MAN 4720 Pepe Exam 2

A strategy through which one firm buys a controlling, or 100%, interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio: A. Acquisition B. Poison pill C. Merger D. Takeover

A. Aquisition

Increasing market size, economies of scale, and location advantages are: A. Benefits of international strategy B. Determinants of national advantage C. Economic risks D. International entry modes

A. Benefits of international strategy

Is a means by which firms collaborate to achieve a shared objective in order to create value for a customer that they likely could not create alone, create competitive advantages, outperform rivals in terms of strategic competitiveness, and earn above average returns. A. Cooperative strategy B. Competition response strategy C. Competition reducing strategy D. Uncertainty reducing strategy

A. Cooperative strategy

Is concerned with what product markets and businesses the firm should compete and how corporate headquarters should manage those businesses: A. Corporate level strategy B. Strategic management C. Related diversification strategy D. Unrelated diversification strategy

A. Corporate level strategy

Important M&A research shows all of the following except: A. Determining the worth of a target firm is easy B. Shareholders of acquired firms often earn above-average returns from acquisitions C. The acquiring firm's stock price often falls immediately after the transaction is announced D. Shareholders of the acquiring firms typically earn returns that are close to zero

A. Determining the worth of a target firm is easy

A strategy through which a firm expands the sales of its goods or services across the borders of global regions and countries into a potentially large number of geographic locations or markets. A. International diversification strategy B. Managing complexity & coordination/distribution costs strategy C. Political risk strategy D. Economic risk strategy

A. International diversification strategy

Which is NOT a value-creating diversification strategy? A. Internationalization (foreign diversification) B. Financial economies (unrelated diversification) C. Market power (related diversification) D. Economies of scope (related diversification)

A. Internationalization (foreign diversification)

When the value created by units working together exceeds the value that those units could create working independently also when assets are worth more when used in conjunction with each other than when they are used separately: A. Synergy B. Core competencies C. Market power D. Diversification

A. Synergy

The highest level of diversification is: A. Unrelated B. Single-business C. Dominant-business D. Related constrained

A. Unrelated

What is NOT an INTERNAL environmental incentive to diversify? A. Low performance B. Antitrust laws C. Synergy D. Risk reduction

B. Antitrust laws

Firms use acquisition strategies for all of the following reasons except: A. Overcome entry barriers to new markets or regions B. Become less diversified C. Avoid the costs of developing new products and increase the speed of new market entries D. Increase market power

B. Become less diversified

All are problems associated with using an acquisition strategy except: A. Overestimating the potential for synergy B. Creating a firm that is not diversified enough C. Incorrectly evaluating the target firm's value D. Developing a combined firm that is too large

B. Creating a firm that is not diversified enough

A strategy in which firms with headquarters in different countries decide to combine some of their resources to create a competitive advantage. A. Vertical complementary strategic alliance B. Cross-boarder strategic alliance C. Horizontal complementary strategic alliance D. International strategy

B. Cross-boarder strategic alliance

refers to a divestiture, spin-off, or some other means of eliminating businesses that are unrelated to a firm's core business. A. Leveraged buy-out (LBO) B. Downscoping C. Cross border acquisition D. Vertical acquisition

B. Downscoping

When 2 or more firms negotiate directly to jointly agree about the amount to product as well as the prices for what is produced (illegal in many economies unless sanctioned by the government policies). A. Competitive response strategy B. Explicit collusion C. Tacit collusion D. Mutual forbearance

B. Explicit collusion

A strategy through which the firm sells its goods or services outside its domestic market. A. Business level strategy B. International Strategy C. Corporate Level Strategy D. Diversification Strategy

B. International Strategy

The size of the firm, the quality of the resources it uses to compete, and its share of the market(s) in which it competes determines its: A. Competitive advantage B. Market Power C. Bankroll D. Leverage

B. Market power

Executive compensation, reduced managerial risk, and social status are: A. Highly profitable for investors B. Motives that might encourage managers to diversify their firm C. Good business practices D. Ways that synergy is created within a firm

B. Motives that might encourage managers to diversify their firm

Genco pura olive oil company has established themselves as a strong differentiator in their respective SBU's but now wishes to explore international strategies. They are prepared to fully customized their product offerings to meet the needs of the foreign country that they are entering; having conducted many surveys on local preferences, tastes, and requirement, the Genco pura olive company will more than likely pursue a ______ strategy. A. Global standardization B. Multidomestic C. Cost-leadership D. Transnational

B. Multidomestic

Which entry mode would typically be LAST in the sequence that firms use to enter International markets? A. Strategic alliances B. New wholly owned subsidiaries (greenfield ventures) C. Licensing D. Exporting

B. New wholly owned subsidiaries (greenfield ventures)

Diversification has a curvilinear relationship with corporate performance - which level of diversification creates the most value? A. Unrelated business B. Related Constrained C. Dominant business D. Single business

B. Related constrained

The belief that a firm will not do anything to exploit its partner's vulnerabilities, even if it has an opportunity to do so. A. Opportunity maximization B. Trust C. Synergy D. Cost minimization

B. Trust

Process through which a potential acquirer evaluates a target firm for acquisition A. Downscoping B. Downsizing C. Restructuring D. Due diligence

D. Due diligence

All are types of distance associated with liability of foreignness EXCEPT: A. Geographic distance B. Cultural distance C. Actual distance D. Economic distance

C. Actual distance

Cost savings a firm creates by successfully sharing resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses A. Penny pinching B. Synergy C. Economies of scope D. Corporate-level diversification strategy

C. Economies of scope

All are incentives to use international strategy EXCEPT: A. Integrate a firm's operations on a global scale to better serve customers in different countries B. Gain access to critical raw materials, sometimes including relatively inexpensive labor C. End a product's life cycle D. Meet increasing demand for goods and services that is surfacing in emerging markets

C. End a product's life cycle

Which is NOT a type of major strategic alliance? A. Joint venture B. Nonequity strategic alliance C. Explicit collusion alliance D. Equity strategic alliance

C. Explicit collusion alliance

The three international corporate-level strategies vary in terms of 2 dimensions _____ and _____. A. Culture; geographic scope B. Cost; quality C. Global integration; local responsiveness D. Regionalization; globalization

C. Global integration; local responsiveness

Which primary approach that firms used to manage cooperative strategies is characterized by less formal contracts, fewer constraints on partner's behaviors, and makes it possible for partners to explore how their resources can be shared in multiple value creating ways. A. Corporate-level competitive strategy B. Synergistic alliance C. Opportunity maximization D. Cost minimization

C. Opportunity maximization

International corporate level strategy where the firm seeks to achieve both global efficiency and responsiveness A. Regionalization strategy B. Multidomestic strategy C. Transnational strategy D. Global strategy

C. Transnational strategy

exists when a company produces its own inputs (backward integration) or owns its own source of output distribution (forward integration) A. Multipoint Competition B. Horizontal Integration C. Vertical integration D. Digital integration

C. Vertical integration

All are determinants of national advantage EXCEPT: A. Patterns of firm strategy, structure, and rivalry B. Demand conditions C. Factors of production D. Economies of scale and learning

D. Economies of scale and learning

Which is NOT one of the 4 risks that cooperative strategies often carry? A. A firm may act in a way that its partner thinks is opportunistic B. A firm misrepresents the resources it can bring to the partnership C. One firm may make investments that are specific to the alliance while its partner does not D. A firm may make more resources available to its partners than it originally committed to the cooperative strategy

D. A firm may make more resources available to its partners than it originally committed to the cooperative strategy

A form of business organization in which a firm that already has a successful product or service licenses it's trademark and method of doing business to other businesses and exchange for an initial franchise fee and an ongoing royalty rate A. Tacit collusion B. Diversifying alliance C. Synergistic alliance D. Franchising

D. Franchising

Trust between partners ________ the likelihood of success when using alliances A. Decreases B. Minimizes C. Does not affect D. Increases

D. Increases

An alliance in which two or more firms develop a contractual relationship to share some of their resources to create a competitive advantage. This type of alliance is less formal, demands fewer partner commitments than other major strategic alliance types, generally do not foster intimate relationship between partners, and is common in outsourcing. A. Cooperative alliance B. Joint ventures C. Equity strategic alliance D. Nonequity strategic alliance

D. Nonequity strategic alliance

What is the main reason that most mergers and acquisitions negatively affect shareholder value? A. The entire market becomes an oligopoly or a monopoly B. Market conditions change too quickly C. Companies that resist acquisitions are subject to the "winner's curse" D. Promised synergies never take place

D. Promised synergies never take place

When firms seek to create value through the synergy that can be generated by integrating resources and capabilities: A. Vertical acquisition B. Unrelated acquisition C. Horizontal acquisition D. Related acquisition

D. Related acquisition

A strategy of _____ will be most beneficial for a firm to enhance its overall corporate performance. A. Unrelated level of diversification B. Single-business level of diversification C. Dominant-business level of diversification D. Related-linked diversification

D. Related-Linked diversification

All the reason that firms choose to diversify their operations EXCEPT: A. Value-neutral (have neutral effects) B. Value-reducing (reduce a firm's value) C. Value-creating (increase a firm's value) D. Value-recycling (have reusable effects)

D. Value-recycling (have reusable effects)