Mgmt 493 Ch 9
Although long-standing enemies, Apple and IBM formed an alliance partnership. How did this partnership benefit both Apple and IBM?
Apple's core competency with consumer services and IBM's core competency with business services complemented each other
Which of the following best explains why Disney showed superior post-merger integration capabilities?
Disney managed its new subsidiaries more like alliances rather than attempting full integration
Which of the following statements is true of explicit knowledge?
Explicit knowledge is shared in non-equity alliance firms
Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.?
GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.
Which of the following statements is true of an equity alliance?
In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible
In Eli Lilly's Office of Alliance Management, the _____ is a senior, corporate-level executive responsible for high-level support and oversight
alliance champion
The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 billion. All the hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are known as Mansion hotels. What does this scenario best illustrate?
an acquisition
When a stand-alone organization is created and owned by two or more parent companies together, the strategic alliance is referred to as a(n)
joint venture
_____ are best described as situations in which both partners in a strategic alliance are motivated to form an alliance for learning, but the rate at which the firms learn may vary
learning races
_____ are best described as contractual alliances in which the participants regularly exchange codified knowledge
licensing agreements
Amiware Inc., a manufacturer of ceramic cookware, has entered into a contractual agreement with Micoware Inc. The agreement involves vertical strategic alliances connecting different parts of the industry value chain. This arrangement between the two companies best illustrates a(n)
non-equity alliance
Equity alliances are less common than non-equity alliances because they
often require larger investments
Adidas acquired Reebok primarily to
overcome its competitive disadvantage against Nike
What causes the winner's curse?
overpaying for an acquisition
In a non-equity alliance, which of the following types of information would firms most likely share?
the documented information about the material composition of a product
Toyota's President, Akio Toyoda, hopes that a transfer of tacit knowledge will take place through its equity alliance with Tesla Motors. He is referring to
the entrepreneurial spirit in Tesla
It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because
the horizontal integration activity has the potential to reduce competitive intensity in an industry
What is horizontal integration?
the process of merging with a competitor at the same stage of the value chain
In 1990, Roche, a Swiss pharmaceutical company, initially invested $2.1 billion to purchase a controlling interest in the biotech startup Genentech. In 2009, after witnessing the success of Genentech's drug discovery and development projects, Roche spent $47 billion to purchase the remaining minority interest in Genentech, making it a wholly owned subsidiary. In terms of strategic alliances, this scenario best indicates
the real-options perspective
The success of the Pixar-Disney strategic alliance demonstrated that
the two entities' complementary assets matched
Why did Pixar enter into a strategic alliance with Disney?
to finance and distribute its newly created computer-animated movies
In the New United Motor Manufacturing, Inc. (NUMMI) joint venture, why did Toyota enter into a strategic alliance with General Motors (GM)?
to learn how to implement its lean manufacturing program with an American workforce
Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups?
to make small-scale investments in ventures poised to disrupt existing market economics
Which of the following is not a reason why firms enter alliances
to replace competitive advantage with competitive parity
Which of the following examples describes the task of an alliance manager?
Fyodor trained the employees of his alliance partner in the skills needed to create a display for an e-notebook.
Which of the following is a drawback of joint ventures?
They necessitate the sharing of rewards between the partners.
Which of the following is an advantage of equity alliances when compared to non-equity alliances?
They produce stronger ties between partners
Terranova Autos Inc., a large automobile company, made an initial small investment in a start-up company that was developing a solar-powered car. This gave Terranova Autos controlling interests in the start-up company. However, Terranova Autos had no obligations to make continued investments in the experiments of the start-up company. It could invest in small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Terranova Autos would have the right to buy out the start-up company. This approach to strategic alliance is referred to as
a real-options perspective
Vibgyor Inc., a manufacturer of smartphones, has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its cell phones. This would mean that both the companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Vibgyor and the software company best referred to as in this scenario?
a strategic alliance
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
accessing critical complementary assets
Which alliance type is the Renault-Nissan alliance, where Nissan owns 15 percent of Renault, and Renault owns 44.4 percent in Nissan?
equity alliance
When entering new geographic markets, some governments, such as those of Saudi Arabia and China, require that foreign firms have a local
joint venture partner
Which of the following is a common drawback of a non-equity alliance?
lack of trust between partners
Comfort Shoes Inc. and InStep Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other competencies. Comfort Shoes entered the strategic alliance to acquire the production system pioneered by InStep Shoes. Similarly, InStep Shoes agreed to the strategic alliance to study the designing process of Comfort Shoes. However, Comfort Shoes was more successful and faster than InStep Shoes in accomplishing its alliance goal. What does this scenario best illustrate?
learning races
In Eli Lilly's Office of Alliance Management, the alliance champion is primarily responsible for
making sure that an alliance fits within the firm's existing alliance portfolio and corporate-level strategy
With regard to New United Motor Manufacturing, Inc. (NUMMI), why did General Motors (GM) enter into a strategic alliance with Toyota?
to learn the lean manufacturing system pioneered by Toyota
Which of the following is true of acquisitions?
Acquisitions can be friendly or hostile.
Which of the following is the best definition of a complementary asset?
an asset a firm needs to complete the value chain from upstream innovation to downstream commercialization
The main reason behind Google's decision to acquire the Israeli start-up company Waze for $1 billion was to
preempt its competitors from buying Waze
How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010?
It has access to convenience stores and a new distribution channel.
Which of the following types of strategic alliances is the least common in terms of frequency?
joint ventures
Disney became the world's leading media company to a large extent by pursuing a corporate strategy of
related-linked diversification
Which of the following accurately describes a common difference between a merger and an acquisition?
A merger tends to be friendly; an acquisition can be friendly or unfriendly
Which of the following statements is true about managing alliances-related tasks?
Alliance management capability is based on three alliance-related tasks
Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks?
Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone
Susan is a strategist for the firm, DigiVision Inc., which produces high-quality HD movie cameras. This company needs a specific material for a new camera they are developing, which is manufactured in large quantities by a competitor called Tech Resources Inc. However, this material is difficult to trade for. Because of this, which of the following is most likely the best strategy for Susan to suggest?
DigiVision should acquire Tech Resources
How does taking a real-options perspective by entering strategic alliances help incumbent firms?
It allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade
How did the strategic alliance between HP and DreamWorks Animation SKG affect HP
It enabled HP to compete head on with Cisco's videoconferencing solution.
Which of the following is a disadvantage of a horizontal integration corporate strategy?
It increases the potential for legal repercussions
Which of the following statements is not true of tacit knowledge?
It is regularly shared between partners in a non-equity alliance
Which of the following corresponds to the use of tacit knowledge?
John assembles the motorcycle from memory
PureSource Pharma Inc. recently acquired BioChem Pharmaceuticals Inc. It now sells its own products along with the products originally sold by BioChem Pharmaceuticals. As a result, PureSource Pharma's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect PureSource Pharma?
PureSource Pharma will lower its costs through economies of scale.
Which of the following scenarios best illustrates horizontal integration?
Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.
What does the relational view of competitive advantage propose?
The locus of competitive advantage is often not found within the individual firm but within a strategic partnership
Which of the following is a result of horizontal integration in terms of Porter's five forces model?
There is a reduction of excess capacity in the market.
Which of the following is an advantage of non-equity alliances
They are flexible and easy to initiate and terminate.
Which of the following statements is true of strategic alliances?
They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles
Which of the following is a disadvantage of equity alliances?
They can entail significant investments.
Which of the following is an advantage of joint ventures?
They create strong ties, trust, and commitment between the partners.
Which of the following statements is true of joint ventures?
They enable the exchange of both tacit and explicit knowledge
Which of the following best illustrates a non-equity alliance?
a contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc
Which of the following best illustrates an equity alliance?
a partnership in which RedGate Insurance Inc. has a 40 percent ownership claim in TwinTrust Finance Inc.
Which of the following is an example of explicit knowledge?
a research summary
When large, incumbent firms buy start-up companies, the transaction is generally described as a(n)
acquisition
Which of the following aspects of alliance management capability is paired with partner selection?
alliance formation
Partner compatibility and partner commitment are necessary conditions for successful alliance formation. Partner compatibility captures
aspects of cultural fit between different firms in an alliance.
When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because
building downstream complementary assets can be expensive and time-consuming.
How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers?
by lowering competitive intensity in the industry overall
How does horizontal integration within an industry affect the surviving firms?
by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
FR Pharmaceuticals Inc., BioCure Pharma Inc., and Regime Pharma Inc. are three rival firms who have set up an alliance to conduct research and find a cure for cancer. They have made almost equal contributions to the research, and they also share their expertise with each other. However, the three firms will continue to behave as competitors in markets for other drugs and vaccines. What is this arrangement best referred to as?
co-opetition
_____ is best described as cooperation by competitors to achieve a strategic objective
co-opetition
When a firm does not have the resource required for pursuing a growth strategy, and if the resource in question is not easily tradable, the implication for the strategist is most likely to
consider an outright acquisition
_____ are best described as equity investments by large established firms making in entrepreneurial ventures to gain access to new, and potentially disruptive, technologies
corporate venture capital investments
Horizontal integration through mergers and acquisitions can help firms strengthen their competitive positions by increasing
differentiation
A drawback of joint ventures is that they are characterized by
double reporting lines
A candy company called SweetThings Inc. forms an agreement with another candy company called Reverie Inc. Through this agreement, SweetThings owns 30 percent of Reverie. However, Reverie does not own any part of SweetThings. This type of agreement is called a(n)
equity alliance
A(n) _____ is best described as a partnership in which at least one partner takes partial ownership in the other partner
equity alliance
The partnership between Toyota and Tesla Motors, in which Toyota has made a $50 million investment in the California startup company to learn new knowledge and gain a window into new technology, is an example of a(n)
equity alliance
Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to
fill gaps in its competency lineup
Which of the following is an ineffective practice in alliance management?
focusing on developing an alliance-management capability in isolation
In a strategic alliance, the firm that learns faster
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?
horizontal integration
Dow Corning is a company owned by Dow Chemical and Corning. This is most likely an example of a(n)
joint venture
EveningStar Inc. and The Luxur Group have together established The Luxur Star Group of hotels. EveningStar owns 49 percent and The Luxur Group has a 51 percent share in The Luxur Star Group of hotels. However, the management of The Luxur Star Group of hotels is separate from its parent companies. What alliance type does this scenario best illustrate?
joint venture
New United Motor Manufacturing, Inc. (NUMMI), formed between General Motors (GM) and Toyota in 1984 was the first _____ in the U.S. automobile industry
joint venture
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
joint venture
Dream Slope Inc. is a leader in producing winter sports equipment, including skis and skates. Recently, the firm decided to expand into the bobsled market and acquired Sleek Phantom Inc. This company produced bobsleds, but its sales had slowed. The managers of Dream Slope convinced themselves that they were able to manage the business of Sleek Phantom more effectively even though they had no experience in the bobsled market. However, this move backfired and the sale of Sleek Phantom's bobsleds plummeted. Which of the following terms is often used to describe this scenario?
managerial hubris
JetStream Airway's decision to acquire Rex Fuels Inc. proved to be ill-fated because its managers had overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers' capabilities were restricted to the airlines industry. What does this scenario best illustrate?
managerial hubris
Why did Quaker Oats Company's acquisition of Snapple fail?
managerial hubris
A(n) _____ occurs when firms enter into a partnership based on contractual agreements, which results in vertical strategic alliances that connect different parts of the industry value chain
non-equity alliance
Supply, distribution, and licensing contractual agreements between firms, which result in vertical strategic alliances, are all examples of
non-equity alliances
The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Movo Automobile is most likely a result of
principal-agent problems
A _____ is best described as an approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time
real-options perspective
Luxura Inc. is a large cosmetics company that made an initial small investment in a start-up company, GreenDream, that was developing an organic face lotion. This gave Luxura controlling interests in the start-up company. However, GreenDream soon began to have financial difficulties because of principal-agent problems. As a result, Luxura did not invest in the next stage of development and pulled out of the company. This approach to strategic alliance is referred to as a
real-options perspective
The _____ is a strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries
relational view of competitive advantage
The process of alliance management begins with
selecting the best possible partner
Medetect Inc. is a large firm involved in the highly competitive market of high-tech medical equipment. In this market, smaller firms that focus on research are constantly making new technological developments. Which of the following approaches would best serve the needs of Medetect?
serial acquisitions
In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are
similar to those that need to be developed and superior to those of competitors in the targeted area
A drawback involved in using cross-border strategic alliances to enter new foreign markets is that
some of the firm's proprietary know-how may be appropriated by the foreign partner.
A _____ is best described as a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services
strategic alliance
The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market in 2013 because
the U.S. population was growing slowly and becoming more health conscious
A consumer electronics company is in the process of evaluating whether it should pursue an internal development strategy or an external growth strategy. To make this decision, the management needs to assess whether the company's internal resources are superior to those of competitors in the targeted area. Which of the following strategic management models would be most useful in this assessment?
the VRIO framework
In Eli Lilly's Office of Alliance Management, who is responsible for providing the technical expertise and knowledge needed for the specific technical area and the day-to-day management of the alliance?
the alliance leader
In Eli Lilly's Office of Alliance Management, who is responsible for providing alliance training and development?
the alliance manager
The downside of equity alliances is
the amount of investment that can be involved
Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion in 2012?
the desire to gain a new capability
One of the first new business apps resulting from the alliance of Apple and IBM will help airline pilots determine the right amount of fuel to carry on a particular flight. This task not only requires significant data analytics but also the need to display the information in an easily understandable way so that pilots can digest it quickly when glancing on their iPad in a cockpit prior to departure. Which of the following parts of this example will Apple be responsible for?
the display of information in an easy-to-understand way
In 1984, GM and Toyota formed a joint venture called New United Motor Manufacturing Inc. Each partner was motivated to learn new capabilities. This joint venture is an example of
using co-opetition
When should mergers and acquisitions (M&A) be considered the "buy" option for a strategist trying to determine which corporate strategy to implement?
when extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge
When does a merger between companies typically occur?
when two firms of comparable size join to form a combined entity
