Strategic Management ch. 9 Corporate Strategy: Strategic Alliances, Mergers and Acquisitions
What are some managerial advantages of building a firm into a large organization?
- greater prestige - more job security - increased power
A firm with alliance management capability is able to effectively manage which tasks?
- partner selection and alliance formation - alliance design and governance - post-formation alliance management
What are sources of value creation in a horizontal integration strategy?
- reduction in competitive intensity - lower costs - increased differentiation
What are the reasons for which firms enter into strategic alliances?
- strengthen competitive position - enter new markets - hedge against uncertainty - access critical complementary assets - learn new capabilities
How does horizontal integration affect Porter's Five Forces for the surviving firms?
- strengthens bargaining powers vis-a-vis suppliers - reduces the threat of entry - reduces rivalry among existing firms
Why do firms make acquisitions?
- to gain access to new markets and distribution channels - to gain access to new capability or competency - to preempt rivals
How do foreign governments typically influence a firm's use of strategic alliance to enter new markets?
Governments may require that foreign firms have a local joint venture partner in order to conduct business within the country's borders
What is true regarding the government and horizontal integration?
Large horizontal integration activity typically needs to be approved by government authorities
Peter's Pans makes cast-iron cookware. It decides to acquire another similar-sized cast-iron cookware company in the hope that its larger size will enable it to snag some market share away from Iron Maiden, the industry leader. Which of the following reasons best describes Peter's Pans strategy?
Peter's Pans is trying to overcome competitive disadvantage
Firms can use strategic alliances to strengthen their competitive advantage when competing in battles to control industry standards.
True
How can horizontal integration increase product differentiation?
by filling the empty spaces in a firm's offerings
How well the firms in an alliance fit together culturally is referred to as partner ____________.
compatibility
Knowledge that can be codified is also called ___________ knowledge
explicit
In most cases, mergers and acquisitions create competitive advantage.
false
In 2010 Kraft Foods bought UK-based Cadbury PLC in a hostile takeover. Kraft felt that a __________ with Cadbury would help Kraft break into emerging countries because of the strong position Cadbury had in India, Egypt, Thailand and other countries.
horizontal integration
A standalone organization that two or more parent companies create and own together is a ___________.
joint venture
When Pfizer and Wyeth merged, they reduced the size of their combined sales force while also increasing the number of drugs they could promote. This is an example of which source of value creation for M&As?
lower costs
Zoe is a manager at a large company engaged in the acquisition of a smaller company. The smaller company has operated at a loss for the last three years under three different managers, but Zoe is convinced that she can turn the company around despite the evidence to the contrary. Zoe is engaging in ____________.
managerial hubris
A partnership that is based on contracts between companies is referred to as a(n) _____________.
non-equity alliance
Tacit knowledge can _______________
only be acquired through actively participating in the process
non-equity alliance
partnership based on contracts between firms
equity alliance
partnership in which at least one partner takes partial ownership in the other
joint ventures
standalone organization created and owned by two or more parent companies
What is the main goal of corporate venture capital investments
to create real options in terms of gaining access to new technologies
Equity alliances require larger investments than non-equity alliances
true
