mgmt exam 3

Which of the following is not a type of corporate​ strategy? A. Collusion B. Mergers​ & acquisitions C. Strategic alliances D. Diversification E. Vertical integration

A. Collusion

What is a common way of thinking about strategy across different businesses​ called? A. Dominant logic B. ​Related-link diversification C. Core competencies D. ​Related-constrained diversification E. Link relationships

A. Dominant logic

Which of the following is BEST described as the difference between the value of the target as a standalone entity and its value in combination with a bidding​ firm? A. Economic profit B. Economic value C. Economic potential D. Strategically related profit E. Economies of scope

A. Economic profit

_____________ represents the value of a target firm when combined with the value of competitors. A. Economies of scope B. Return on investment C. Economies of scale D. Cumulative abnormal returns E. Capital asset pricing model

A. Economies of scope

Which of the following is the MOST popular way to evaluate the performance effect of an acquisition for a bidding​ firm? A. Event study analysis B. Retained earnings C. The Federal Trade Commission Analysis Report D. The Economic Justification Board E. Vertical integration

A. Event study analysis

Which of the following is LEAST likely to be a potential area of problems when implementing merger or acquisition​ strategies? A. Financial B. Operational C. Cultural D. Functional E. Strategic

A. Financial

Which of the following represents a compensation agreement between a firm and its senior management team in the event the firm is acquired and they lose their​ jobs? A. Golden parachutes B. Supermajority voting rules C. Crown jewels D. Shark repellents E. White knights

A. Golden parachutes

In the automotive​ industry, General Motors and Toyota formed an alliance allowing General Motors an advantage in which​ area? A. Manufacturing​ high-quality small cars profitable B. To act as a supplier in the Japanese car market C. New car design D. To allow for joint manufacturing of products E. Ability to buy Toyota

A. Manufacturing​ high-quality small cars profitable

Which of the following is a common clause for establishment issues in contracts to govern strategic​ alliances? A. Place of incorporation B. When an initial public offering​ (IPO) will be pursued C. Performance expectations D. ​Non-compete agreements E. Confidentiality clauses

A. Place of incorporation

When a firm sets prices so that they are less than the​ business's cost, what type of cross subsidization is taking​ place? A. Predatory pricing B. Multipoint competition C. Tacit collusion D. Mutual forbearance E. ​Deep-pocket modeling

A. Predatory pricing

Which of the following BEST describes when a firm acquires a complementary product​ line? A. Product extension merger B. Vertical merger C. Acquisition premium D. Tender offer E. Market extension merger

A. Product extension merger

If a firm has​ valuable, rare, or​ costly-to-imitate resources, vertical integration of these activities will do which of the following for the​ firm? A. Put it at a competitive disadvantage B. Increase its competitive advantage C. Increase the value chain D. Alter the corporate strategy E. Increase the cost of​ transaction-specific investments

A. Put it at a competitive disadvantage

Which of the following reasons for diversification does not directly benefit a​ firm's outside equity​ holders? A. Reduced riskiness of cash flow B. Shared managerial competencies C. Reduces total costs of products D. Shared business level competencies E. Shared corporate competencies

A. Reduced riskiness of cash flow

When less than 70 percent of a​ firm's revenue comes from a single product market and these multiple lines of business share important economies of​ scope, what type of strategy is the firm​ using? A. Related corporate diversification B. Related constrained strategy C. Unrelated corporate diversification D. Related linked E. Dominant business strategy

A. Related corporate diversification

_____________ includes all groups who have an interest in how a firm performs. A. Stakeholders B. Customers C. Equity investors D. Employees E. Suppliers

A. Stakeholders

Which of the following exists when firms coordinate production and pricing decisions by exchanging signals with​ others' firms about their intent to​ cooperate? A. Tacit collusion B. Uncertainty C. Explicit collusion D. Absorptive capacity E. Network industries

A. Tacit collusion

Who is the governing body that evaluates the competitive implications of proposed​ mergers? A. The Federal Trade Commission B. The New York Stock Exchange​ (NYSE) C. The U.S. Securities and Exchange Commission D. The board of directors E. The Economic Justification Board

A. The Federal Trade Commission

Which of the following is the primary objective of the executive committee of a​ firm? A. Track​ short-term performance B. Implement quality improvement programs C. Monitor​ long-term strategic investments D. Oversee the introduction of new products E. Monitor plant expansions

A. Track​ short-term performance

Which of the following is a set of activities that must be accomplished to bring a product or service from raw material to the final​ customer? A. Value chain B. Vertical integration C. Business strategy D. Value added as a percentage of sales E. Corporate strategy

A. Value chain

To be economically​ valuable, links between bidding and target firms must meet the same criteria as diversification​ strategies, called​ _______________. A. economies of scope B. pecuniary economies C. underutilized tax shields D. economies of scale E. vertical integration

A. economies of scope

A​ _________ merger takes place when a firm acquires a former competitor. A. horizontal B. conglomerate C. product extension D. market extension E. vertical

A. horizontal

Using a forward vertical integration strategy brings a firm closest to​ ________. A. its final customers B. suppliers in the industry C. other competitors in the industry D. the raw materials needed by the company E. wholesalers in the industry

A. its final customers

Based on tangible assets of the​ firm, _____________ are usually relatively easy to duplicate. A. research and development B. core competencies C. significant market power in one line of business D. coordination between different business segments E. ​information-processing capabilities

A. research and development

Which of the following are substitutions for strategic​ alliances? A. ​"Going it​ alone" and acquisitions B. Joint ventures and acquisitions C. Nonequity alliance and joint ventures D. Collusion and acquisitions E. Licensing agreement and nonequity alliance

A. ​"Going it​ alone" and acquisitions

When the value of the investments stakeholders make in a particular firm are greater than the value of those same investments would be in other​ firms, what type of investment has been​ made? A. ​Firm-specific investments B. ​Customer-specific investments C. ​Supplier-specific investments D. Human capital investment E. Rare resource investments

A. ​Firm-specific investments

​_____________ can limit the development of an alliance over time. A. Need to learn B. A priori C. Flexibility D. Trust E. Allowing the alliance to develop over time on its own

B. A priori

​__________ is the result of an alliance partner that promises a certain resource that it either does not control or cannot acquire. A. Alliance rarity B. Adverse selection C. Holdup D. Transaction specificity E. Moral hazard

B. Adverse selection

_____________ identify a complex set of resources and capabilities that link different businesses in a diversified firm through managerial and technical expertise. A. Free cash flow B. Core competencies C. Related constrained diversification D. Diversification E. Rare and valuable resources

B. Core competencies

How are the resources and capabilities that enable firms to implement strategies​ imitated? A. Direct duplication and licensing agreement B. Direct duplication and substitution C. Substitution and acquisition D. Joint ventures and government intervention E. Going it alone and acquisitions

B. Direct duplication and substitution

Which of the following helps reduce production or distribution​ costs? A. Increasing market power in product markets B. Economies of scale C. Eliminating inefficient target management D. Tax shields E. Avoiding bankruptcy

B. Economies of scale

________ is when firms coordinate production and pricing by directly communicating with each other. A. Absorptive capacity B. Explicit collusion C. Tacit collusion D. A learning race E. Facilitating entry and exit opportunities

B. Explicit collusion

Which of the following is not one of the ways in which firms improve the performance of their current​ operations? A. Learning from competitors B. Exploiting economies of scope C. Exploiting economies of scale D. Managing risk E. Sharing costs

B. Exploiting economies of scope

​______________ differences is not one of the​ post-merger integration problems due to the differences between the acquiring and target​ firms? A. Strategic B. Financial C. Operational D. Cultural E. Functional

B. Financial

Why are mergers and acquisition strategies​ important? A. To limit control of the FTC B. For diversification and vertical integration C. To prevent hostile takeovers D. To satisfy demands of the FTC E. To generate additional value for a firm

B. For diversification and vertical integration

Which of the following allows a target​ firm's management to purchase stock for a price greater than the current market​ value? A. A trade offers B. Greenmail C. Pac Man defense D. A poison pills E. A standstill agreement

B. Greenmail

The extent to which rare vertical integration decisions can be sources of sustained competitive advantage depends on which one of the​ following? A. Threat of opportunism B. Imitability C. Vertical​ dis-integration D. ​U-form management structures E. Outsourcing

B. Imitability

____________ reduces cheating by linking the ability of partners to earn returns on their investments to the economic success of the alliance. A. Distribution agreements B. Joint ventures C. Licensing agreements D. Supply agreements E. Equity investments

B. Joint ventures

Which diversification strategy is related to the extent to which a firm is​ diversified? A. Geographic B. Limited corporate C. ​Single-business corporate D. Vertical E. Capabilities

B. Limited corporate

Which of the following is a less​ costly-to-duplicate economies of​ scope? A. Multipoint competition B. Risk reduction C. Internal capital allocation D. Exploiting market power E. Core competencies

B. Risk reduction

_____________ allow employees to purchase stock at predetermined prices. A. ​Performance-based bonuses B. Stock options C. Profit sharing D. Stock grants E. Cash bonuses

B. Stock options

Which of the following is a substitute for exploiting economies of scope in​ diversification? A. ​Deep-pocket model of diversification B. Strategic alliance C. External capital markets D. ​Related-linked strategies E. Human capital investments

B. Strategic alliance

Which of the following is an advantage of internal capital allocation for a diversified​ firm? A. There are fewer inflated estimates of performance. B. There is an efficiency advantage. C. There is a higher quality exchange of information between firms. D. Poor performers require less incentive. E. Unrelated diversity is easier to manage.

B. There is an efficiency advantage.

When does an imperfectly competitive market of control​ exist? A. When all bidders are aware of additional value to competitors B. When the target is worth more to one bidder than others C. When the target is worth less than what is being bid D. When performance can be measured in the global market E. When the target is worth more than what is being bid

B. When the target is worth more to one bidder than others

One limitation of core competencies based on economies of scope includes​ ___________. A. invented competencies B. intangible nature of economies of scope C. dominant logic D. exploitation of core competencies E. prevention of exploitation of core competencies

B. intangible nature of economies of scope

When a firm allows others to use its brand name to sell​ products, a(n)​ _________ has been established. A. equity alliance B. licensing agreements C. distribution agreement D. nonequity alliance E. joint venture

B. licensing agreements

Vertical integration reduces the threat of​ _________. A. a transaction specific investment B. opportunism C. uncertainty D. limited flexibility E. backward vertical integration

B. opportunism

To have a sustained competitive​ advantage, a strategic alliance must be​ ________. A. equally beneficial to all members B. rare and costly to imitate C. common among competitors in the industry D. easily duplicated among alliance partners E. interchangeable with​ low-cost substitutions

B. rare and costly to imitate

High levels of​ transaction-specific investment lead to higher levels of​ _____________. A. flexibility B. vertical integration C. strategic alliances D. competitive advantage E. opportunism

B. vertical integration

Which of the following will negate competitive advantage even when objectives of a strategic alliance are rare and costly to​ imitate? A. Licensing agreements B. ​Low-cost substitutions C. Foreign market penetration D. An alliance is too socially complex E. ​"Going it​ alone"

B. ​Low-cost substitutions

When a​ firm's businesses share few economies of​ scope, which type of strategy is the firm​ pursuing? A. ​Limited-corporate diversification B. ​Unrelated-corporate diversification C. ​Related-constrained strategy D. ​Related-corporate diversification E. ​Related-link strategy

B. ​Unrelated-corporate diversification

Investments that have more value in a particular firm are examples of​ ________ investments. A. ​transaction-specific B. ​firm-specific C. ​short-term D. operational committee E. ​long-term

B. ​firm-specific

A strategy that allows firms to implement more than one diversification strategy is said to be implementing a​ ______ strategy. A. corporate diversification B. ​product-market diversification C. ​geographic-market diversification D. dominant business E. product diversification

B. ​product-market diversification

Which of the following indicates a​ firm's ability to​ learn? A. A learning race B. Strategic alliance C. Absorptive capacity D. Explicit collusion E. Increasing returns to scale

C. Absorptive capacity

Which of the following is a necessary but not sufficient condition for a firm to gain a competitive advantage from acquiring a target to pursue scope​ economies? A. Target firm must have valuable and rare resources and capabilities B. Both target and acquiring firms must have valuable and rare resources and capabilities C. Acquiring firm must have valuable and rare resources and capabilities D. Both target and acquiring firms must have valuable resources and capabilities E. Target firm must have valuable resources and capabilities

C. Acquiring firm must have valuable and rare resources and capabilities

When bidding on a firm with rare and valuable economies of​ scope, which of the following would have the LEAST likelihood of generating profits for equity​ holders? A. Search for firms that have valuable and rare commodities. B. Operate in a​ "thinly traded" acquisition market. C. Announce the potential bid publicly to influence bidding firm stock prices. D. Keep information away from other bidders. E. Avoid bidding wars.

C. Announce the potential bid publicly to influence bidding firm stock prices.

Which of the possible sources of economies of scope is achieved by improving a​ firm's performance relative to​ risk? A. Manufacturing economies B. Technical economies C. Diversification economies D. Pecuniary economies E. Vertical mergers

C. Diversification economies

Which of the following clauses that might be found in an alliance contract addresses how profits will be​ divided? A. Equity investment B. Initial Public Offerings C. Establishment issues D. Licensing intellectual property rights issues E. Termination issues

C. Establishment issues

Which of the following evaluates the performance effects of an acquisition for a bidding​ firm? A. Cumulative abnormal returns B. Asset pricing model C. Event study analysis D. Management hubris E. Economic profit potential

C. Event study analysis

Which of the following is not a requirement for a learning race to evolve between​ firms? A. Firms must have a strategic alliance B. Firms may vary in the rate they learn from each other C. Firms must seek to learn the same thing D. Firms may differ in terms of their ability to learn E. Firms may seek to learn from each other

C. Firms must seek to learn the same thing

Which of the following is NOT true about vertical​ integration? A. Vertical integration is simply the number of steps in this value chain that a firm accomplishes within its boundaries B. Backward vertical integration is when a firm incorporates more stages of the value chain within its boundaries. C. Firms that are more vertically integrated accomplish fewer stages of the value chain within their boundaries than firms that are less vertically integrated. D. Forward vertical integration brings firms closer to interacting directly with final customers. E. A​ firm's level of vertical integration is a potential source of competitive advantage.

C. Firms that are more vertically integrated accomplish fewer stages of the value chain within their boundaries than firms that are less vertically integrated.`

Which of the following occurs when a firm that has not made​ transaction-specific investments demands returns from the alliance that are higher than initially agreed​ to? A. Alliance rarity B. Transaction specifity C. Holdup D. Adverse selection E. Moral hazard

C. Holdup

Which of the following is a​ costly-to-duplicate economy of​ scope? A. Tax advantages B. Employee compensation C. Internal capital allocation D. Shared activities E. Risk reduction

C. Internal capital allocation

Which of the following is NOT a form of obtaining a controlling share of assets of another​ firm? A. Using cash from ongoing businesses to purchase a target firm B. Using a combination of assets to purchase a target firm C. Issuing an IPO to purchase a target firm D. Using internal equity to purchase a target firm E. Going into debt to purchase a target firm

C. Issuing an IPO to purchase a target firm

Which of the following is true about business​ strategy? A. It is a theory of how to gain competitive advantage in multiple businesses simultaneously. B. It is a theory of how to gain competitive advantage in a single industry simultaneously. C. It is a theory of how to gain competitive advantage in a single business or industry. D. It equates to the value chain of a company. E. It is similar to a​ company's mission.

C. It is a theory of how to gain competitive advantage in a single business or industry.

Which of the following is an example of a firm allowing others to use its brand name to sell​ products? A. Joint venture B. Equity alliance C. Licensing agreement D. Strategic alliance E. Nonequity alliance

C. Licensing agreement

Which one of the following is a difference between acquisitions and​ mergers? A. Mergers use cash while acquisitions use stock to purchase B. Acquisitions rather than mergers tend to be friendly C. Mergers rather than acquisitions typically involve firms of equal size and profitability D. Mergers and acquisitions involve one buyer and one target E. Mergers are public while acquisitions are private

C. Mergers rather than acquisitions typically involve firms of equal size and profitability

When firms work together but do not have equity positions in each​ other's organization, what type of alliance is​ formed? A. Joint venture B. Strategic alliance C. Nonequity alliance D. Licensing agreement E. Equity alliance

C. Nonequity alliance

When entering a new​ market, especially a new foreign​ market, which of the following is a reason that the benefits of an alliance may be​ few? A. Government may act to encourage the number of local firms in a market B. When the market is saturated C. Relatively few firms may have complementary resources needed in the alliance D. Increased trust of partners E. Encouraged duplication of product sources

C. Relatively few firms may have complementary resources needed in the alliance

Which of the following increases revenue by exploiting the reputation of some of a​ firm's business in other segments of its​ business? A. Product bundles B. Related constraints C. Shared activity D. Purchasing E. Inputs

C. Shared activity

Which of the following provides a firm with flexibility but still gives the firm enough information about an exchange to estimate its value over​ time? A. Value added as a percentage of sales measurements B. Vertical integration C. Strategic alliance D. Opportunism E. ​Transaction-specific investments

C. Strategic alliance

​_____________ is an aspect of imitability of diversification. A. Shared activity B. Multipoint competition C. Substitution D. Predatory pricing E. ​Firm-specific investment

C. Substitution

Which of the following is a financial motivation to mergers and​ acquisitions? A. Economies of scale B. Increased utilization of the​ bidder's management team C. Tax shields D. Adoption of more efficient production technology E. Vertical integration

C. Tax shields

Which of the following indicates only a small number of firms know about opportunities in a​ market? A. Asset pricing model B. Return on investment C. Thinly traded market D. Economies of scope E. Management hubris

C. Thinly traded market

Among the​ following, when is adverse selection in an alliance MOST likely to be​ made? A. When a partner sends less qualified or poorly trained employees to support the partnership B. When there is limited value in economic exchanges C. When it is difficult to observe the resources that a partner brings to an alliance D. When a partner makes investments that have value only in context of that alliance and no other economic exchanges E. When the potential partner produces the highest bid on the partnership

C. When it is difficult to observe the resources that a partner brings to an alliance

When is the cost of flexibility​ high? A. When the cost of changing strategic choices is high B. When resources are rare or costly to imitate C. When the cost of changing strategic choices in low D. When an investment is transaction specific E. When there is uncertainty

C. When the cost of changing strategic choices in low

From a​ CEO's perspective, coordinating functional specialists to implement a vertical integration strategy almost always involves​ ______________. A. external labor markets B. firm specific investments C. conflict resolution D. maximizing managerial accountability E. external capital markets

C. conflict resolution

The theory of how to gain competitive advantage by operating in several businesses simultaneously is called​ ________. A. business strategy B. forward vertical integration C. corporate strategy D. value chain E. vertical integration

C. corporate strategy

In addition to exploiting economies of scope in diversification by strategic​ alliances, firms can substitute for diversification by​ _________________. A. linking businesses thru common sales forces. B. using intangible core competencies. C. growing each business separately. D. exploiting economies of scope across businesses. E. using shared risk and tax advantages.

C. growing each business separately.

A​ _________ merger is when a firm acquires a former competitor. A. conglomerate B. market extension C. horizontal D. product extension E. vertical

C. horizontal

When competing firms cannot vertically integrate the same way as another​ firm, the​ firm's vertical integration strategy is considered to be​ _________. A. transaction specific B. alliance based C. rare D. opportunistic E. inflexible

C. rare

The two types of firms included in limited corporate diversification strategies are​ dominant-business firms and which of the​ following? A. ​Related-constrained strategies B. ​Unrelated-corporate diversification C. ​Single-business firms D. ​Related-corporate diversification strategies E. ​Related-linked strategies

C. ​Single-business firms

Which of the following is an advantage to an acquisition instead of a firm​ "going it​ alone"? A. The independence of the​ firm's resources is valuable. B. Acquisitions allow firms to retain flexibility to enter or not enter a new business. C. Acquisitions limit organizational baggage. D. A firm can exploit opportunities provided by the acquired firm. E. The acquisition will result in a monopoly.

D. A firm can exploit opportunities provided by the acquired firm.

Which of the following indicates a firm purchasing a second​ firm? A. Controlling shares B. Merger C. Hostile takeover D. Acquisition E. Tender offer

D. Acquisition

A firm that has not sold many shares of stock on the public market is BEST described as which of the​ following? A. Tender offer B. Controlling shares C. Premium D. Closely held E. Privately held

D. Closely held

_________ strategy is defined as a​ firm's theory of how to gain competitive advantage by operating in several businesses simultaneously. A. Real options B. Business C. Differentiation D. Corporate E. International

D. Corporate

When a firm generates between 70 and 95 percent of its total sales in a single product​ market, what type of corporate diversification category does the firm fall​ into? A. Limited corporate diversification B. Related constrained firm C. Related corporate diversification D. Dominant business firms E. Single business firms

D. Dominant business firms

​_____________ refers to how costly it is for a firm to alter strategic and organizational decisions. A. Vertical integration B. Value added as a percentage of sales C. Value chain D. Flexibility E. Opportunism

D. Flexibility

When a firm operates in several geographic areas at the same​ time, which type of strategy is being​ implemented? A. Product diversification strategy B. Limited corporate diversification C. Corporate diversification strategy D. Geographic market diversification strategy E. ​Product-market diversification strategy

D. Geographic market diversification strategy

If a firm possesses​ valuable, rare, and​ costly-to-imitate resources in a business​ activity, how should that firm use vertical​ integration? A. It should not use any type of integration in that activity. B. It should use forward integration into that activity. C. It should pursue backward integration in that activity. D. It should pursue vertical integration into that activity. E. It should pursue​ transaction-specific investments for that activity.

D. It should pursue vertical integration into that activity.

Which of the following suggests economic value of bidding firms will fall once a merger or acquisition is​ announced? A. Event study analysis B. Asset pricing model C. Economic profit potential D. Managerial hubris E. Cumulative abnormal returns

D. Managerial hubris

Which of the following represents the market created when multiple firms seek to acquire other​ firms? A. Strategic relatedness B. Securities and exchange C. Potential for economic profits D. Market for corporate control E. Cumulative abnormal return

D. Market for corporate control

Which of the following is characterized by increasing returns to​ scale? A. Absorptive capacity B. The learning race C. Explicit collusion D. Network industries E. Economies of scale

D. Network industries

If the cost of vertical integration is greater than the cost of​ opportunism, what should the firm​ do? A. Vertically integrate into the exchange B. Not participate in the exchange C. Use forward integration in the exchange D. Not integrate into the exchange E. Use backward integration in the exchange

D. Not integrate into the exchange

If a firm does not possess resources necessary to gain competitive​ advantage, what should the firm avoid​ doing? A. Changing their business strategy B. Providing value chain C. Using vertical integration D. Pursuing opportunism E. Implementing corporate strategy

D. Pursuing opportunism

When a business exploits different types of economies of​ scope, what type of strategy is the firm​ implementing? A. Core competencies B. Risk reduction C. Diversified portfolio D. Related link diversification E. Related constrained diversification

D. Related link diversification

Which of the following has associated costs that are known and​ fixed? A. Opportunism B. Corporate strategy C. ​Flexibility-based approach D. Strategic alliances E. Vertical integration

D. Strategic alliances

Which of the following is true of a​ transaction-specific investment? A. The alternate exchange has greater value. B. The current exchange has less value than an alternate exchange. C. The current exchange and the alternate exchange has equal value. D. The current exchange has more value than an alternate exchange. E. The value of the exchanges cannot be compared.

D. The current exchange has more value than an alternate exchange.

Which one of the following is a reason to prefer alliances over​ "going it​ alone"? A. The level of​ transaction-specific investment required to complete an exchange is low. B. The level of​ transaction-specific investment required to complete an exchange is high. C. There is great certainty about the future value of an exchange. D. There is great uncertainty about the future value of an exchange. E. An exchange partner possesses valuable resources and capabilities

D. There is great uncertainty about the future value of an exchange.

Which of the following represents a​ decision-making setting where the future value of an exchange cannot be known when the investment is being​ made? A. Valued added as a percentage of sales measures B. ​Transaction-specific investments C. Flexibility D. Uncertainty E. Opportunism

D. Uncertainty

Which of the following is NOT one of the four business​ strategies? A. Flexibility B. Cost leadership C. Collusion D. Vertical integration E. Product differentiation

D. Vertical integration

Which of the following strategies implemented by mergers and acquisitions would benefit by using the​ U-form structure? A. Horizontal integration strategies B. Diversification strategies C. Outsourcing strategies D. Vertical integration strategies E. Asset pricing model strategies

D. Vertical integration strategies

Which of the following BEST defines​ opportunism? A. The amount of sales within the boundaries of the firm B. Investing in an exchange that has more value than a current exchange C. Marketing to a specific​ population, such as children D. When a firm is unfairly exploited in an exchange E. Reaching the largest number of customers possible

D. When a firm is unfairly exploited in an exchange

Core competencies more difficult to directly duplicate because they​ ___________. A. are socially complex. B. are dependent on capital allocation. C. are part of a strategic alliance. D. are more intangible. E. must be used in shared activities.

D. are more intangible.

The failures typically associated with the worst acquisitions can primarily be attributed to​ ________. A. financial struggles B. strategic differences C. operational challenges D. cultural clashes E. functional and organizational differences

D. cultural clashes

Firms must be​ ________ to exploit economies of​ scope? A. linked B. single C. public D. diversified E. private

D. diversified

​"Going it​ alone" preferred over a strategic alliance when the level of the specific investment is​ ______. A. low B. evenly shared C. moderate D. high E. undetermined

D. high

When a business in a diversified firm competes for corporate​ capital, a(n)​ _______ market is created A. dominant logic B. cost of capital advantage C. external capital D. internal capital E. internal competencies

D. internal capital

When firms create a legally independent firm in which they invest and share​ profits, a(n)​ __________ has been established. A. equity alliance B. strategic alliance C. nonequity alliance D. joint venture E. distribution agreement

D. joint venture

When two or more diversified firms simultaneously compete in multiple​ markets, the result is​ _________. A. mutual forbearance B. risk of cash flow C. tacit collusion D. multipoint competition E. escalation of commitment

D. multipoint competition

Transaction-specific investments make parties to an exchange vulnerable to​ _________. A. value chain B. limited flexibility C. uncertainty D. opportunism E. forward vertical integration

D. opportunism

When attempting to exploit opportunities created by​ valuable, rare, and​ costly-to-imitate resources and​ capabilities, firms should engage in​ ___________. A. business strategy B. value chain C. opportunism D. vertical integration E. corporate strategy

D. vertical integration

If a firm operates in business with the same economies of scope and generates less than​ 70% of its revenues in one​ business, which type of diversified firm is​ this? A. Unrelated diversification B. ​Related-link C. Dominant business D. ​Related-constrained E. Single business

D. ​Related-constrained

When a firm uses monopoly power in several different​ businesses, they are engaging in​ _________. A. multipoint competition B. tacit collusion C. mutual forbearance D. ​deep-pocket model E. predatory pricing

D. ​deep-pocket model

Which of the following will limit the value of a​ firm's resources that are dependent on its​ independence? A. Joint venture B. ​"Going it​ alone" C. Nonequity agreement D. Alliances E. Acquisition

E. Acquisition

Which of the following describes a​ company's strategy of incorporating various stages of the value chain with those stages bringing it closer to gaining access to raw​ materials? A. ​Transaction-specific investments B. Opportunism C. Forward vertical integration D. Business strategy E. Backward vertical integration

E. Backward vertical integration

Which of the following is one of the MOST important control mechanisms for CEOs in​ U-form organizations? A. Operations committees B. ​Firm-specific investments C. Compensation D. Executive committees E. Budgeting

E. Budgeting

Which of the following is MOST likely to create a moral​ hazard? A. Misrepresented resources B. Government intervention C. An unethical CEO D. Lack of skills and abilities E. Changes in market conditions

E. Changes in market conditions

Which diversification strategy will a firm implement when it operates in multiple industries or markets​ simultaneously? A. Geographic market B. ​Product-market C. Product D. ​Related-corporate E. Corporate

E. Corporate

Which of the following reasons is not consistent with a valuable vertical integration​ strategy? A. Enables a firm to exploit its own or other​ firms' valuable,​ rare, and​ costly-to-imitate resources B. Responds to threats of​ opportunism; C. Gives a firm flexibility D. A firm is organized to implement it correctly E. Creates more uncertainty

E. Creates more uncertainty

Which of the following occurs when competitors develop or obtain the resources and capabilities that enable another firm to implement a valuable and rare vertical integration​ strategy? A. Casual ambiguity B. Sustained competitive advantage C. Path dependency D. Social complexity E. Direct duplication

E. Direct duplication

_________________ exists when the value of the product increases as a function of the number of businesses the firm operates. A. Unrelated corporate diversification B. Limited corporate diversification C. Product diversification strategy D. Link relationships E. Economies of scope

E. Economies of scope

​______________ reduces the likelihood of cheating by strategic alliance partners. A. Strategic alliance B. Licensing agreements C. Intellectual property rights ownership D. IPOs E. Equity alliances

E. Equity alliances

When a firm incorporates more stages of the value chain and those stages bring the firm closer to the final​ customer, what is it engaging​ in? A. Corporate strategy B. Backward vertical integration C. Value chain D. Vertical integration E. Forward vertical integration

E. Forward vertical integration

Which of the following is NOT a tool used to help realize the value of alliances and minimize the threat of​ cheating? A. Contracts B. Joint ventures C. Trust D. Equity investments E. Licensing

E. Licensing

Which of the following is an unrealistic belief that managers in a bidding firm can manage assets of a target more​ efficiently? A. Asset pricing model B. Cumulative abnormal return C. Economic profit potential D. Event study analysis E. Management hubris

E. Management hubris

When firms purchase services from outside suppliers that it used to obtain​ internally, what is the firm​ performing? A. Rare vertical integration B. Offshoring C. Direct duplication D. Forward vertical integration E. Outsourcing

E. Outsourcing

Which of the following allows a firm to reduce costs and focus efforts on business functions that are central to competitive​ advantage? A. Backward vertical integration B. ​U-form management structures C. Imitability D. Opportunism E. Outsourcing

E. Outsourcing

When a firm operates in multiple industries​ simultaneously, what type of strategy is being​ used? A. Corporate diversification strategy B. Geographic market diversification strategy C. ​Product-market diversification strategy D. Limited corporate diversification E. Product diversification strategy

E. Product diversification strategy

Which of the following economies of scope is NOT likely to be subject to​ high-cost imitation? A. Exploiting market power B. Multipoint competition C. Internal capital allocation D. Exploiting corporate capabilities E. Shared activities

E. Shared activities

Which of the following is not one of the ways to cheat in strategic​ alliances? A. Partners exploit transaction specific investments made by others in the alliance B. Holdup C. Adverse selection D. Moral hazard E. Tacit collusion

E. Tacit collusion

Which of the following is NOT a reason to merge with another​ company? A. For the potential for above normal profits B. To ensure survival C. To increase cash flow D. Management hubris E. To pay increased dividends to shareholders

E. To pay increased dividends to shareholders

Which of the following can describe business activities that are shared across different businesses within a diversified​ firm? A. Exploiting market power B. Risk reduction C. Operational economies of scope D. Multipoint competition E. Value chain

E. Value chain

When a firm incorporates more stages at the beginning of the supply​ chain, the firm engaging in​ __________. A. mergers and acquisitions B. vertical integration C. forward vertical integration D. value chain E. backward vertical integration

E. backward vertical integration

The theory of how to gain competitive advantage in a single business or industry is called a​ ______. A. corporate Strategy B. backward vertical integration C. value chain D. forward vertical integration E. business strategy

E. business strategy

A(n) ________ is when a firm purchases a majority of a second​ firm's outstanding stock shares. A. friendly acquisition B. hostile takeover C. acquisition premium D. unfriendly acquisition E. controlling share

E. controlling share

When one firm agrees to distribute products of​ others, a(n)​ _____________ is formed. A. strategic alliance B. joint venture C. nonequity alliance D. equity alliance E. distribution agreement

E. distribution agreement

​A(n) __________ indicates an acquisition that the target firm did not want. A. merger B. acquisition premium C. friendly acquisition D. strategic options for diversification E. hostile takeover

E. hostile takeover

When one firm agrees to supply another firm with a product or​ service, a​ __________ is formed. A. distribution agreement B. nonequity alliance C. joint venture D. licensing agreement E. supply agreement

E. supply agreement

In what percentage of alliances do one or more partners feel the alliance did not meet their​ expectations? A. ​50% B. ​75% C. ​40% D. ​25% E. ​30%

E. ​30%

_________________ do not commonly experience conflict due to vertical​ integration? A. Finance and Human Resources B. Manufacturing and Sales C. ​R&D and Finance D. Accounting and​ R&D E. ​R&D and Human Resources

E. ​R&D and Human Resources