strategic business management

The choices that a firm has for entering the international market include all of the following EXCEPT:

. leasing.

Pappelbon Enterprises recently acquired a chain of convenience stores offering both fuel and food. Pappelbon is now surprised and dismayed to find that the gas pumps have been poorly maintained and will need to be replaced at considerable expense. All of the following statements accurately reflect this EXCEPT:

Pappelbon's management was overly focused on acquisitions.

Which of the following is NOT a disadvantage associated with exporting?

Potential loss of proprietary technologies

Spotnick Enterprises is exploring options for entering into international markets. The key stakeholders have expressed that the primary concern is that Spotnick maintain the maximum amount of control possible in order to protect its proprietary technology. What type of entry would be best for Spotnick?

a. An acquisition b. Exporting c. A greenfield venture d. Licensing C

The Zolloffe Co. is exploring options for entering into international markets. Time is of the essence. The key stakeholders have expressed that the primary concern is that Zolloffe gain access to new markets as quickly as possible in order to spur corporate growth. What type of entry would be best for Zolloffe?

a. An acquisition b. Licensing c. Exporting d. A strategic alliance A

Which of the following is an advantage associated with greenfield ventures?

a. Governmental support and subsidies in the host country b. The lower level of risks involved c. The level of control over the firm's operations d. The lower cost of this type of venture C

BradyHawk found itself in a bidding war and paid a 32 percent premium to acquire LasLuces in 2017 and issued more stock to raise capital This illustrates what problem associated with acquisitions?

a. Integration difficulties b. Too much diversification c. Large or extraordinary debt d. Inadequate evaluation of the target C

Which of the following is NOT a typical disadvantage of licensing?

a. Licensees may develop a competitive product after the license expires b. Lower potential returns than the use of exporting or strategic alliances c. Little control over the marketing of products d. Incompatibility of the licensing partner D

Bunyan Heavy Equipment, a U.S. firm, is investigating expanding into Russia using a greenfield venture. The committee researching this project has delivered a negative report. The main concern of the committee is probably:

a. Russia's recent actions to gain state control of private firms' assets. b. loss of intellectual property due to Russian piracy. c. the fluctuation in the value of the ruble. d. the numerous and conflicting legal authorities in Russia. A

Which of the following is NOT a disadvantage of international acquisitions?

a. The acquiring firm has to deal with the regulatory requirements of a host country. b. They are very expensive and often require debt financing. c. It is the slowest way to enter a new market. d. Merging the acquired and acquiring firm is difficult. C

Which of the following is a reason to pursue an acquisition?

a. To strengthen existing capabilities b. To increase speed to market c. To limit diversification d. To reduce debt B

A primary reason for a firm to pursue an acquisition is to:

a. achieve greater market power. b. avoid increased government regulation. c. achieve greater financial returns in the short run. d. exit a hyper-competitive market. C

A(n) __________ occurs when one firm buys a controlling, or 100 percent interest, in another firm.

a. acquisition b. merger c. spin-off d. restructuring A

SpeakEasy, a U.S. software company that specializes in voice-recognition software, wishes to rapidly enter the growing technical translation software market. This market is dominated by firms making highly differentiated products. To enter this market, SpeakEasy would be best served if it considers a(n):

a. acquisition of a highly related firm in the technical translation market. b. vertical acquisition of a firm that uses technical translation products. c. strategy of internally developing the technical translation products needed to compete in this market. d. cross-border merger, preferably with an Indian or Chinese company. A

A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product, instead of adopting a strategy of developing new products in-house. All of the following arguments are correct EXCEPT:

a. acquisitions could become a substitute for innovation within your firm. b. the outcomes of acquisitions can be estimated more easily and accurately than the outcomes for an internal product development process. c. the acquisition of Taylor should be primarily for defensive rather than strategic reasons. d. research suggests that acquisition strategies are a common means of avoiding risky internal ventures. C

Horizontal, vertical, and related acquisitions to build market power:

a. are rarely permitted to occur across international borders. b. concentrate on capturing value at more than one stage in the value chain. c. are likely to undergo regulatory review by various governmental entities. d. typically involve a firm purchasing one of its suppliers or distributors. C

When substantial debt is used to finance acquisitions, firms with successful acquisitions:

a. avoid long-term investments b. restrict managerial discretion in the use of cash flow. c. reduce the debt quickly. d. seek financial slack. C

Internal product development is often viewed as:

a. carrying a high risk of failure. b. a quicker method of product launch than acquisition of another firm. c. the only reliable method of generating new products for the firm. d. critical to the success of biotech and pharmaceutical firms. A

Researchers have found that shareholders of acquired firms often:

a. earn above-average returns. b. are not affected by the acquisition. c. earn below-average returns. d. earn close to zero as a result of the acquisition. A

An international diversification strategy is one in which a firm:

a. expands into one or a few markets. b. acquires a firm in a foreign country. c. expands into nearby markets. d. expands into a potentially large number of geographic locations or markets. D

The acquisition of Sun Microsystems (a computer hardware producer) by Oracle Corporation (a software firm) is an example of a(n):

a. horizontal acquisition. b. vertical acquisition. c. merger of equals. d. unrelated acquisition B

Cross-border acquisitions are critical to U.S. firms competing internationally:

a. if they are to develop differentiated products for markets served. b. when market share growth is the focus. c. where consolidated operations are beneficial. d. if they wish to overcome entry barriers to international markets. D

Research results indicate all of the following EXCEPT:

a. immediately after the announcement of a planned acquisition, the stock price of the majority of acquiring firms declines in the majority of cases. b. the majority of acquisitions increase long-term value for the acquiring firm. c. shareholders of acquired firms often earn above-average returns from an acquisition. d. shareholders of acquiring firms typically earn returns from the transaction that are close to zero. B

Currently, the rationale for making an acquisition includes all of the following EXCEPT to:

a. increase market power. b. overcome entry barriers. c. increase diversification. d. decrease taxes paid by shareholders. D

When a firm becomes internationally diversified, the initial impact on returns is that they:

a. increase. b. become more variable. c. remain stable. d. decrease. D

All of the following complicate the implementation of an international diversification strategy EXCEPT:

a. increased costs of coordination between business units. b. widespread multilingualism. c. logistical costs. d. cultural diversity. B

The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because:

a. innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting from acquisition. b. of barriers to entry in many industries. c. it is difficult and time intensive for companies to develop products that differ from their current product line. d. unrelated acquisitions are usually uncomplicated since the acquired firm is allowed to continue to function independently as it did before acquisition. C

Research has shown that the more __________, the greater is the probability that an acquisition will be successful.

a. involved investment banking firms are in the due diligence process b. disparate the corporate cultures c. related the acquired and acquiring firms are d. diverse the resulting portfolio of competencies C

Terrorism creates an economic risk for firms, which:

a. is offset by the above-average returns for firms that have learned how to operate in such an environment. b. reduces the amount of investment foreign companies will make in a country perceived to be terror prone. c. is created by governmental bans on doing business with terrorist regimes. d. is absorbed by firms that are highly geographically diversified and that operate in both secure and insecure locations. B

The presence of barriers to entry in a particular market will generally make acquisitions __________ as an entry strategy.

a. less likely b. prohibitive c. illegal d. more likely D

Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for:

a. market discipline. b. innovation. c. international diversification. d. risk analysis. B

Internationally diversified firms:

a. may need to decrease international activities when domestic profits are poor. b. are generally unable to achieve high levels of synergy because of differences in cultures. c. are more likely to produce below-average returns for investors in the long run. d. earn greater returns on their innovations through larger or more numerous markets. D

Compared to internal product development, acquisitions allow:

a. more accurate prediction of return on investment. b. immediate access to innovations in mature product markets. c. more effective use of company core competencies. d. slower market entry. A

Market power is derived primarily from the:

a. quality of a firm's top management team. b. size of a firm and its resources and capabilities. c. depth of a firm's strategy. d. core competencies of the firm. B

All of the following are reasons why firms use international strategic alliances EXCEPT:

a. strategic alliances are easy to manage. b. sharing of risks and resources. c. alliances facilitate the development of new capabilities. d. learning new competencies particularly those related to technology. A

Manny Inc. recently completed the purchase of its primary supplier. Manny intends to begin expanding the market to which the supplier's products are sold. This purchase is a(n):

a. unrelated acquisition. b. merger. c. vertical acquisition. d. horizontal acquisition. C

Sales of watches among teenagers and twenty-somethings are declining rapidly as this age group uses cellphones, iPods, and other devices to tell time. A company that specializes in selling inexpensive watches to this age group may wish to consider __________ in order to develop new products other than watches.

a. unrelated diversification b. backward integration c. forward integration d. horizontal acquisition A

Firms with core competencies that can be exploited across international markets are able to:

achieve synergies and produce high-quality goods at lower costs.

Porter's model, if a country has both __________ and __________ production factors, it is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors.

advanced; specialized

The use of high levels of debt in acquisitions has contributed to:

an increased risk of bankruptcy for acquiring firms.

The location advantages associated with locating facilities in other countries can include all of the following EXCEPT:

avoidance of host country governmental regulations.

Problems associated with acquisitions include all of the following EXCEPT:

excessive time spent on the due diligence process.

The problems associated with exporting include:

high transportation costs and the expense of tariffs.

The two important environmental trends that influence a firm's choice and use of international corporate-level strategies are __________ and __________.

liability of foreignness; regionalization

The four determinants in Porter's model of international competitive advantage include all of the following EXCEPT:

political and economic institutions.

The __________ phase is probably the single most important determinant of shareholder value creation in mergers and acquisitions.

post-acquisition integration.

Associations such as the European Union, Organization of American States, and the North American Free Trade Agreement encourage:

regional strategies.

In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry. This is an example of the __________ in Porter's model.

related and supporting industries

Due diligence includes all of the following activities EXCEPT assessing:

the level of private synergy between the two firms.

All of the following are international corporate-level strategies EXCEPT the __________ strategy.

universal

The factors that lead to poor long-term performance by acquisitions include all of the following EXCEPT firms:

with insufficient diversification.