Chap 9

How do foreign governments typically influence a firm's use of strategic alliances 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.

Which of the following is true of tacit knowledge?

It can only be acquired through actively participating in the process

In what way does the strategic alliance between GM and Lyft allow GM to hedge against uncertainty?

It gives GM access to the market of the future, in which traditional private car ownership no longer exists.

Which of the following are true of alliance management capability

It involves partner selection and alliance formation. A firm may need to employ it with several different alliances.

What are common reasons a firm might pursue a merger?

To gain superior acquisition and integration capability To overcome competitive disadvantage To address principal-agent problems

There are several benefits of horizontal integration. Which of the following below is not a benefit?

access to new marketing and sales divisions

Which term refers to a company's ability to handle the three specific tasks related to an alliance concurrently and effectively?

alliance management capability

A real option gives a firm the right to continue making investments

but does not obligate the firm to do so

How can horizontal integration increase product differentiation

by filling the empty spaces in a firm's offerings

In order to build alliance management capabilities in small companies, it is recommended that firms take the ______ approach

learning by doing

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

What are the three mechanisms that alliances can be governed by?

non-equity alliances joint ventures equity alliances

What are three advantages of equity alliances

possible emergence of trust and commitment a window into new technology (option value) stronger ties

Internal development should occur when the firm's resources are _____ to those of competitors in the targeted area.

similar and superior

In order for an alliance to qualify as ______, it must have the potential to alter a company's competitive advantage.

strategic

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

strategic alliance

The partners in non-equity alliances can have weak ties because such alliances are often ______ in nature, which can cause lack of trust and commitment.

temporary

Horizontal integration is a good option if

the target firm will have more value when combined with the acquiring firm

How does Lyft benefit from its strategic alliances with GM and Waymo?

It allows Lyft to more effectively compete against Uber.

Which of the following is a disadvantage of a joint venture?

Knowledge shared with the new partner could be misappropriated by opportunistic behavior.

A firm has a core competency in R&D but little else, so it enters into a strategic alliance with a larger firm to gain distribution channels and marketing expertise. In this case, distribution channels and marketing expertise would be examples o

critical complementary assets

Marketing, manufacturing, and after-sale service are examples of

critical complementary assets

Knowledge that can be codified is also called ______ knowledge.

explicit

Non-equity alliances tend to share ______, which allows the firms to understand a certain process or product.

explicit knowledge

An advantage of using a non-equity alliance to govern a strategic alliance is its

flexibility and ease of initiation

Why do incumbent companies enter into strategic alliances with startups?

hedge against uncertainty

horizontal integration can

help a firm improve its strategic position in an industry

When a firm wishes to consolidate the industry in which they compete by merging with their competitors, they are engaging in

horizontal integration

The starting point of the build-borrow-or-buy framework is management's

identification of a strategic resource gap that will impede future growth.

A(n) ______ is when two firms agree to join and create a combined entity, and a(n) ______ is when one firm buys or takes over another firm.

merger; acquisition

The most common type of alliance is a(n)

non equity alliance

Horizontal integration through mergers and acquisitions can create costs. Which of the following are sources of such costs

reduced flexibility increased potential for legal repercussions integration failure

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

real options perspective

When a company makes incremental investments as part of a larger investment and takes the time to analyze the information gained following each incremental investment, the company is taking a

real-options perspective

A firm should use an equity alliance, a joint venture, or an outright acquisition in order to gain use of a resource when

resource not easily traded

What are downsides of equity alliances

The time and effort for assembling the partnership The amount of investment involved

Which of the following forms of agreement do non-equity alliances typically take

supply distribution licensing

How can firms build alliance management capability?

through repeated experiences over time

Why might a firm create a joint venture when entering a new geographic market?

to adhere to local law to access local expertise to access local contacts

Which framework can companies use to assess whether their internal resources are superior to those of competitors in the targeted area?

vrio framework

When companies get involved in a bidding war and the winner overpays for the acquisition, the acquiring company has fallen victim to the

winners curse

Which of the following terms refers to when one firm purchases or takes over another firm

acquisition

Which of the following are the three choices in the build-borrow-or-buy framework?

acquisition of new resources strategic alliances internal development

A conceptual model that helps strategists choose between seeking internal development, entering into an alliance, or acquiring new resources, capabilities, and competencies is called the "______ framework."

build buy or borrow

A firm might want to use a strategic alliance to ______.

change the industry structure

How willing the firms in an alliance are to share necessary resources and make sacrifices in the name of long-term rewards is referred to as partner

commitment

How well the firms in an alliance fit together culturally is referred to as partner

compatibility

On average, mergers and acquisitions ______ shareholder value

destroy

What happens in the third phase of alliance management?

the alliance partners make relation-specific investments

Which of the following is one of the reasons that firms make acquisitions

to gain access to a new capability or competency

Which of the following are reasons why firms enter into strategic alliances

to learn new capabilities to strengthen their competitive position to enter new markets

In general, if a resource is highly tradable, then it should be ______ using a license or contractual agreement.

borrowed