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man 4720 exam 3

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Research shows that about ____ percent of mergers and acquisitions are successful. (A) 20(B) 40(C) 60 (D) 80

(A) 20

Japan, due to a lack of undeveloped land, would be an unusual choice of location for a U.S. cattle company to set up local grazing operations. This limiting factor would be identified in what part of Porter's determinants of national advantage? (A) Factors of production(B) Demand conditions(C) Related and supporting industries (D) Firm strategy, structure, and rivalry

(A) Factors of production

Which of the following is NOT a disadvantage associated with exporting? (A) Potential loss of proprietary technologies (B) High transportation costs (C) Loss of control over distribution activities (D) Tariffs imposed by local governments

(A) Potential loss of proprietary technologies

Which of the following is NOT one of the three main restructuring strategies? (A) Realigning(B) Downsizing(C) Downscoping (D) Leveraged buyouts

(A) Realigning

Firms with core competencies that can be exploited across international markets are able to: (A) achieve synergies and produce high-quality goods at lower costs.(B) enter new markets more quickly. (C) enhance their market image and brand loyalty among local consumers. (D) meet local government requirements more quickly than their international competitors.

(A) achieve synergies and produce high-quality goods at lower costs.

Without effective due diligence the: (A) acquiring firm is likely to overpay for an acquisition. (B) firm may miss its opportunity to buy a well-matched company. (C) acquisition may deteriorate into a hostile takeover, reducing the value creating potential of the action. (D) firm may be unable to act quickly and decisively in purchasing the target firm.

(A) acquiring firm is likely to overpay for an acquisition.

Horizontal, vertical, and related acquisitions to build market power:(A) are likely to undergo regulatory review and analysis by financial markets. (B) are rarely permitted to occur across international borders.(C) typically involve a firm purchasing one of its suppliers or distributors.(D) concentrate on capturing value at more than one stage in the value chain.

(A) are likely to undergo regulatory review and analysis by financial markets.

In the franchising strategy, the most important competitive advantage for the franchisee is the franchisor's: (A) brand name.(B) capital resources.(C) access to a consolidated market. (D) geographic locations.

(A) brand name

Thomas is an upper-middle level manager for a firm that has been actively involved in acquisitions over the last 10 years. The firm has grown much larger as a result. Thomas has been dismayed to find that recently the managerial culture of the firm has been turning more and more to ____ controls. (A) bureaucratic (B) strategic(C) tactical(D) organic

(A) bureaucratic

Internal product development is often viewed as: (A) carrying a high risk of failure. (B) the only reliable method of generating new products for the firm. (C) a quicker method of product launch than acquisition of another firm. (D) critical to the success of biotech and pharmaceutical firms.

(A) carrying a high risk of failure.

Dynamic alliance networks work best in industries: (A) characterized by frequent product innovations and short product life cycles. (B) that are mature and stable in nature. (C) where the coordination of product and global diversity is critical.(D) that are characterized by predictable market cycles and demand.

(A) characterized by frequent product innovations and short product life cycles.

A global corporate-level strategy differs from a multi-domestic corporate-level strategy in that in a global strategy: (A) competitive strategy is dictated by the home office. (B) competitive strategy is decentralized and controlled by individual strategic business units. (C) products are customized to meet the individual needs of each country .(D) the firm sells in multiple countries.

(A) competitive strategy is dictated by the home office.

121. Arkadelphia Polymers, Inc., earns 60 percent of its revenue from exports to Europe and Asia. The CEO of the company would be: (A) concerned if the value of the dollar strengthened. (B) pleased if the value of the dollar strengthened. (C) unconcerned about the fluctuation in the value of the dollar because the company is widely diversified geographically. (D) likely to consider moving to international strategic alliances or acquisitions if the value of the dollar fell and remained low.

(A) concerned if the value of the dollar strengthened.

A ____ cooperative strategy helps the firm diversify in terms of products offered, markets served, or both. (A) corporate-level (B) business-level (C) national-level (D) industry-level

(A) corporate-level

Offshore Oil Exploration Partners (OOEP) has entered into a cooperative strategy with Malay Petroleum. The resulting documents are long, formal, and detailed. They specify detailed responsibilities of each partner and include methods of monitoring accounting and technical procedures. OOEP and Malay Petroleum are using the ____ management approach. (A) cost minimization(B) trust but verify(C) opportunity maximization (D) pragmatic realism

(A) cost minimization

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) the incompatibility of the partners.

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) economies of scope

The Microsoft/Nokia alliance that had hundreds of pages to specify each partner's responsibilities would be closest to the _______ approach to managing cooperative ventures. In contrast, the Renault/Nissan alliance (Chapter 9 Mini Case) was based on trust, respect, and transparency and is an example of the ________ approach to managing cooperative ventures. (A) cost minimization; opportunity maximization (B) opportunity maximization; cost minimization (C) cost maximization; opportunity minimization (D) bureaucratic; organic

(A) cost minimization; opportunity maximization

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) cost minimization; opportunity maximization

During the recent financial crisis, M&A activity ______, whereas in 2011, M&A activity ______. (A) declined; increased (B) declined; declined (C) increased; increased (D) increased; declined

(A) declined; increased

Failing to ____________ appropriately will result in too many employees doing the same work and prevent the new firm from realizing the cost synergies it anticipated. (A) downsize (B) spin-off(C) downscope (D) buyout

(A) downsize

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) earn greater returns on their innovations through larger or more numerous markets.

The three main luxury hotels in a major tourist destination keep very close track of their competitors' room pricing, restaurant offerings, tour packages, and special services, such as airport transportation and spa privileges. When one hotel makes adjustments in prices or offerings, the other hotels follow suit. It is possible that these hotels are: (A) engaging in tacit collusion. (B) following uncertainty reducing strategies. (C) monitoring business competitors for opportunistic behaviors. (D) following a competitive response strategy.

(A) engaging in tacit collusion.

A strategic alliance in which the partners own different percentages of the new company they have formed is called a(n): (A) equity strategic alliance. (B) joint venture. (C) nonequity strategic alliance. (D) cooperative arrangement.

(A) equity strategic alliance.

A fundamental reason for a country's development of advanced and specialized factors of production is often its: (A) lack of basic resources. (B) monetary wealth.(C) small workforce.(D) protective tariffs.

(A) lack of basic resources

Firms able to standardize the processes used to produce, sell, distribute, and service their products across country borders enhance their ability to: (A) learn how to continuously reduce costs while increase the value of their products. (B) increase investment in research and development. (C) access to a low-cost labor force in the host market. (D) mitigate cultural differences.

(A) learn how to continuously reduce costs while increase the value of their products.

U.S. cola companies entered the global market because of: (A) limited growth opportunities in their domestic market. (B) lower labor costs in the emerging markets. (C) economies of scale that offset research and development costs.(D) an increase in the return on investment from their U.S. bottling plants

(A) limited growth opportunities in their domestic market.

Reduction of competition can be accomplished through all of the following EXCEPT: (A) predatory alliances. (B) explicit collusion. (C) tacit collusion. (D) mutual forbearance.

(A) predatory alliances.

Terrorism creates an economic risk for firms, which: (A) reduces the amount of investment foreign companies will make in a country perceived to be terror-prone. (B) is created by governmental bans on doing business with terrorist regimes. (C) is offset by the above-average returns for firms that have learned how to operate in such an environment. (D) is absorbed by firms that are highly geographically diversified and that operate in both secure and insecure locations.

(A) reduces the amount of investment foreign companies will make in a country perceived to be terror-prone

Research has shown that the more ____, the greater is the probability that an acquisition will be successful. (A) related the acquired and acquiring firms are (B) diverse the resulting portfolio of competencies (C) disparate the corporate cultures (D) involved investment banking firms are in the due diligence process

(A) related the acquired and acquiring firms are

Typically, in a failed acquisition, the organization will: (A) restructure.(B) go into bankruptcy.(C) focus on building private synergy. (D) increase integration.

(A) restructure.

After a leveraged buyout, ____ typically occur(s). (A) selling of assets(B) further rounds of acquisitions(C) due diligence (D) private synergy

(A) selling of assets

In the Chapter 9 Mini Case, the cooperation between Fiat and Chrysler to produce a Fiat- designed car in Chrysler's Illinois factory is a(n) _________ alliance because it allows the firms to share resources and capabilities across multiple functions. (A) synergistic (B) opportunistic (C) horizontal (D) diversifying

(A) synergistic

All of the following are business-level cooperative strategic alliances EXCEPT: (A) synergistic strategic alliances. (B) uncertainty reduction strategic alliances. (C) complementary strategic alliances. (D) competition response strategic alliances.

(A) synergistic strategic alliances.

A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product instead of a strategy of developing new products in-house. All of the following arguments are correct EXCEPT: (A) the acquisition of Taylor should be primarily for defensive rather than strategic reasons. (B) research suggests that acquisition strategies are a common means of avoiding risky internal ventures. (C) the outcomes of acquisitions can be estimated more easily and accurately than the outcomes for an internal product development process. (D) acquisitions could become a substitute for innovation within your firm.

(A) the acquisition of Taylor should be primarily for defensive rather than strategic reasons.

International corporate-level strategy focuses on: (A) the scope of operations through both product and geographic diversification. (B) competition within each country .(C) economies of scale. (D) sophistication of monitoring and controlling systems.

(A) the scope of operations through both product and geographic diversification.

A large domestic market can provide the country's industries a chance at dominating the world market because: (A) they have been able to develop economies of scale at home. (B) they have access to abundant and inexpensive factors of production. (C) the related and supporting industries will have been developed. (D) the nation's culture and educational system will be adapted to producing the labor force needed for the industry.

(A) they have been able to develop economies of scale at home.

Legitimately, a firm may pursue an international strategic alliance for all of the following reasons EXCEPT: (A) to enhance the compensation packages of top managers. (B) to leverage core competencies in new markets. (C) to operate within government restrictions in the local country. (D) to escape limited domestic growth opportunities.

(A) to enhance the compensation packages of top managers.

In China, Starbucks is standardizing its operations while simultaneously decentralizing some decision-making responsibility to local levels to meet customers' tastes. Starbucks is following the __________ international corporate-level strategy. (A) transnational (B) global(C) differentiation (D) multi-domestic

(A) transnational

Sales of watches among teenagers and twenty-somethings are declining rapidly as this age group uses cellphones, iPods, and other devices to tell time. A company that specializes in selling inexpensive watches to this age group may wish to consider ____ in order to develop new products other than watches. (A) unrelated diversification (B) backward integration (C) forward integration (D) horizontal acquisitions

(A) unrelated diversification

The acquisition of Sun Microsystems (a computer hardware producer) by Oracle Corporation (a software firm) is an example of a(n): (A) vertical acquisition. (B) unrelated acquisition. (C) horizontal acquisition. (D) merger of equals.

(A) vertical acquisition

A manufacturer of specialty jams and jellies has decided to ally itself with an orchard and vineyard growing rare strains of fruit. This is a(n) ____ strategy. (A) vertical complementary (B) horizontal complementary (C) uncertainty reduction (D) network

(A) vertical complementary

All of the following complicate the implementation of an international diversification strategy EXCEPT: (A) widespread multilingualism.(B) increased costs of coordination between business units. (C) cultural diversity.(D) logistical costs.

(A) widespread multilingualism

Which of the following statements is TRUE? (A) Most cooperative strategies are successful if the basic agreements are well written and include appropriate monitoring strategies. (B) As many as 50 percent of cooperative strategies fail. (C) Opportunistic behaviors are usually focused on gaining the use of the partner's manufacturing and financial resources. (D) Problems with international cooperative strategies usually concern financial-system differences between the partners.

(B) As many as 50 percent of cooperative strategies fail.

Which of the following is NOT a result of over-diversification? (A) Executives do not have a rich understanding of all of the firm's business units. (B) Managers emphasize strategic controls rather than financial controls. (C) Firms use acquisition as a substitute for innovation. (D) Managers become short-term in their orientation.

(B) Managers emphasize strategic controls rather than financial controls

Mutual forbearance is: (A) illegal in the United States. (B) a type of competition-reducing strategy.( C) a variety of risk-sharing by firms in highly fragmented industries.(D) exercised when alliance partners refrain from opportunistic behaviors.

(B) a type of competition-reducing strategy.

A primary reason for a firm to pursue an acquisition is to: (A) avoid increased government regulation. (B) achieve greater market power. (C) exit a hyper-competitive market. (D) achieve greater financial returns in the short run.

(B) achieve greater market power.

A(n) ____ occurs when one firm buys a controlling, or 100 percent interest, in another firm. (A) merger(B) acquisition(C) spin-off (D) restructuring

(B) acquisition

SpeakEasy, a U.S. software company that specializes in voice-recognition software, wishes to rapidly enter the growing technical translation software market. This market is dominated by firms making highly differentiated products. To enter this market, SpeakEasy would be best served if it considers a(an): (A) vertical acquisition of a firm that uses technical translation products. (B) acquisition of a highly related firm in the technical translation market. (C) cross-border merger, preferably with an Indian or Chinese company. (D) strategy of internally developing the technical translation products needed to compete in this market.

(B) acquisition of a highly related firm in the technical translation market.

The term "leverage" in leveraged buyouts refers to the: (A) firm's increased concentration on the firm's core competencies. (B) amount of new debt incurred in buying the firm. (C) fact that the employees are purchasing the firm for which they work. (D) process of removing the firm's stock from public trading.

(B) amount of new debt incurred in buying the firm.

The use of high levels of debt in acquisitions has contributed to: (A) the increase in above-average returns earned by acquiring firms. (B) an increased risk of bankruptcy for acquiring firms. (C) the confidence of the stock market in firms issuing junk bonds. (D) an increase in investments that have long-term payoffs.

(B) an increased risk of bankruptcy for acquiring firms.

Stable alliance networks will most often: (A) be used to enhance a firm's internal operations. (B) appear in mature industries where demand is relatively constant and predictable. (C) emerge in industries with short product life cycles. (D) emerge in declining industries as a way to increase process innovations.

(B) appear in mature industries where demand is relatively constant and predictable.

Moving into international markets is a particularly attractive strategy to firms whose domestic markets: (A) demand a differentiation strategy for success. (B) are limited in opportunities for growth. (C) have developed unfriendly business attitudes toward the industry. (D) have too much regulation.

(B) are limited in opportunities for growth.

When a firm is overly dependent on one or more products or markets, and the intensity of rivalry in that market is intense, the firm may wish to ____ by making an acquisition. (A) increase new product speed to market (B) broaden its competitive scope (C) increase its economies of scale (D) overcome entry barriers

(B) broaden its competitive scope

____ strategic alliances have stronger focus on value creation than do ____ alliances. (A) competition reducing; complementary (B) complementary; competition reducing (C) uncertainty reducing; complementary (D) collusive; uncertainty reducing

(B) complementary; competition reducing

In general, cross-border alliances are more ____ and ____ than domestic alliances, especially in emerging markets. (A) uncertainty reducing; diversifying (B) complex; risky(C) highly leveraged; tightly monitored (D) flexible; trust-based

(B) complex; risky

Compared with downsizing, ____ has (have) a more positive effect on firm performance. (A) reconfiguring(B) downscoping(C) leveraged buyouts (D) acquisitions

(B) downscoping

A global corporate-level strategy emphasizes: (A) differentiated products. (B) economies of scale. (C) sensitivity to local product preferences. (D) decentralizing control and limited monitoring.

(B) economies of scale.

An international diversification strategy is one in which a firm: (A) expands into nearby markets. (B) expands into a potentially large number of geographic locations and markets. (C) expands into one or a few markets. (D) acquires a firm in a foreign country

(B) expands into a potentially large number of geographic locations and markets

A businessperson in Atlanta who wishes to develop a luxury pet kennel approaches the owner of the highly successful Pet Resort and Day Spa in Houston to see if the owner is interesting in franchising the Pet Resort brand. The Atlanta businessperson's goal is to: (A) get venture capital from Pet Resort. (B) gain access to Pet Resort's tacit knowledge. (C) collude with Pet Resort to diminish competition in the kennel industry in Atlanta. (D) join in a vertical complementary alliance with Pet Resort.

(B) gain access to Pet Resort's tacit knowledge

The increased pressures for global integration of operations have been driven mostly by: (A) new low-cost entrants. (B) increasing demand for similar products. (C) increased levels of joint ventures. (D) the rise of governmental regulation.

(B) increasing demand for similar products.

The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because: (A) of barriers to entry in many industries. (B) it is difficult and time intensive for companies to develop products that differ from their current product line. (C) innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting from acquisition. (D) unrelated acquisitions are usually uncomplicated because the acquired firm is allowed to continue to function independently as it did before acquisition.

(B) it is difficult and time intensive for companies to develop products that differ from their current product line

Fujitsu Siemens Computers is a legally independent company of which Fujitsu and Siemens each own 50 percent. This collaboration is an example of a ________, which is effective at transferring ________. (A) nonequity strategic alliance; explicit knowledge (B) joint venture; tacit knowledge (C) joint venture; explicit knowledge (D) equity strategic alliance; tacit knowledge

(B) joint venture; tacit knowledge

Most firms enter international markets sequentially, introducing their ____ first. (A) most innovative products (B) largest and strongest lines of business (C) most generic products, which will be more likely to generate universal product demand, (D) products customized to the region

(B) largest and strongest lines of business

122. The positive results associated with increasing international diversification have been shown to: (A) continue as the level of international diversification increases. (B) level off and become negative as diversification increases past some point. (C) become negative quickly. (D) be centered in only one or two industries.

(B) level off and become negative as diversification increases past some point.

In the United States, cooperative strategies to reduce competition may result in ____ if they are explicit. (A) increased tax liabilities (B) litigation (C) government takeover of the firms (D) dissolution of the firm

(B) litigation

Compared to internal product development, acquisitions allow: (A) immediate access to innovations in mature product markets. (B) more accurate prediction of return on investment. (C) slower market entry. (D) more effective use of company core competencies.

(B) more accurate prediction of return on investment.

The presence of barriers to entry in a particular market will generally make acquisitions ____ as an entry strategy. (A) less likely (B) more likely (C) prohibitive (D) illegal

(B) more likely

For the purpose of diversification, a corporate-level cooperative strategy may be preferable to a merger or acquisition for all the following reasons EXCEPT: (A) a host nation may forbid a merger or acquisition. (B) opportunistic behaviors are less likely. (C) cooperative strategies require fewer resources .(D) cooperative strategies allow greater flexibility in diversifying the firm's portfolio.

(B) opportunistic behaviors are less likely.

In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry. This is an example of the ____ in Porter's model. (A) strategy, structure, and rivalry among firms (B) related and supporting industries (C) demand conditions (D) factors of production

(B) related and supporting industries

Market power is derived primarily from the: (A) core competencies of the firm. (B) size of a firm and its resources and capabilities. (C) quality of a firm's top management team. (D) depth of a firm's strategy.

(B) size of a firm and its resources and capabilities.

62. 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

Claude holds a large number of shares of Bayou Beauty, a regional brewing company that is considered a likely takeover target by a major international brewer. It would probably be in Claude's financial interest if Bayou Beauty's owners: (A) resisted selling at any price.(B) sold the company to the larger brewer.(C) designed a poison pill to discourage a takeover.(D) looked for smaller brewers to acquire instead of selling to the larger brewer.

(B) sold the company to the larger brewer

International strategy refers to a(n): (A) action plan pursued by American companies to compete against foreign companies operating in the United States. (B) strategy through which the firm sells products in markets outside the firm's domestic market. (C) political and economic action plan developed by businesses and governments to cope with global competition .(D) strategy American firms use to dominate international markets.

(B) strategy through which the firm sells products in markets outside the firm's domestic market.

A ____________ is a strategy in which firms share some of their resources and capabilities to create economies of scope and is similar to the business-level horizontal complementary alliance. (A) joint venture(B) synergistic strategic alliance (C) diversifying strategic alliance (D) dynamic alliance network

(B) synergistic strategic alliance

In free-market economies, ____ must decide how rivals can collaborate with their competitors without violating established regulations. (A) the invisible hand (B) the government (C) consumers(D) the business community

(B) the government

To increase the likelihood of success between partners assuming that trust exists, ____ approach(es) should be used to manage cooperative strategies. (A) the cost minimization (B) the opportunity maximization (C) both the cost minimization and opportunity maximization (D) None of the these options are correct.

(B) the opportunity maximization

Currently, the rationale for making an acquisition includes each of the following EXCEPT: (A) to increase market power. (B) to decrease taxes paid by shareholders. (C) to overcome entry barriers. (D) to increase diversification

(B) to decrease taxes paid by shareholders.

Increasingly, customers worldwide are demanding emphasis on local requirements and companies require efficiency as global competition increases. This has triggered an increase in the number of firms using the ____ strategy. (A) multi-domestic (B) transnational (C) universal (D) global

(B) transnational

A nonequity strategic alliance exists when: (A) two firms join together to create a new company. (B) two or more firms have a contractual relationship to share resources and capabilities. (C) two partners in an alliance own unequal shares in the combined entity. (D) the partners agree to sell bonds instead of stock in order to finance a new venture.

(B) two or more firms have a contractual relationship to share resources and capabilities.

All of the following are international corporate-level strategies EXCEPT the ____ strategy. (A) multi-domestic(B) universal(C) global (D) transnational

(B) universal

Of the various business-level strategic alliances, ____ alliances have the most probability of creating sustainable competitive advantage, and ____ have the lowest. (A) horizontal complementary; vertical complementary (B) vertical complementary; competition reducing (C) competition reducing; horizontal complementary (D) uncertainty reducing; competition reducing

(B) vertical complementary; competition reducing

Managers perceive internal product development as a high-risk activity and tend to choose acquisitions because approximately _______ percent of innovations are imitated within 4 years after patents are obtained. (A) 5(B) 10(C) 60(D) 20

BPM Corp. is a manufacturer of radar systems for regional-sized jet aircraft. The company has announced plans to enter into a joint venture with J3 Composites, a producer of advanced composite materials. The announced venture will produce a new, combined product consisting of the radar unit and protective composite cover. Which of the following ownership arrangements would be most typical for a joint venture? (A) BPM will own more than 50 percent of the venture and a new company will be formed. (B) J3 will own more than 50 percent of the venture and a new company will be formed. (C) BPM and J3 will both own 50 percent of the venture and a new company will be formed. (D) BPM and J3 will both own 50 percent of the venture but no new company will be formed.

___________ may be necessary because acquisitions create a situation in which the newly formed form has duplicate organizational functions such as sales, manufacturing, distribution, and human resource management. (A) Management buyout (B) Leveraged buyout (C) Downsizing(D) Downscoping

Which of the following is NOT a risk for firms engaged in cooperative strategies? (A) Misrepresentation of a partner's competencies(B) Partner acts opportunistically(C) Insufficient variation in firms' core competencies (D) Failure of partners to make complementary resources available to the partnership

_________ is the set of costs associated with unfamiliar operating environments; economic, administrative and cultural differences; and the challenges of coordination over distances. (A) Transnational risk (B) Regionalization (C) Liability of foreignness (D) International risk

Which of the following statements is FALSE? (A) Synergy resulting from an acquisition generates gains in shareholder wealth beyond what they could achieve through diversification of their own portfolios. (B) Private synergy results when the combination of two firms yields competencies and capabilities that could not be achieved by combining with any other firm. (C) Private synergy is easy for competitors to understand and imitate.(D) Private synergy is more likely when the two firms in an acquisition have complementary assets.

Which of the following is an advantage associated with greenfield ventures? (A) Governmental support and subsidies in the host country (B) The lower cost of this type of venture (C) The level of control over the firm's operations (D) The lower level of risks involved

If intellectual property rights in an emerging economy are not well-protected, the number of firms in the industry is rapidly growing, and the need for global integration is high, ____ is the preferred entry mode. (A) exporting (B) strategic alliance (C) a joint venture or wholly owned subsidiary (D) licensing

A leveraged buyout refers to: (A) a firm restructuring itself by selling off unrelated units of the company's portfolio. (B) a firm pursuing its core competencies by seeking to build a top management team that comes from a similar background. (C) a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private. (D) an action where the management of the firm and/or an external party buys all of the assets of a business financed largely with equity.

(C) a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private.

A licensing agreement: (A) results in two firms agreeing to share the risks and the resources of a new venture. (B) is best way to protect proprietary technology from future competitors. (C) allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country. (D) can be greatly impacted by currency exchange rate fluctuations.

Firms in a standard-cycle market may form alliances in order to: (A) take advantage of opportunities in emerging market countries. (B) more quickly distribute new products. (C) capture economies of scale. (D) share risky R&D investments

Japanese telecom NTT DoCoMo Inc. and Chinese Internet search operator Baidu Inc. established an alliance to distribute games and other mobile-phone content. Baidu will own 80 percent of this collaboration with DoCoMo holding the remaining 20 percent. This collaborative arrangement is an example of a(n): (A) joint venture .(B) network strategy. (C) equity strategic alliance. (D) nonequity strategic alliance.

Raymond Vernon states that the classic rationale for international diversification is to: (A) pre-emptively dominate world markets before foreign companies can establish dominance. (B) avoid domestic governmental regulation. (C) extend the product's life cycle. (D) avoid international governmental regulation.

In addition to the four basic dimensions of Porter's "diamond" model, ____ may also contribute to the success or failure of firms. (A) national work ethic (B) educational requirements ( C) government policy (D) national pride

Private synergy :(A) occurs in most related acquisitions and allows firms to see increased returns. (B) is frequently achieved in conglomerates. (C) is not easy for competitors to understand and imitate. (D) is assessed by managers during the due diligence process.

In a(n) ____, two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage. (A) equality-based strategic alliance (B) non-equity strategic alliance (C) joint venture (D) equity strategic alliance

Caterpillar's payment of a 32 percent premium for the acquisition of Bucyrus in 2011 and subsequent need to issue more stock illustrates the acquisition problem of: (A) integration difficulties.(B) inability to achieve synergy.(C) large or extraordinary debt.(D) managers overly focused on acquisitions.

The choices that a firm has for entering the international market include all of the following EXCEPT: (A) exporting. (B) licensing. (C) leasing.(D) acquisition.

Working in multiple international markets can provide firms with __________ perhaps even in terms of __________. (A) location advantages; larger markets (B) research and development activities; larger markets (C) new learning opportunities; research and development activities (D) economies of scale and learning; larger markets

DDD Partners, a U.S. business consulting firm is considering a cooperative alliance with an Indian business consulting firm that has a wide practice in the Middle East and Asia. DDD has some European clients, but it sees the Middle East and Asia as growth opportunities. It hopes to learn how to navigate the different cultures and business practices in this part of the world from its alliance with the Indian firm. DDD's greatest risk here is that the Indian firm will: (A) insist on excessively close monitoring of DDD's actions. (B) gain access to DDD's core competencies and use them to become a future competitor. (C) not fully share its intangible resources. (D) not make equivalent investments to the alliance as does DDD.

There are few true mergers because: (A) few firms have complementary resources. (B) integration problems are more severe than in outright acquisitions. (C) one firm usually dominates in terms of market share, size, or value of assets. (D) of managerial resistance. True mergers result in significant managerial-level layoffs.

The ____ phase is probably the single most important determinant of shareholder value creation in mergers and acquisitions. (A) pre-acquisition negotiations (B) pre-acquisition due diligence (C) post-acquisition integration (D) post-acquisition restructuring

Magma, Inc., acquired Vulcan, Inc., 3 years ago. Effective integration of the two companies' culture was never achieved, and the two firms' assets were not complementary. It is very likely that Magma will: (A) go public through an IPO. (B) review the due diligence information collected before the acquisition. (C) restructure. (D) review its tactical-level strategies.

One disadvantage of developing effective monitoring systems to manage a strategic alliance is that: (A) firms will have to accept greater risks. (B) trust will be eroded. (C) spontaneous opportunities are minimized. (D) power coalitions will still develop.

The fact that the prices consumers pay for branded breakfast cereals are above the prices that would exist if there were true competition suggests that the cereal manufacturers are engaging in: (A) excessive cooperation. (B) joint ventures. (C) tacit collusion .(D) horizontal strategic alliances.

When the target firm does not solicit the acquiring firm's bid, it is referred to as a(n): (A) stealth raid. (B) adversarial acquisition. (C) takeover or unfriendly acquisition. (D) leveraged buyout.

A multi-domestic corporate-level strategy is one in which: (A) a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace. (B) the firm produces a standardized product, but markets it differently in each country in which it competes. (C) the firm customizes the product for each country in which it competes. (D) the firm competes in a number of countries, but it is centrally coordinated by the home office.

Due diligence includes all of the following activities EXCEPT assessing: (A) differences in firm cultures. (B) tax consequences of the acquisition. (C) the level of private synergy between the two firms. (D) financing for intended transaction.

Disney suffered lawsuits in France at Disneyland Paris as a result of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of: (A) the effects of regionalization. (B) the risks of a multi-domestic strategy. (C) the liability of foreignness. (D) the effect of demand conditions.

All of the following statements are correct EXCEPT: (A) immediately after the announcement of a planned acquisition, the stock price of the majority of acquiring firms declines. (B) shareholders of acquired firms often earn above-average returns from an acquisition. (C) the majority of acquisitions increase long-term value for the acquiring firm. (D) shareholders of acquiring firms typically earn returns from the transaction that are close to zero.

The expenses incurred by firms trying to create synergy through acquisition are called ____ costs. (A) differentiation (B) diversification (C) transaction (D) interaction

The primary responsibility of the franchisor, such as McDonald's or Hilton International is to: (A) learn about the brand and technology from the franchisee. (B) test the franchisee for potential future acquisition. (C) transfer to the franchisee knowledge and skills needed to compete at the local level. (D) provide feedback to the franchisee regarding how the franchisor could become more effective and efficient.

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

Ambrose is a scientist working for a pharmaceutical company. His company was acquired by a rival pharmaceutical company, and now it is involved in downsizing and downscoping. Ambrose is concerned about his job security, since he is actively involved in amateur sports in his community and does not wish to disrupt his current lifestyle. Ambrose's job will be most likely to be secure if: (A) Ambrose's research is in a non-core activity. (B) the acquisition has been financed by junk bonds. (C) Ambrose is in a position to take a poison pill. (D) Ambrose is a key employee in the firm's primary business

(D) Ambrose is a key employee in the firm's primary business

Which of the following is NOT a factor pressuring companies for local responsiveness? (A) Differences in employment laws (B) Customization due to cultural differences (C) Government pressure for firms to use local sources for procurement (D) Availability of low labor costs

(D) Availability of low labor costs

_________ refers to a divestiture, spin-off, or some other means of eliminating businesses that are unrelated to a firm's core business. (A) Downsizing(B) Hostile takeovers (C) Shakeouts(D) Downscoping

(D) Downscoping

__________ is often used when the acquiring firm paid too high a premium to acquire the target firm. (A) Management buyout (B) Leveraged buyout (C) Downscoping(D) Downsizing

(D) Downsizing

Meredith Inc. is a manufacturer of art supplies. The company has announced plans to enter into an equity strategic alliance with JaZz Paper to develop a line of specialty papers for use with a line of specialty paints Meredith manufactures. Which of the following would be the accurate interpretation of this announcement? (A) Meredith will own a majority equity stake in the new venture. (B) JaZz will own a majority equity stake in the new venture. (C) Meredith or JaZz will own an equal equity stake in the new venture. (D) Either Meredith or JaZz will own a majority equity stake, but we do not know which one based on the announcement.

(D) Either Meredith or JaZz will own a majority equity stake, but we do not know which one based on the announcement.

Which of the following statements is FALSE? (A) Franchising is most appropriate in fragmented industries. (B) Franchising provides corporate growth with less risk than do mergers and acquisitions. (C) Successful franchising allows transfer of knowledge and skills from the franchisor to the franchisee. (D) Franchising agreements require more trust between firms than do other cooperative strategies

(D) Franchising agreements require more trust between firms than do other cooperative strategies

Which of the following is NOT a typical disadvantage of licensing? (A) Little control over the marketing of the products (B) Licensees may develop a competitive product after the license expires (C) Lower potential returns than the use of exporting or strategic alliances (D) Incompatibility of the licensing partners

(D) Incompatibility of the licensing partners

When a firm acquires its supplier, it is engaging in a(n): (A) merger.(B) unrelated acquisition.(C) hostile takeover. (D) vertical acquisition.

(D) vertical acquisition.

Which of the following is NOT an attribute of a successful acquisition? (A) The acquiring firm has a large amount of financial slack. (B) The acquired and acquiring firms have complementary assets and/or resources. (C) Innovation and R&D investments continue as part of the firm's strategy. (D) Investments in advertising and image building are made quickly.

(D) Investments in advertising and image building are made quickly

____ are unsecured obligations that are not tied to specific assets for collateral. (A) Bearer bonds(B) No-load stocks(C) Penny stocks (D) Junk bonds

(D) Junk bonds

The risks of being accused of collusion are MOST likely under what type of alliance? (A) Equity-based vertical complementary alliance (B) Equity-based horizontal complementary alliance (C) Nonequity-based vertical complementary alliance (D) Nonequity-based horizontal complementary alliance

(D) Nonequity-based horizontal complementary alliance

Pappelbon Enterprises recently acquired a chain of convenience stores offering both fuel and food. Pappelbon is now surprised and dismayed to find that the gas pumps have been poorly maintained and will need to be replaced at considerable expense. Each of the following statements accurately reflect this EXCEPT: (A) Pappelbon did not fully evaluate the target. (B) Pappelbon overpaid. (C) Pappelbon's due diligence was not fully effective. (D) Pappelbon's management was overly focused on acquisitions.

(D) Pappelbon's management was overly focused on acquisitions.

Why are alliances in the airline industry unstable? (A) Unstable industries make for unstable alliances. (B) The potential for firms to take opportunistic actions is too widespread. (C) The industry is declining and profits are not sufficient to divide among alliance partners. (D) The alliances require cooperation among firms that must also compete with one another.

(D) The alliances require cooperation among firms that must also compete with one another.

In practice, the cost minimization strategy can be more expensive than the opportunity maximization strategy. Which of the following is a way in which the cost minimization strategy is less expensive than the opportunity minimization strategy? (A) The loss of unexpected opportunities (B) The cost of extensive monitoring mechanisms (C) The costs of writing detailed contracts (D) The prevention of opportunistic behavior by the partner(s)

(D) The prevention of opportunistic behavior by the partner(s)

____ are LEAST likely to involve potential or current competitors. (A) Mutual forbearance strategies (B) Tacit collusion strategies (C) Horizontal complementary strategic alliances (D) Vertical complementary strategic alliances

(D) Vertical complementary strategic alliances

A strategy in which firms work together to achieve a shared objective is a: (A) functional-level strategy. (B) business-level strategy. (C) corporate-level strategy. (D) cooperative strategy.

(D) cooperative strategy.

A relatively young firm has developed a method of transferring photographic images of surface textures onto any type of hard surface. This potentially has a huge market in the home-decorating field as well as any hard surface that is typically painted, such as car bodies. The type of alliance partner this firm would be searching for would be one with: (A) low-cost labor production facilities in another country. (B) similar products who could help the firm establish economies of scale. (C) access to franchises in new markets. (D) excess resources for investing.

(D) excess resources for investing.

Problems associated with acquisitions include all of the following EXCEPT: (A) managers overly focused on acquisitions. (B) integration difficulties. (C) large or extraordinary debt. (D) excessive time spent on the due diligence process.

(D) excessive time spent on the due diligence process.

The benefits of expanding into international markets include each of the following opportunities EXCEPT: (A) increasing the size of the firm's potential markets. (B) economies of scale and learning. (C) location advantages. (D) favorable tax concessions and economic incentives by home-country governments.

(D) favorable tax concessions and economic incentives by home-country governments.

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) franchising cooperative

The means of entry into international markets that offers the greatest control is: (A) licensing.(B) acquisitions.(C) joint ventures. (D) greenfield ventures.

(D) greenfield ventures.

The factors that lead to poor long-term performance by acquisitions include all of the following EXCEPT firms: (A) with insufficient diversification. (B) having too much debt. (C) being unable to achieve synergy. (D) growing too large.

(D) growing too large.

The problems associated with exporting include: (A) merging corporate cultures. (B) a partner's incompatibility. (C) difficulty in negotiating relationships. (D) high transportation costs and the expense of tariffs.

(D) high transportation costs and the expense of tariffs.

Which pair of industries would NOT be considered as "related and supporting" under Porter's diamond model? (A) Japanese cameras and copiers (B) Italian leather-processing and shoes (C) U.S. computers and software (D) highway systems and the supply of debt capital

(D) highway systems and the supply of debt capital

Cross-border acquisitions are critical to U.S. firms competing internationally: (A) if they are to develop differentiated products for markets served.(B) when market share growth is the focus. (C) where consolidated operations are beneficial. (D) if they wish to overcome entry barriers to international markets.

(D) if they wish to overcome entry barriers to international markets.

Whole-firm LBOs tend to result in all the following negative outcomes EXCEPT: (A) large debt and increased financial risk. B) failure to invest in R&D. (C) risk-averse management. (D) inefficient operations.

(D) inefficient operations.

Manny Inc. recently completed the purchase of its primary supplier. Manny intends to begin expanding the market to which the suppliers' products are sold. This purchase is a(n): (A) merger.(B) unrelated acquisition. (C) horizontal acquisition. (D) vertical acquisition.

. (D) vertical acquisition.

FrameCo, a maker of commercial greenhouses, has just extricated itself from a failing cooperative alliance with another firm. The expected synergies never were achieved, and FrameCo lost most of its investment. The top management of FrameCo should: (A) avoid future cooperative alliances because they lack the skills needed to manage them successfully. (B) enter into future cooperative alliances only if the alliance is closely monitored by a third party to prevent opportunistic behavior by the alliance partner. (C) realize that most cooperative alliances fail and that it should ally itself only with an experienced alliance partner in the future. (D) internalize the knowledge about the successes and failures of this alliance so FrameCo can learn from the experience.

(D) internalize the knowledge about the successes and failures of this alliance so FrameCo can learn from the experience.

The use of strategic alliances: (A) is unlikely to yield success if partnering firms are headquartered in the same country. (B) may be too restrictive to facilitate entry into new markets .(C) usually increases the investment necessary to introduce new products. (D) is more frequent than other types of cooperative strategies.

(D) is more frequent than other types of cooperative strategies.

The transnational strategy is becoming increasingly necessary to compete in international markets for all the following reasons EXCEPT: (A) the growing number of competitors heightens the requirements to keep costs down. (B) the desire for specialized products to meet consumers' needs. (C) differences in culture and institutional environments also require firms to adapt their products and approaches to local environments. (D) it is easy to use.

(D) it is easy to use.

A global strategy: (A) is easy to manage because of common operating decisions across borders .(B) achieves efficient operations without sharing resources across country boundaries. (C) increases risk because decision making is centralized at the home office. (D) lacks responsiveness to local markets.

(D) lacks responsiveness to local markets.

The two important environmental trends that influence a firm's choice and use of international corporate-level strategies are _________ and __________. (A) culture; geographic scope(B) cost; quality(C) regionalization; globalization(D) liability of foreignness; regionalization

(D) liability of foreignness; regionalization

A global corporate-level strategy assumes: (A) efficiency and customization can be achieved simultaneously. (B) a rise in income levels across the world .(C) increasing levels of cultural differences among nations .(D) more standardization of products across country markets.

(D) more standardization of products across country markets.

Acquisitions can become a time sink for top level managers for all the following reasons EXCEPT: (A) the integration process after acquisition requires managerial attention. (B) they must prepare for acquisition negotiations. (C) managers are involved in the search for viable acquisition candidates. (D) only top managers can perform the required due diligence.

(D) only top managers can perform the required due diligence.

Cross-border acquisitions are primarily made to: (A) reshape the firm's competitive scope.(B) reduce the cost of new product development.(C) take advantage of higher education levels of labor in developed countries. (D) overcome barriers to entry in another country.

(D) overcome barriers to entry in another country.

Each of the following is a rationale for acquisitions EXCEPT: (A) achieving greater market power. (B) overcoming significant barriers to entry. (C) increasing speed of market entry. (D) positioning the firm for a tactical competitive move.

(D) positioning the firm for a tactical competitive move.

The announcement that P&G was acquiring premium dog and cat food manufacturer Iams was a _________ acquisition and is intended to ________. (A) vertical; increase diversification (B) horizontal; increase market power (C) vertical; overcome entry barriers (D) related; increase speed to market

(D) related; increase speed to market

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) retain tight control over intangible core competencies.

In some countries, the only legal way for foreign firms to invest in the country is through: (A) acquisitions.(B) mergers.(C) greenfield ventures. (D) strategic alliance with a local firm.

(D) strategic alliance with a local firm.

All of the following are reasons why firms use international strategic alliances EXCEPT: (A) sharing of risks and resources. (B) alliances facilitate the development of new capabilities. (C) learning new competencies particularly those related to technology. (D) strategic alliances are easy to manage.

(D) strategic alliances are easy to manage.

Factors of production in Porter's model of international competitive advantage include all of the following EXCEPT: (A) labor.(B) capital.(C) infrastructure. (D) technology.

(D) technology.

The opportunity maximization approach is more difficult to establish in international relationships than in domestic relationships because of differences in all EXCEPT: (A) laws.(B) culture.(C) trade policies. (D) technology.

(D) technology.

Effectively implementing the ________ international corporate-level strategy often produces higher performance than does implementing either the _______ or _________ strategies. (A) multi-domestic; global; transnational (B) global; multi-domestic; transnational (C) cost leadership; differentation; focus (D) transnational; multi-domestic; global

(D) transnational; multi-domestic; global

One problem with becoming too large is that large firms: (A) tend to have less market power. (B) have less potential for economies of scale. (C) become attractive takeover targets. (D) usually increase bureaucratic controls.

(D) usually increase bureaucratic controls.

Baby Doe's, a designer and manufacturer of children's clothing, has decided to purchase a retail chain specializing in children's clothing. This purchase is a(n): (A) merger.(B) unrelated acquisition. (C) horizontal acquisition. (D) vertical acquisition.

(D) vertical acquisition.

In a merger: (A) one firm buys controlling interest in another firm .(B) two firms agree to integrate their operations on a relatively coequal basis. (C) two firms combine to create a third separate entity.(D) one firm breaks into two firms.

.(B) two firms agree to integrate their operations on a relatively coequal basis

U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness because of: (A) increasing rejection of American culture across much of the world .(B) the sophistication of the international consumer because of the Internet. (C) consumer needs, political and legal structures, and social norms vary by country. (D) the increasing loss of economies of scale.

.(C) consumer needs, political and legal structures, and social norms vary by country.

A friendly acquisition: (A) raises the price that has to be paid for a firm. (B) enhances the complementarity of the two firms' assets .(C) facilitates the integration of the acquired and acquiring firms. (D) allows joint ventures to be developed.

.(C) facilitates the integration of the acquired and acquiring firms.

All of the following are correct about what managers should know about firms based in a country with a national competitive advantage EXCEPT: (A) success is not guaranteed as the firm implements its chosen international business-level strategy. (B) the actual strategic choices made are most compelling reasons for success or failure .(C) success is guaranteed as the firm implements its chosen international business-level strategy. (D) the determinants of national competitive advantage provide a foundation for a firm's competitive advantages.

.(C) success is guaranteed as the firm implements its chosen international business-level strategy.

The decision of what entry mode to use is primarily based on all of the following factors EXCEPT: (A) the industry's competitive conditions. (B) the country's situation and government policies .(C) the worldwide economic situation .(D) the firm's unique set of resources, capabilities, and core competencies.

.(C) the worldwide economic situation

Which of the following is NOT a disadvantage of international acquisitions? (A) They are very expensive and often require debt financing. (B) The acquiring firm has to deal with the regulatory requirements of a host country. (C) Merging the acquired and acquiring firm is difficult. .(D) It is the slowest way to enter a new market.

.(D) It is the slowest way to enter a new market.

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) Russia's recent actions to gain state control of private firms' assets.

72. The location advantages associated with locating facilities in other countries can include all of the following EXCEPT: (A) low-cost labor .(B) access to critical supplies. (C) access to customers .(D) evasion of host country governmental regulations.

.(D) evasion of host country governmental regulations.

Researchers have found that shareholders of acquired firms often: A) earn above-average returns .(B) earn below-average returns. (C) earn close to zero as a result of the acquisition. (D) are not affected by the acquisition.

A) earn above-average returns

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) sources of capital

The two types of complementary strategic alliances are: (A) vertical and horizontal. (B) macro and micro. (C) outsourcing and insourcing. (D) network and complementary.

A) vertical and horizontal

Skaredykat Inc. is considering initial expansion beyond its home market. The firm has decided not to enter markets that differ greatly from its home market, instead expanding within the twelve- nation region that includes its home country. Which one of these is true? (A) The firm is not engaging in international trade. (B) The firm is using a regional approach to international expansion.(C) The firm will not be able understand the cultures, legal, and social norms of this market. (D) Skaredykat is too afraid to implement an international strategy.

B) The firm is using a regional approach to international expansion.

When a firm INITIALLY becomes internationally diversified, its returns: (A) remain stable.(B) decrease.(C) become more variable. (D) increase.

B) decrease.

An investor is analyzing two firms in the same industry. She is looking for long-term performance from her investment. Both firms are basically identical except one firm is involved in substantial downsizing and the other firm is undertaking aggressive downscoping. The investor should invest in the: (A) downscoping firm because the higher debt load will discipline managers to act in shareholders' best interests. (B) downscoping firm because of reduced debt costs and the emphasis on strategic controls derived from focusing on the firm's core businesses. (C) downsizing firm because it will be making decisions based on tactical strategies.(D) downsizing firm because it is eliminating employees who are essentially "dead weight" and are dragging down the firm's profitability.

B) downscoping firm because of reduced debt costs and the emphasis on strategic controls derived from focusing on the firm's core businesses.

A U.S. manufacturer of adaptive devices for persons with disabilities is considering expanding internationally. It is a fairly small company, but it is looking for growth opportunities. This company should primarily consider the option of: (A) licensing.(B) exporting.(C) a strategic alliance. (D) a greenfield venture.

B) exporting

Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for: (A) market discipline.(B) innovation.(C) risk analysis.(D) international diversification

B) innovation.

A multi-domestic corporate-level strategy has ____ need for global integration and ____ need for local market responsiveness. (A) low; low (B) low; high (C) high; low (D) high; high

B) low; high

The Renault Nissan alliance discussed in the Mini Case is an example of a ________ in that the firms seek to create economies of scope by sharing their resources and capabilities to develop manufacturing platforms that can be used to produce cars that will be either a Renault or a Nissan. (A) joint venture(B) synergistic alliance(C) horizontal complementary alliance (D) dynamic alliance network

B) synergistic alliance

____ typically result(s) in the acquiring firm being able to prevent valuable human resources in the acquired firm from leaving. (A) Financial slack (B) Private synergy(C) Friendly acquisitions (D) High compensation

C) Friendly acquisitions

Burgess Corp. manufactures a line of heavy construction equipment. The company has announced a contractual relationship with FS Electronics whereby FS will supply Burgess with advanced GPS navigation and guidance systems. These systems will be an option on all bulldozers, dump trucks, and road graders Burgess produces. What type of alliance is this? (A) Joint venture (B) Equity strategic alliance( C) Nonequity strategic alliance (D) Competition reduction alliance

C) Nonequity strategic alliance

If conflict in a strategic alliance or joint venture is not manageable, a(n) _______may be a better option. (A) licensing strategy(B) exporting strategy(C) acquisition(D) new wholly owned subsidiary

C) acquisition

The collaboration between Volvo Aero (a subsidiary of Sweden's AB Volvo) and U.S.-based Pratt & Whitney to produce a new jet engine would be characterized as a(n): (A) collusive tactic. (B) merger. (C) cross-border strategic alliance. (D) international acquisition.

C) cross-border strategic alliance

The four aspects of Porter's model of international competitive advantage include all of the following EXCEPT: (A) factors of production.(B) demand conditions.(C) political and economic institutions. (D) related and supporting industries.

C) political and economic institutions.

Associations such as the European Union, Organization of American States, and the North American Free Trade Association, encourage: (A) global strategies. (B) domestication.(C) regional strategies. (D) nationalization.

C) regional strategies.

A firm may narrow its focus to a specific region of the world: ( A) because that market is most different from its domestic market and so represents an unexploited "greenfield opportunity" for its products. (B) in order to obtain greater economies of scale. (C) so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets. (D) to take advantage of limited protections of intellectual property so that it can manufacture innovative products without restrictions.

C) so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets.

Amylin Pharmaceuticals has an alliance with Eli Lilly & Co. to produce diabetes drugs. Lilly, however, recently signed an alliance agreement with another company to also produce diabetes drugs. As a result, Amylin sued Lilly for breach of the alliance agreement. Which of the following risks of cooperative strategies discussed in the chapter is most likely occurring here? (A) Having a true perception of the partner's trustworthiness (B) Failing to make available to its partners the resources and capabilities that it committed to the cooperative strategy (C) The partner misrepresenting competencies it can bring to the partnership D) Opportunistic behavior

D) Opportunistic behavior

Greentech, Inc., is a bioengineering firm specializing in food crops. It is considering a cooperative alliance with an Asian agribusiness firm, AsiaFoods, to jointly produce improved crops for the Asian market. The risks that Greentech should consider before entering this alliance include all of the following EXCEPT: (A) Has AsiaFoods accurately represented its competencies? (B) Will AsiaFoods make alliance-specific investments? (C) Can Greentech expect opportunistic behavior from AsiaFoods? (D) Will Greentech be able to use a cost-minimization management strategy in the AsiaFoods alliance?

D) Will Greentech be able to use a cost-minimization management strategy in the AsiaFoods alliance?

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) advanced; specialized

When using cooperative strategies, 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. create a competitive advantage.

A state-wide alliance of independent hospitals has formed in order to do group purchasing of medical supplies. Group purchasing allows the hospital alliance to negotiate lower prices with suppliers because of the large quantity of materials ordered. This is an example of the advantage of ____ resulting from an alliance. (A) explicit collusion (B) economies of scale (C) opportunistic behavior (D) distribution opportunities

economies of scale

Within the Renault Nissan alliance (Chapter 9 Mini 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

horizontal complementary

A cooperative strategy: (A) is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. (B) is a strategy in which firms work together to achieve a shared objective. (C) is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets. (D) specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets.

is a strategy in which firms work together to achieve a shared objective.

Moon Flower cosmetics company executives are aware that their Asian customer base is interested in advanced skin care treatments beyond Moon Flower's traditional herbal and organic compounds. Moon Flower and a large American chemical company are in discussions to create a 50- 50 partnership in a new firm, which would create skin care treatments based on innovative chemical formulations that would be marketed both in Asia and in the United States. Beyond being a cross- border alliance, this partnership can be called a(n): (A) nonequity strategic alliance. (B) joint venture.( C) horizontal complementary alliance. (D) equity strategic alliance.

joint venture

Which type of strategic alliance is best at passing tacit knowledge between firms? (A) primary cooperative strategic alliances (B) Joint ventures (C) Equity strategic alliances (D) Nonequity strategic alliances

joint venture

A competitive advantage that is developed through a cooperative strategy is called a collaborative or a(n) ____ advantage. (A) economic (B) collusive (C) alliance (D) relational

relational

U.S. Steel and Nucor (the two remaining major players in the U.S. steel industry) have been forming alliances as a means to enter markets in Europe and Asia. The steel industry is an example of a ________ market in which firms typically use alliances to gain market access. (A) fast-cycle(B) standard-cycle(C) slow-cycle(D) intermediate-cycle

slow-cycle

The Renault Nissan alliance (Chapter 9 Mini Case) is an example of a _______ created to gain economies of scope by sharing resources and capabilities. (A) diversifying strategic alliance (B) vertical complementary alliance (C) synergistic strategic alliance (D) nonequity-based horizontal complementary alliance

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