Exam 3

Which of the following types of diversification tend to have the lowest performances?

Both Unrelated Diversification and Single Business Diversification

Which of the following is NOT a risk of vertical integration?

Consolidation

Which of the following factors does NOT help define administrative and political distance?

Geographic Space between Borders

Which of the following are characteristics of a joint venture?

It is a long-term commitment by two or more partners.

Which of the following is a disadvantage of the multidomestic strategy?

It is inefficient.

What is a related-linked diversification strategy?

One in which executives pursue various business opportunities that share only a limited number of linkages.

Which of the following is an alternative to vertical integration?

Strategic Outsourcing

What is a major disadvantage of organizing economic activity within firms?

The Principal-Agent Problem

Which of the following states that important resources and capabilities are commonly embedded in strategic alliances that cross firm boundaries?

The relational view of competitive advantage.

Olivia's, and all of oil company, grows and harvests all of us, makes all of oil, and distributes it is all of oil to its retail shop. Olivia's is an example of _______________.

a fully vertically integrated company

The persons responsible for forming corporate-level strategy are the _______________.

executives

A firm follows a(n) _______________ diversification strategy when it drives less than 70% of its revenues from a single business activity and obtains revenues from other lines of business that are linked to the primary business activity.

related

Transaction costs include _______________ costs associated with an economic exchange.

the internal and external

When a company has difficulty coordinating operations across geographic distance and between distinct cultural environments, it experiences _______________.

the liability of foreignness

The extent to which members of a society feel anxious when faced with an unknown situation is known as _______________.

uncertainty avoidance

Long-term contracts include which of the following forms?

Licensing

Which of the following is a reason a firm would NOT want to enter into an equity alliance instead of a short- or long-term contract?

To allow the partner to use the firm's trademark and business processes.

Which of the following is NOT a primary reason a firm might pursue a merger?

To correct a negative inverted U-shaped relationship with scope.

Which of the following are among the reasons firms need to grow?

To motivate management.

Which of the following is NOT a main reason firms make acquisitions?

To reduce flexibility.

A(n) _______________ is a situation in which the stock price of highly diversified firms are valued as less than the sum of their individual business units.

diversification discount

In the Boston Consulting Group matrix, _______________ hold the small market share in a-growth market.

dogs

When two competitors merge, leading to industry consolidation, they are engaging in _______________.

horizontal integration

Gunther is transferred from the United States to Hong Kong for work. He notices that his colleagues at the new office, most of whom are Hong Kong natives, behave and communicate in a similar manner that is a striking contrast to what Gunther is accustomed to. Gunther is observing his colleagues' _______________.

national culture

Horizontal integration can reduce _______________.

the threat of entry

Google's choice to hire programmers in-house suggests that they decided that the _______________ costs associated with this strategy are _______________ than the costs associated with contracting in the open market.

transaction; lower

Which approach to strategic decision-making takes a larger investment decision and divides it into multiple smaller decisions that happen over time?

A real-options perspective.

A firm with alliance management capability is able to effectively manage all of the following tasks EXCEPT?

Purchase of the Alliance Partner

Which of the following is a cost associated with a related-diversification strategy?

Coordination Costs

Which of the following are alternatives on the make-or-buy continuum?

Equity Alliances

Which of the following is an advantage of organizing economic activity at the market level?

Increased Flexibility

The _______________ depicts the transformation of raw materials into finished goods and services along distinct vertical stages, each of which represents a distinct industry in which a number of different firms are competing.

Industry Value Chain

Dream Donuts is a very successful business and the United Kingdom. It is contemplating global expansion. Which of the following strategies is Dream Donuts most likely to pursue at the beginning stages of expansion?

International

Which of the following conditions does NOT suggest a multidomestic strategy might be the appropriate strategy for MNEs?

Lack a differentiation between domestic and foreign markets.

Which of the following forms of agreement do non-equity alliances typically NOT take?

Marketing

Which of the following are NOT part of culture?

National Boundaries

Which of the following is NOT one of the four quadrants of the core competence-market matrix?

New Competencies with Related Markets

Which of the following statements about economic distance is true?

Wealthy companies benefit from trade when their competitive advantage is based on economies of experience, scale, and scope.

"Which national markets should the firm compete in?" is an example of a _______________-level strategic question.

corporate

When Walmart posted a list of banned suppliers on its website, this was an example of _______________.

corporate social responsibility

Zipster is a local manufacturer of athletic shoes. Zipster has decided it wants to expand to global markets and to offer a larger selection of items. It plans to offer not just athletic shoes but also luggage and car accessories. Zipster is engaging in _______________.

diversification

A partnership in which at least one partner takes partial ownership in the other is a(n) _______________.

equity alliance

Specialized assets have _______________.

high opportunity cost

With a multidomestic strategy, products are manufactured on a local level. This has the potential of _______________.

increasing the risk of intellectual property appropriation

MNEs pursuing a multidomestic strategy hope that _______________.

local consumers will perceive them to be a domestic company

One notable advantage of a multidomestic strategy is _______________.

lower exchange-rate exposure

To figure out if a firm's type of diversification is _______________, one can ask questions about the degree to which the corporation's business units share core competencies.

related or unrelated

A(n) _______________ strategy focuses on integration at the business level by attempting to reconcile product differentiations at low cost.

transnational

Which of the following is an example of the principal-agent problem if the principal's goal is to create shareholder value?

A manager flies first class on all business trips.

Which of the following dimensions is NOT considered in the CAGE distance framework?

Architectural Distance

Spex is a leading manufacturer of eyeglasses. Spex is based in the United States but opens a facility in a Japanese city known for cutting-edge eyeglass innovations. Spex is counting on which of the following?

Benefiting from location economies.

Wheels on the Go! is a company that manufactures tires for semitrucks. The company is entirely owned by North American Haulers, a large company in the semitruck industry. The two companies have formed a(n) _______________.

Parent-Subsidiary Relationship

Which the following is a necessary condition for successful alliance formation?

Partner Compatibility

Which of the following are the most important determinants of economic distance?

Per Capita Income

Which of the following is one of the forms of specialized assets?

Site Specificity

A voluntary arrangement between firms to share knowledge, resources, and capabilities to develop products, processes, or services is known as a(n) _______________.

strategic alliance