MAN 4720 Exam 3 Questions
Research has shown that approximately what percent of mergers and acquisitions, while not clear failures, produce disappointing results?
60
Which of the following statements is true?
As many as 50 percent of cooperative strategies fail
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?
BPM and J3 will both own 50 percent of the venture and a new company will be formed
Why do U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness?
Consumer needs and desires, industry conditions, political and legal structures, and social norms vary by country
__________ is most often used when the goal is to refocus on the company's business.
Downscoping
__________ refers to divestiture, spin-off, or some other means of eliminating businesses that are unrelated to a firm's core businesses.
Downscoping
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 MOST accurate interpretation of this announcement?
Either Meredith or JaZz will own a majority equity stake, but we do not know which one based on the announcement
Japan, which has 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?
Factors of production
Which of the following statements is false?
Franchising agreements require more trust between firms than do other cooperative strategies
__________ is the set of costs associated with various issues firms face when entering foreign markets, including unfamiliar operating environments; economic, administrative, and cultural differences; and the challenges of coordination over distances.
Liability of foreignness
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. All of the following statements accurately reflect this EXCEPT:
Pappelbon's management was overly focused on acquisitions
Which of the following is NOT a disadvantage associated with exporting?
Potential loss of proprietary technologies
Which of the following statements is false?
Private synergy is easy for competitors to understand and imitate
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:
Russia's recent actions to gain state control of private firms' assets
For which of the following reasons are alliances in the airline industry unstable?
The alliances require cooperation among firms that must also compete with one another
__________ are LEAST likely to involve potential or current competitors.
Vertical complementary strategic alliances
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 questions that Greentech should consider before entering this alliance include all of the following EXCEPT:
Will Greentech be able to use a cost-minimization management strategy in the AsiaFoods alliance?
A primary reason for a firm to pursue an acquisition is to:
achieve greater market power
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(n):
acquisition of a highly related firm in the technical translation market
The two basic approaches to successfully manage cooperative strategic alliances involve __________ and __________.
cost minimization; opportunity maximization
A global corporate-level strategy emphasizes:
economies of scale
Legitimately, a firm may pursue an international strategic alliance for all of the following reasons EXCEPT to:
enhance the compensation packages of top managers
An international diversification strategy is one in which a firm:
expands into a potentially large number of geographic locations or markets
Raymond Vernon states that the classic rationale for international diversification is to:
extend the product's life cycle
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:
gain access to Pet Resort's tacit knowledge
A leveraged buyout will often result in a short-term outcome of __________, which, in turn, leads to a long-term outcome of __________.
high debt costs; higher risk
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:
internalize the knowledge about the successes and failures of this alliance so FrameCo can learn from the experience
Moon Flower Cosmetics Company's 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 the United States. Beyond being a cross-border alliance, this partnership can be called a(n):
joint venture
The choices that a firm has for entering the international market include all of the following EXCEPT:
leasing
U.S. soft drink companies entered the global market because of:
limited growth opportunities in their domestic market
Operating in multiple international markets can provide firms with __________ perhaps even in terms of __________.
new learning opportunities; research and development activities
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:
not fully share its intangible resources
Cross-border acquisitions are primarily made to:
overcome barriers to entry in another country
In a franchising strategy, the franchisee __________ to the franchisor.
pays an initial franchise fee and ongoing royalties
The four determinants in Porter's model of international competitive advantage include all of the following EXCEPT:
political and economic institutions
When substantial debt is used to finance acquisitions, firms with successful acquisitions:
reduce the debt quickly
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.
related and supporting industries
A competitive advantage developed through a cooperative strategy often is called a collaborative or __________ advantage.
relational
Magma, Inc., acquired Vulcan, Inc., three 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:
restructure
A leveraged buyout refers to a(n):
restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private
A firm may narrow its focus to a specific region of the world:
so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets
In a cross-border alliance, the local partner is often a useful source of information about:
sources of capital
A __________ is a strategy in which firms share some of their resources to create economies of scope and is similar to the business-level horizontal complementary strategic alliance.
synergistic strategic alliance
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:
tacit collusion
When the target firm does not solicit the acquiring firm's bid, it is referred to as a(n):
takeover or unfriendly acquisition
A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product, instead of adopting a strategy of developing new products in-house. All of the following arguments are correct EXCEPT:
the acquisition of Taylor should be primarily for defensive rather than strategic reasons
One of the primary reasons for failure of cross-border strategic alliances is:
the incompatibility of the partners
Research results indicate all of the following EXCEPT:
the majority of acquisitions increase long-term value for the acquiring firm
The expenses incurred by firms trying to create synergy through acquisition are called __________ costs.
transaction
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.
transnational
Effectively implementing the __________ international corporate-level strategy often produces higher performance than does implementing either the __________ or __________ strategies.
transnational; multidomestic; global
In managing cooperative strategies, research indicates that __________ can be a capability that gives a firm a competitive advantage because it increases the likelihood of success.
trustworthiness
In a merger:
two firms agree to integrate their operations on a relatively coequal basis
All of the following are international corporate-level strategies EXCEPT the __________ strategy.
universal
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):
vertical acquisition
The acquisition of Sun Microsystems (a computer hardware producer) by Oracle Corporation (a software firm) is an example of a(n):
vertical acquisition
Of the various business-level strategic alliances, __________ alliances have the most probability of creating sustainable competitive advantage, and __________ have the lowest.
vertical complementary; competition-reducing
All of the following complicate the implementation of an international diversification strategy EXCEPT:
widespread multilingualism
The factors that lead to poor long-term performance by acquisitions include all of the following EXCEPT firms:
with insufficient diversification
The decision of what entry mode to use is primarily based on all of the following factors EXCEPT the:
worldwide economic situation
