TEST #2 : Strategic Management Ch. 8 & Ch. 9

____ 14. When using cooperative strategies, a firms most frequently develop strategic alliances that a. enhance the firm's reputation in the marketplace. b. are long-lived. c. will reduce the firm's political risk. d. create a competitive advantage.

D

____ 15. Firms participate in strategic alliances for all the following reasons EXCEPT to a. create value that they could not develop by acting independently. b. enter competitive markets more quickly. c. gain access to resources. d. retain tight control over intangible core competencies.

D

____ 17. McDonald's, Hilton International, and Subway all heavily rely on the ____ strategy. a. transnational b. network cooperative c. cross-border alliances d. franchising cooperative

D

____ 9. In Porter's model, if a country has both ________ and __________ production factors, it is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors. a. basic; advanced b. advanced; generalized c. basic; generalized d. advanced; specialized

D

A strategy through which the firm sells its goods or services outside its domestic market.

International Strategy

Which determinant of national advantage is, "digital communication systems and an educated workforce"

advanced factors

An alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities for the purpose of creating a competitive advantage

equity strategic alliance

In competition reducing alliances, ____ ____ is when firms directly negotiate production output and pricing agreements in order to reduce competition (illegal).

explicit collusion

What is the best solution if the firm has no foreign manufacturing expertise and requires investment only in distribution

export

Which determinant of national advantage is, "the inputs necessary to compete in any industry Labor Land Natural resources Capital Infrastructure"

factors of production

Use the market ___ ___ for: Speed up development of new goods or service Speed up new market entry Maintain market leadership Form an industry technology standard Share risky R&D expenses Overcome uncertainty

fast cycle

Which determinant of national advantage is, "the pattern of strategy, structure, and rivalry among firms. Common technical training Methodological product and process improvement Cooperative and competitive systems"

firm strategy, structure, and rivalry

____ ____ ____: Long term relationships that often appear in mature industries where demand is relatively constant and predictable Stable networks are built for exploitation of the economies (scale and/or scope) available between the firms

stable alliance network

Use the market ____ ____ for: Gain market power (reduce industry overcapacity) Gain access to complementary resources Establish economies of scale Overcome trade barriers Meet competitive challenges from other competitors Pool resources for very large capital projects Learn new business techniques

standard cycle

A cooperative strategy in which firms combine some of their resources and capabilities for the purpose of creating a competitive advantage

strategic alliance

A primary type of cooperative strategy in which firms combine some of their resources and capabilities to create a mutual competitive advantage.

strategic alliance

What is the best solution if the firm needs to reduce its risk through the sharing of costs.

strategic alliance

____ ____ involves the exchange and sharing of resources and capabilities to co-develop or distribute goods and services and requires cooperative behavior from all partners.

strategic alliance

A strategy in which firms share some of their resources and capabilities to create economies of scope

synergistic strategic alliance

_____ ____ ____: Creates joint economies of scope between two or more firms. Creates synergy across multiple functions or multiple businesses between partner firms.

synergistic strategic alliances

In competition reducing alliances, ____ ____ is when firms in an industry indirectly coordinate their production and pricing decisions by observing other firm's actions and responses.

tacit collusion

Competitive advantages gained from competition and uncertainty reducing _______

temporary

An international strategy through which the firm seeks to achieve both global efficiency and local responsiveness

transnational strategy

Which Strategy: Seeks to achieve both global efficiency and local responsiveness. Difficult to achieve because of simultaneous requirements: Strong central control and coordination to achieve efficiency Decentralization to achieve local market responsiveness Firm must pursue organizational learning to achieve competitive advantage.

transnational strategy

____ 10. One of the primary reasons for failure of cross-border strategic alliances is a. the incompatibility of the partners. b. conflict between legal and business systems. c. security concerns and terrorism. d. high debt financing.

A

A business-level cooperative strategy that: Are used to hedge against risk and uncertainty. These alliances are most noticed in fast-cycle markets An alliance may be formed to reduce the uncertainty associated with developing new product or technology standards. is ____ ____ ____

uncertainty reducing alliances

____ 11. Internationally diversified firms a. earn greater returns on their innovations through larger or more numerous markets. b. are more likely to produce below-average returns for investors in the long run. c. may need to decrease international activities when domestic profits are poor. d. are generally unable to achieve high levels of synergy because of differences in cultures.

A

____ 18. In a cross-border alliance, the local partner is often a useful source of information about a. sources of capital. b. the strengths of the foreign firm's technology. c. market synergies. d. long-term planning.

A

____ 19. The two basic approaches to successfully manage cooperative strategic alliances involve ____ and ____. a. cost minimization, opportunity maximization b. monitoring systems, multiple management approaches c. contractual systems, financial systems d. equity approaches, nonequity approaches

A

____ 5. An office management firm has developed a system for efficiently organizing small medical and dental practices both through proprietary software and through unique training programs for staff. It has recently acquired a firm specializing in providing management services for veterinary practices. The office management firm is hoping to a. achieve economies of scope. b. implement vertical integration. c. achieve financial economies through an unrelated acquisition. d. acquire specialized talent from the veterinary management company.

A

____ 6. A noted professional art academy has founded an "artists and friends" travel company specializing in tours for artists to scenic locales, using its faculty as traveling teachers. In addition, the art academy has purchased a framing company to both make frames for academy art works, but also to sell museum-quality framing services to the public. The art academy is engaging in diversification based on ____ relatedness. a. operational b. corporate c. intellectual d. constrained

A

____ 13. Within the Renault Nissan alliance (Chapter 9 Opening Case), both Renault and Nissan have each formed ____________ strategic alliances at the business-unit level with other companies. a. vertical complementary b. horizontal complementary c. synergistic d. diversifying

B

____ 16. Firms entering into synergistic strategic alliances expect to attain a. technological complexity. b. economies of scope. c. monopolistic market power. d. learning curve efficiencies.

B

____ 3. Ikea offers young customers a selection of home furnishings featuring good design, function, and acceptable quality at low prices. Ikea is using which business level strategy? a. Cost leadership b. Focused cost leadership c. Differentiation d. Focused differentiation

B

____ 4. Which of the following reasons for diversification is most likely to increase the firm's value? a. increasing managerial compensation b. reducing costs through business restructuring c. taking advantage of changes in tax laws d. conforming to antitrust regulation

B

____ 7. The drawbacks to transferring competencies by moving key people into new management positions include all EXCEPT a. the people involved may not want to move. b. managerial competencies are not easily transferable to different organizational cultures. c. managers with these skills are expensive. d. top-level managers may resist having these key people transferred.

B

____ 2. All of the following are ways that a good or service can be differentiated EXCEPT a. Responsive customer service b. Perceived prestige and status c. Economies of scale and efficient operations d. Engineering design and performance

C

____ 20. In managing cooperative strategies, research indicates that ____ can be a capability that is valuable, rare, imperfectly imitable, and often nonsubstitutable giving these firms a competitive advantage. a. extensive capitalization b. stability c. trustworthiness d. Internet competency

C

____ 8. Which of the following is NOT an incentive for firms to become multinational? a. to gain access to consumers in emerging markets. b. to gain easier access to raw materials. c. to avoid high domestic taxation on corporate income. d. opportunities to integrate operations on a global scale.

C

____ 1. When selecting a business level strategy, the firm must determine all of the following EXCEPT a. How will the customer's needs be satisfied? b. Who is the customer? c. What are the customers' needs? d. Why should these customers' needs be satisfied?

D

____ 12. Bunyan Heavy Equipment, a U.S. firm, is investigating expanding into Russia using a greenfield venture. The committee researching this project has delivered a negative report. The MAIN concern of the committee is probably a. loss of intellectual property due to Russian piracy. b. the fluctuation in the value of the ruble. c. the numerous and conflicting legal authorities in Russia. d. Russia's recent actions to gain state control of private firms' assets.

D

Which strategy includes: Products are standardized across national markets. Business-level strategic decisions are centralized in the home office. Strategic business units (SBU) are assumed to be interdependent. Emphasizes economies of scale. Often lacks responsiveness to local markets. Requires resource sharing and coordination across borders (hard to manage).

Global strategy

Focusing on particular region(s) rather than on global markets Better understanding of the cultures, legal and social norms

Regionalization

Which determinant of national advantage is, "natural and labor resources"

basic factors

A strategy through which firms combine some of their resources and capabilities for the purpose of creating a competitive advantage by competing in one or more product markets

business level cooperative strategy

The type of corporate strategy selected will have an impact on the selection and implementation of the ____ ___ ____.

business level strategies

A business-level cooperative strategy that: Created to avoid destructive or excessive competition Explicit collusion: when firms directly negotiate production output and pricing agreements in order to reduce competition (illegal). Tacit collusion: when firms in an industry indirectly coordinate their production and pricing decisions by observing other firm's actions and responses. is ____ ____ ____

competition reducing alliances

A business-level cooperative strategy that: Occur when firms join forces to respond to a strategic action of another competitor. Because they can be difficult to reverse and expensive to operate, strategic alliances are primarily formed to respond to strategic rather than tactical actions is _____ ____ _____

competition response alliances

_______ business-level strategic alliances, especially the vertical ones, have the greatest probability of creating a sustainable competitive advantage.

complementary

A business-level cooperative strategy that: Combine partner firms' assets in complementary ways to create new value. Include distribution, supplier or outsourcing alliances where firms rely on upstream or downstream partners to build competitive advantage. is ____ _____

complementary alliances

Business level alliances in which firms share some of their resources and capabilities in complementary ways for the purpose of creating a competitive advantage

complementary strategic alliances

Is a means by which firms collaborate for the purpose of working together to achieve a shared objective

cooperative strategy

A strategy through which a firm collaborates with one or more companies for the purpose of expanding its operations

corporate level cooperative strategy

The ____ _____ management approach involves: Have formal contracts with partners. Specify how strategy is to be monitored. Specify how partner behavior is to be controlled. Set goals that minimize costs and to prevent opportunistic behavior by partners.

cost minimization

A strategy in which firms with headquarters in different countries decide to combine some of their resources and capabilities for the purpose of creating a competitive advantage

cross border strategic alliance

Which determinant of national advantage is, "characterized by the nature and size of buyers' needs in the home market for the industry's goods or services. Size of the market segment can lead to scale-efficient facilities. Efficiency can lead to domination of the industry in other countries. Specialized demand may create opportunities beyond national boundaries."

demand conditions

____ ___ ___ ____ include: Factors of production Basic factors Advanced factors Demand conditions Related and Supporting industries Firm Strategy, Structure, and Rivalry

determinants of national advantage

A strategy in which firms share some of their resources and capabilities to engage in product and/or geographic diversification

diversifying strategic alliance

_____ ____ ____ : Allows a firm to expand into new product or market areas without completing a merger or an acquisition. Provides some of the potential synergistic benefits of a merger or acquisition, but with less risk and greater levels of flexibility. Permits a "test" of whether a future merger between the partners would benefit both parties.

diversifying strategic alliance

____ ____ ___: Arrangements that evolve in industries with rapid technological change leading to short product life cycles. Primarily used to stimulate rapid, value-creating product innovation and subsequent successful market entries. Purpose is often exploration of new ideas

dynamic alliance network

Which type of risk in the internal environment is: Differences and fluctuations in the value of different currencies Differences in prevailing wage rates Difficulties in enforcing property rights Unemployment

economic risks

International strategy benefits include: ____ __ _____ : Expanding size or scope of markets helps to achieve economies of scale in manufacturing as well as marketing, R&D or distribution. Can spread costs over a larger sales base. Can increase profit per unit.

economies of scale (or learning)

A strategy in which a firm (the franchisor) uses a franchise as a contractual relationship to describe and control the sharing of its resources and capabilities with its partners (the franchisees)

franchising

_____: Spreads risks and uses resources, capabilities, and competencies without merging or acquiring another company. A contractual relationship (the franchise) is developed between two parties, the franchisee and the franchisor. An alternative to pursuing growth through mergers and acquisitions.

franchising

An international strategy in which a firm's home office determines the strategies business units are to use in each country or region

global strategy

An entry mode through which a firm invests directly in another country or market by establishing a new wholly owned subsidiary

greenfield venture

____ ____ alliances are sometimes difficult to maintain because they are often between rival competitors.

horizontal complementary

A strategy through which a firm expands the sales of its goods or services across the borders of global regions and countries into a potentially large number of geographic locations or markets

international diversification strategy

A strategy through which the firm sells its goods or services outside its domestic market

international strategy

Reasons to having an ____ ____: International markets yield potential new opportunities. New market expansion extends product life cycle. Needed resources can be secured

international strategy

A strategic alliance in which two or more firms create a legally independent company to share some of their resources and capabilities for the purpose of developing a competitive advantage

joint venture

Legitimate concerns about the relative attractiveness of global strategies Global strategies not as prevalent as once thought Difficulty in implementing global strategies

liability of foreignness

What is the best solution if the firm needs to facilitate the product improvements necessary to enter foreign markets

licensing

International strategy benefits include: ____ ____ which is low cost markets aid in developing competitive advantage by providing access to: Raw materials Transportation Lower costs for labor Key customers Energy

location advantage

Low cost markets aid in developing competitive advantage by providing access to: Raw materials Transportation Lower costs for labor Key customers Energy

location advantages

Cost of coordination across diverse geographical business units Institutional and cultural barriers Understanding strategic intent of competitors The overall complexity of competition

management problems (with international expansion)

Use the market ____ ____ for: Gain access to a restricted market Establish a franchise in a new market Maintain market stability (e.g., establishing standards)

slow cycle

An international strategy in which strategic and operating decisions are decentralized to the strategic business units in individual countries our regions for the purpose of allowing each unit the opportunity to tailor products to the local market

multidomestic strategy

Which strategy includes: Strategy and operating decisions are decentralized to strategic business units (SBU) in each country. Products and services are tailored to local markets. Business units in one country are independent of each other. Assumes markets differ by country or regions. Focus on competition in each market. Prominent strategy among European firms due to broad variety of cultures and markets in Europe.

multidomestic strategy

A strategy wherein several firms agree to form multiple partnerships for the purpose of achieving shared objectives

network cooperative strategy

Reasons to having an international strategy International markets yield potential ____ _____. New market expansion extends ____ ___ ____. Needed _____ can be secured

new opportunities; product life cycle; resources

An alliance in which two or more firms develop a contractual relationship to share some of their resources and capabilities for the purpose of creating a competitive advantage

nonequity strategic alliance

The ____ ____ approach involves: Maximize partnership's value-creation opportunities Learn from each other Explore additional marketplace possibilities Maintain less formal contracts, fewer constraints

opportunity maximization

Which type of risk in the internal environment is: Instability in national governments War, both civil and international Potential nationalization of a firm's resources

political risk

Which determinant of national advantage is, "supporting services, facilities, suppliers and so on. Support in design Support in distribution Related industries as suppliers and buyers"

related and supporting industries

What is the best solution if the firm's intellectual property rights in an emerging economy are not well protected, the number of firms in the industry is growing fast, and the need for global integration is high.

wholly owned subsidiary