Ch.11 Making Alliances & Acquisitions
Strategic investments in an equity-based alliance involve one partner investing in another.
True
The "imitability" of an alliance is based on the trust and understanding between the partners.
True
The alliance dissolution is a four-step process.
True
The degree of tacitness is low in non-equity-based alliances.
True
The informal institution-based view that stresses on the cognitive pillar is centered on the internalized taken-for-granted values and beliefs that guide firm behavior.
True
The more hard to describe the capabilities of a firm in an alliance, the greater the preference for an equity involvement.
True
The real options view gives the investor the levy of buying an option for initial investment, holding it until a decision point is arrived, and abandoning it if necessary.
True
One of the disadvantages of having strategic alliances is potential partner opportunism.
True
Acquisition premium is the difference between the acquisition price and the market value of the acquiring firm.
False
Alliances preclude acquisitions.
False
Antitrust authorities provide easy approvals for both alliances and acquisitions with less intervention.
False
Contractual alliances involve sharing of ownership.
False
Cross-border mergers are more common than acquisitions.
False
Equity alliance relationships tend to have less direct control over joint activities on a continual basis than contractual relationships.
False
Equity-based alliances include co-marketing, research and development, contracts, turnkey products, strategic suppliers, and strategic distributors.
False
Every alliance or acquisition decision is driven by imitation.
False
Formal government policies regarding entry mode requirements are generally becoming more conservative.
False
Importance of direct organizational monitoring and control is low in equity-based alliances.
False
In the context of acquisitions, synergistic motives destroy value while hubris and managerial motives add value.
False
Influence of formal institutions is low in both equity- and non-equity-based alliances.
False
Licensing is a form of equity-based alliance.
False
The "O" in the VRIO framework indicates opportunity.
False
The first phase in an alliance dissolution is mediation by third parties.
False
The formal institution-based view that drives mergers and alliances is based on the normative and cognitive pillars.
False
The three potential motives for alliances are synergistic, hubristic, and managerial motives.
False
One way of combating opportunism in an alliance is to wall off critical capabilities.
True
A joint venture (JV) is a form of equity-based alliance.
True
Alliances have emerged as great instruments of real options because of their flexibility to sequentially scale up or scale down investment.
True
Alliances permit firms to sequentially increase their investment should they decide to pursue acquisitions.
True
Cross-shareholding is based on financial interest between the firms.
True
During the first stage of alliance formation, a firm decides whether growth can be achieved strictly through market transactions, acquisitions, or alliances.
True
Equity, learning and experience, relational capabilities, and nationality are four factors that may influence alliance performance.
True
In the context of alliance formation, shared capabilities is one of the driving forces in deciding whether to take a contract or an equity approach.
True
Managers involved in alliances require collaborative relationship skills.
True
Mergers and acquisitions represent the largest proportion of foreign direct investment (FDI) flows.
True