MGMT 481 Test 3

When large, incumbent firms buy up startup companies, the transaction is generally described as a(n) _____. A. Non-equity alliance B. Equity alliance C. Acquisition D. Merger

Acquisition

Which of the following best illustrates an equity alliance? A. a contractual agreement that provides Ocia Pharma Inc. the exclusive rights to distribute the drugs of Marvel Pharma Inc. in the Asian market B. an alliance between GoldWing Systems Inc. and GM Computers Inc. that results in GM Wing Inc., an independent third company C. a collusion between two competitors, Torque Steels Inc. and Vizor Metals Inc., to fix prices D. a partnership in which RedGate Insurance Inc. has a 40 percent ownership claim in TwinTrust Finance Inc.

D. a partnership in which RedGate Insurance Inc. has a 40 percent ownership claim in TwinTrust Finance Inc.

The four aspects of Porter's model of national competitive advantage include all of the following EXCEPT the: A. Factor condition. B. Demand condition. C. Economic institutions. D. Supporting industry.

Economic institutions

Which of the following statements is true of explicit knowledge? A. Explicit knowledge is about knowing how to do a certain task. B. Explicit knowledge is knowledge that cannot be codified. C. Explicit knowledge is shared in non-equity alliance firms. D. Explicit knowledge is acquired only through actively participating in a process.

Explicit knowledge is shared in non-equity alliance firms.

When a firm chooses to build new plants and facilities from scratch in foreign markets, this is called __________. A. Exporting B. A joint venture C. A greenfield strategy D. Franchising

Exporting

In an equity alliance, firms tend to share mostly explicit knowledge. True or False

FALSE

Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.? A. GD Inc. purchases VS Inc. for $80 billion despite VS Inc. being against the purchase. B. GD Inc. and VS Inc. join together to form a third new entity, while they also operate separately. C. GD Inc. outsources a few of its business activities to VS Inc. for competitive advantage. D. GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.

GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.

7. Which of the following is NOT related to horizontal integration? A. It concerns the number of activities a firm participates in up and down the industry value chain. B. A type of strategy that improves a firm's strategic position in a single industry. C. The process of acquiring and merging with competitors. D. HP acquiring Compaq in 2002 is an example.

It concerns the number of activities a firm participates in up and down the industry value chain.

International strategy refers to: A. An action plan pursued by American companies to compete against foreign companies operating in the United States. B. A political and economic action plan developed by businesses and governments to cope with global competition. C. Leveraging home-based core competencies by selling the same products or services in both domestic and foreign markets. D. The high entry barriers of the home market.

Leveraging home-based core competencies by selling the same products or services in both domestic and foreign markets.

The major disadvantages of expanding internationally is ________________. A. Liability of foreignness B. Cultural compatibility C. Technology availability D. Knowledge complementarity

Liability of foreignness

According to the integration-responsiveness framework, if a firm is facing high pressure for local responsiveness and low pressure for cost reductions, the firm is likely to adopt a(n) _____________. A. Transnational strategy B. Global-standardization strategy C. Localization strategy D. International strategy

Localization strategy

_____ is a form of self-delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary. A. Managerial pride B. Managerial ego C. Managerial arrogance D. Managerial hubris

Managerial hubris

A(n) _________ describes the joining of two independent companies to form a combined entity. A. Acquisition B. Merger C. Joint venture D. Equity alliance

Merger

Which of the following is a feature of the Globalization 2.0 stage? A. Huge investments in fiber-optic cable networks around the world enabled companies to operate as global-collaboration networks. B. Only sales and distribution operations took place overseas, while all the important business functions were located in the home country. C. Two-way knowledge flow between the local subsidiaries and their U.S. headquarters was strong. D. Multinational enterprises (MNEs) began to create smaller, selfcontained replicas of themselves in a few key countries.

Multinational enterprises (MNEs) began to create smaller, selfcontained replicas of themselves in a few key countries.

Zeda is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Zeda in terms of cultural distance? A. Olax, which has the same wealth and per capita income as Zeda B. Jordax, which has a very profitable economy and where people speak Jordaxian C. Segar, where people speak English and have a low standard of living D. Terra, which is located close to Zeda and is easily accessible by road

Segar, where people speak English and have a low standard of living

Horizontal integration can help firms enhance differentiation. True or False

TRUE

One of the dimensions of corporate strategy is how to compete effectively in the global marketplace True or False

TRUE

One disadvantage noted in the text of an international strategy is _______________. A. The expropriation of intellectual property by foreign competitors B. The high distribution cost for firms operating internationally C. The low market presence, since there is low response to local markets D. Diminishing returns on any increasing marginal sales

The expropriation of intellectual property by foreign competitors

What does the relational view of competitive advantage propose? A. A strategic alliance has the potential to help a firm gain a competitive advantage when it joins together resources that are common, inexpensive, and easy to imitate. B. The locus of competitive advantage is often not found within the individual firm but within a strategic partnership. C. Strategic alliances fail to provide competitive advantage when they involve joining different parts of a firm's value chain, such as R&D and marketing. D. A firm has a competitive advantage over its rivals when it can provide goods or services similar to the competitors' at a higher price.

The locus of competitive advantage is often not found within the individual firm but within a strategic partnership.

Which of the following is an advantage of equity alliances when compared to non-equity alliances? A. They are more flexible and easy to initiate and terminate. B. They require smaller capital investments. C. They produce stronger ties between partners. D. They are based on contracts rather than ownership.

They produce stronger ties between partners.

Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode? A. They are easy to initiate and terminate. B. They require low amounts of investments in terms of capital. C. They reduce a firm's exposure to loss of reputation. D. They are based on contracts rather than ownership.

They reduce a firm's exposure to loss of reputation.

Which one of the following is NOT a reason firms expand abroad? A. To gain access to a larger market B. To gain access to low-cost input factors C. To develop new competencies D. To dominate domestic markets

To dominate domestic markets

Acquisitions, alliances, and networks help firms pursue common interests, enhance competitiveness, and increase revenues. True or False

True

Fierce domestic competition in Lobekistan makes a tough environment for any motorcycle company. Success requires top-notch engineering of chassis and engines, as well as keeping costs and fuel consumption in check. As a result, Lobekistan's motorcycles have a competitive advantage in the global market. According to Porter's diamond framework, this scenario shows the influence of competitive intensity in. A. a peripheral industry. B. a focal industry. C. supportive complementors. D. related complementors.

a focal industry.

Evara Cosmetics Inc. is a company that operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Evara Cosmetics Inc. most likely implement? A. a multidomestic strategy B. an international strategy C. a global-standardization strategy D. a one-product strategy

a multidomestic strategy

When North Autos Inc. wanted to sell its cars in the country of Balvia, it lacked access to distribution channels and marketing expertise in the country. Thus, North Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner's well-established distribution channels. Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario? A. increasing competitive intensity B. accessing critical complementary assets C. procuring additional capital investments D. reducing differentiation of product and service offerings Relational view of compe

accessing critical complementary assets

Which of the following aspects of alliance management capability is paired with partner selection? A. alliance governance B. alliance design C. alliance formation D. post-formation alliance management

alliance formation

Opula Inc., a luxury car company, sells the same cars and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Opula Inc. most likely pursue? A. a multidomestic strategy B. a transnational strategy C. a global-standardization strategy D. an international strategy

an international strategy

Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage? A. benefits from lower labor costs in manufacturing and services B. access to low-cost raw materials such as lumber and iron ore C. low levels of economic growth in emerging economies D. inefficient infrastructure in countries like China, which have brought down setting-up costs

benefits from lower labor costs in manufacturing and services

How does horizontal integration within an industry affect the surviving firms? A. by increasing the threat the surviving firms will face from new entrants B. by strengthening the rivalry among existing firms C. by requiring the surviving firms to shift their focus from non-price to price competition D. by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers

by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers

When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ______ distance. A. political B. geographic C. administrative D. cultural

cultural

Which of the following modes of entering a foreign market allows for the lowest level of control? A. greenfield ventures B. exporting C. joint ventures D. acquisitions

exporting

Which of the following types of organizations comparatively requires the lowest levels of investment and control? A. joint ventures B. franchising C. acquisition D. greenfield operations

franchising

In a strategic alliance, the firm that learns faster A. has the tendency to lose its competitive advantage. B. has the incentive to reduce its knowledge sharing. C. has the tendency to move up a learning curve. D. has the incentive to invest further in the alliance.

has the incentive to reduce its knowledge sharing.

Olympia Autos Inc. merged with its competitor Vaca Autos Inc. This allowed Olympia Autos to use its technological competencies along with Vaca Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate? A. backward integration B. forward integration C. horizontal integration D. vertical integration

horizontal integration

Wave Motors Inc., a Kempa-based automobile company, has entered into a partnership with Sphere Autos Inc., headquartered in United Cadvia. The parent companies, together, have established a stand-alone firm called Genuine Autos Inc. This arrangement best exemplifies a A. joint venture. B. partnership. C. non-equity alliance. D. proprietorship.

joint venture.

Jane is the CEO of a clothing brand, Diva Rule Inc., which has retail stores and production units in five different countries. The firm's shareholders ensure the proper management of Diva Rule Inc. through their appointed board of directors. In this scenario, Diva Rule Inc. is most likely a A. nonprofit organization. B. nationalized firm. C. sole proprietorship. D. multinational enterprise.

multinational enterprise.

What causes the winner's curse? A. buying a firm with principal-agent problems B. overpaying for an acquisition C. buying a firm with a competitive disadvantage D. underpaying for an acquisition

overpaying for an acquisition

Which of the following is part of Geert Hofstede's cultural dimensions? A. locus of control B. self-efficacy C. span of control D. power distance

power distance