Ch.9 BUSA 4900

_____ are best described as equity investments by large established firms making in entrepreneurial ventures to gain access to new, and potentially disruptive, technologies.

. Corporate venture capital investments

How does taking a real-options perspective by entering strategic alliances help incumbent firms?

. It allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade.

Which of the following aspects of alliance management capability is paired with partner selection?

. alliance formation

Which of the following is true of acquisitions?

Acquisitions can be friendly or hostile.

Which of the following statements is not true of tacit knowledge?

It is regularly shared between partners in a non-equity alliance.

_____ are best described as situations in which both partners in a strategic alliance are motivated to form an alliance for learning, but the rate at which the firms learn may vary

Learning races

Which of the following is an advantage of non-equity alliances?

They are flexible and easy to initiate and terminate.

Which of the following statements is true of strategic alliances?

They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles.

Which of the following is a disadvantage of equity alliances?

They can entail significant investments.

Which of the following is an example of explicit knowledge?

a research summary

In Eli Lilly's Office of Alliance Management, the _____ is a senior, corporate-level executive responsible for high-level support and oversight.

alliance champion

The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 billion. All the hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are known as Mansion hotels. What does this scenario best illustrate?

an acquisition

How does horizontal integration within an industry affect the surviving firms?

by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers

_____ is best described as cooperation by competitors to achieve a strategic objective.

co-opetition

When a firm does not have the resource required for pursuing a growth strategy, and if the resource in question is not easily tradable, the implication for the strategist is most likely to

consider an outright acquisition

Horizontal integration through mergers and acquisitions can help firms strengthen their competitive positions by increasing

differentiation

A drawback of joint ventures is that they are characterized by

double reporting lines

A candy company called SweetThings Inc. forms an agreement with another candy company called Reverie Inc. Through this agreement, SweetThings owns 30 percent of Reverie. However, Reverie does not own any part of SweetThings. This type of agreement is called a(n)

equity alliance

Which of the following statements is true of explicit knowledge?

explicit knowledge is shared in non-equity alliance firms

Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to

fill gaps in its competency lineup.

Olympia Autos Inc. merged with its competitor Vaca Autos Inc. This allowed Olympia Autos to use its technological competencies along with Vaca Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate?

horizontal integregation

Which of the following is a common drawback of a non-equity alliance?

lack of trust between partners

_____ are best described as contractual alliances in which the participants regularly exchange codified knowledge

licensing agreements

JetStream Airway's decision to acquire Rex Fuels Inc. proved to be ill-fated because its managers had overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers' capabilities were restricted to the airlines industry. What does this scenario best illustrate?

managerial hubris

A(n) _____ occurs when firms enter into a partnership based on contractual agreements, which results in vertical strategic alliances that connect different parts of the industry value chain.

non-equity alliance

Amiware Inc., a manufacturer of ceramic cookware, has entered into a contractual agreement with Micoware Inc. The agreement involves vertical strategic alliances connecting different parts of the industry value chain. This arrangement between the two companies best illustrates a(n)

non-equity alliance

Equity alliances are less common than non-equity alliances because they

often require larger investments

What causes the winner's curse?

overpaying for an acquisition

The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Movo Automobile is most likely a result of

principal-agent problems

A _____ is best described as an approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time.

real-options perspective

Luxura Inc. is a large cosmetics company that made an initial small investment in a start-up company, GreenDream, that was developing an organic face lotion. This gave Luxura controlling interests in the start-up company. However, GreenDream soon began to have financial difficulties because of principal-agent problems. As a result, Luxura did not invest in the next stage of development and pulled out of the company. This approach to strategic alliance is referred to as a

real-options perspective

The _____ is a strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries.

relational view of competitive advantage

Medetect Inc. is a large firm involved in the highly competitive market of high-tech medical equipment. In this market, smaller firms that focus on research are constantly making new technological developments. Which of the following approaches would best serve the needs of Medetect?

serial acquisitions

A drawback involved in using cross-border strategic alliances to enter new foreign markets is that

some of the firm's proprietary know-how may be appropriated by the foreign partner.

A consumer electronics company is in the process of evaluating whether it should pursue an internal development strategy or an external growth strategy. To make this decision, the management needs to assess whether the company's internal resources are superior to those of competitors in the targeted area. Which of the following strategic management models would be most useful in this assessment?

the VRIO framework

In Eli Lilly's Office of Alliance Management, who is responsible for providing the technical expertise and knowledge needed for the specific technical area and the day-to-day management of the alliance?

the alliance leader

In Eli Lilly's Office of Alliance Management, who is responsible for providing alliance training and development?

the alliance manager

Which of the following is an advantage of equity alliances when compared to non-equity alliances

they produce stronger ties between partners

Which of the following is not a reason why firms enter alliances?

to replace competitive advantage with competitive parity

In 1984, GM and Toyota formed a joint venture called New United Motor Manufacturing Inc. Each partner was motivated to learn new capabilities. This joint venture is an example of

using co-opetition