive for Disney e. There can be a synergy between the two companies upon acquisition, as Disney will be able to use all Pixar characters for merchandise and theme park operations

a. The first partnership between Disney and Pixar enabled the two firms to establish an efficient communication system, reducing the length and complexity of the second contract b. Intensified competition in film studios reduced the industry's attractiveness, reducing the need to renegotiate with or acquire Pixar

Choose all that apply: Princess Cruises announced that it has reached an agreement with a Brazilian firm to offer services in Southern America in response to growing demand. With this new contract, Princess Cruises expects to grow continuously and expand globally as the world's destination leader in premium cruising. Which of the following statement(s) represent potential reasons for this global expansion? a. The recipes of renowned chefs from the Southern America region can be passed onto Princess Cruises chefs, providing high-quality dining experiences to its domestic customers b. Global brand image may increase buyers' willingness to pay c. Increased demand for Princes Cruises services will add volume beyond the minimum economies of scale point. d. The opposite season of the Southern Hemisphere can help normalize the risk of reduced demand in the U.S. during winter e. A firm's presence in multiple countries increases the bargaining power of buyers, further increasing the industry attractiveness

a. The recipes of renowned chefs from the Southern America region can be passed onto Princess Cruises chefs, providing high-quality dining experiences to its domestic customers b. Global brand image may increase buyers' willingness to pay d. The opposite season of the Southern Hemisphere can help normalize the risk of reduced demand in the U.S. during winter

Which of the following is the LEAST true about decisions regarding firm scope? Choose two. a. Weighing the transaction costs and the administrative costs is necessary for determining the optimal horizontal scope with ownership b. The most important consideration for firms contemplating horizontal diversification is whether the expansion requires a major investment in an asset that is specific to the new production process c. When determining the range of products and services offered by the firm, it should consider whether and how the resources involved in the production of those products and services are related to one another d. When expanding to a new country/region, one of the factors that a firm should consider is the economic distance between the home country and the destination country e. It is advisable to consider whether adding volume to production would contribute to the profitability of the firm when considering a firm's global strategy

a. Weighing the transaction costs and the administrative costs is necessary for determining the optimal horizontal scope with ownership b. The most important consideration for firms contemplating horizontal diversification is whether the expansion requires a major investment in an asset that is specific to the new production process

Bluestar Airlines, an airline based in North Carolina, offers domestic flights across the United States. It is considering route expansion, to offer flights to Cuba. Which concern should factor most heavily in their decision? Select two. a. Cultural differences - preferences for in-flight beverage options differ by b. Administrative challenges - relations between the US and Cuba are strained c. Geographic distance - time zones may make it difficult to manage operations spread over multiple countries d. Economic differences - per-capita income in Cuba could limit the size of the potential market for international travel

b. Administrative challenges - relations between the US and Cuba are strained d. Economic differences - per-capita income in Cuba could limit the size of the potential market for international travel

In 1997-1998, Walmart entered Germany. To enter Germany, Walmart acquired the 21-store Wertkauf chain and 74 hypermarkets from Germany retailed Spar Handels AG. Here, Walmart attempted to implement its US personnel policies and procedures: the Walmart cheer, a door greeter, every associate within 10 feet of a customer smiling and offering help, bagging groceries at checkout, video surveillance, a prohibition against dating co-workers, etc. German employees refused to comply as this was not how grocery stores operated in Germany (Rothaermel, 2017). This is an example of: a. Administrative Distance b. Cultural Distance c. Geographic Distance d. Economic Distance

b. Cultural Distance

Since its launch, Tesla has been in dispute with several U.S. states regarding selling their electric vehicles through dealerships. Many states prohibit direct-to-consumer sales of vehicles and require car manufacturers to sell their cars through independent dealers. However, Tesla has long fought this law, instead wanting to own and operate their car dealerships. In this 2012 blog., Elon Musk outlines reasons why Tesla owns and operates its own dealerships. Tesla's ownership and operation of Tesla-only car dealerships is an example of: a. Backward Integration b. Forward Integration c. Related Diversification d. Cross-Selling Benefits e. Economies of Scope

b. Forward Integration

Choose all apply: What method did Ant Financial use to expand into other countries? a. Mergers & Acquisitions b. Strategic Alliances & Minor Investments c. Ant has not tried to expand internationally d. Greenfield investment

b. Strategic Alliances & Minor Investments

When is vertical integration NOT a better choice than a contract-based arrangement such as alliances or outsourcing for a firm? a. Whether the other party involved in the contract is carrying out actions according to the contract is not easily observable to the firm b. The firm internally has highly complex interactions necessary for production that is incurring coordination costs, prior to the expansion c. The vertical scope expansion is likely to involve a high level of asset-specific investment d. There is a high level of uncertainty regarding the stability of the environment that supports firm-to-firm contracting e. The firm faces serious constraints in terms of making decisions regarding the terms of the contract and making predictions about what will happen under the contract

b. The firm internally has highly complex interactions necessary for production that is incurring coordination costs, prior to the expansion

In 2016, Tesla entered the solar photovoltaics industry by acquiring SolarCity. Later, in 2017, Tesla announced a concept for the Tesla Semi, an all-electric battery-powered Class 8 semi-truck. Considering Tesla began as an electric car manufacturer (with the Tesla Roadster), expansion into the electric truck and solar photovoltaics industry can be considered an example of Tesla's: a. business strategy b. corporate strategy

b. corporate strategy

Which of the following is NOT an example of horizontal diversification? a. Spotify, an audio streaming provider, has partnered with ESPN and Netflix to curate podcasts around Netflix's Micahel Jordan documentaries. b. Uber has expanded into food delivery market by leveraging its ride-sharing matching algorithms to connect delivery drivers with end users Iconic fashion brand Gucci opened 1921 Gucci in Shanghai, which is the brand's first fine dining restaurant in the world. c. To ensure the same products are being offered to its customers across the globe, McDonald's has set up its own manufacturing plants to procure the main ingredients d. Marriott International launched a new home rental service called Homes & Villas, offering premium and luxury homes to its existing customers, as a response to competitive threats arising from Airbnb

c. To ensure the same products are being offered to its customers across the globe, McDonald's has set up its own manufacturing plants to procure the main ingredients

In 2007, Fiat, the Italian car company, partnered with the Indian car giant Tata Motors in order to further develop the Fiat brand in India. As part of the alliance, Tata Motors would manage the distribution of Fiat branded cars in India through joint Tata-Fiat dealership. This is an example of a: a. Horizontal alliance b. Neither vertical nor horizontal alliance c. Both vertical and horizontal alliance d. Vertical alliance

d. Vertical alliance

According to Google's case, which of the following statements is true? a. The creation of a new holding company, Alphabet, integrated all of the business lines, including Google and Moonshots, to improve communication and resource sharing across businesses. b. Google's culture of compensating for failures and providing generous benefits resulted in high employee satisfaction ratings, which subsequently led to low employee turnover. c. Google's relatively newer investments, such as driverless cars, automated farming, and smart homes, generated enough returns on their investments to cover their increased expenses. d. Although investors were worried about Google's expansion into new lines of businesses, their voting rights (prior to restructuring) enabled them to influence and impede Google's major expansion decisions. e. Some of Google's Moonshot project expenses were subsidized by the profits generated from their core online advertisement business.

e. Some of Google's Moonshot project expenses were subsidized by the profits generated from their core online advertisement business.

Which of the following is NOT an argument for a firm to expand its horizontal scope? a. Expanding horizontal scope enables sharing of related activities and exploiting core competencies b. Customers have a higher willingness-to-pay due to the one-stop-shop experiences c. Simultaneous ownership of two or more units that utilize a similar set of tangible and intangible resources enables cross-selling benefits d. The firm can benefit from the economies of scope by exploiting the internal capital and labor market e. The expansion represents the firm's founding members' original vision and passion, while there is little resource relatedness

e. The expansion represents the firm's founding members' original vision and passion, while there is little resource relatedness