BCOR 460 Exam 4
National culture, according to Geert Hofstede, can be defined as different groups' distinctive ______.
"programming of the mind"
Long-term contracts typically last ______.
1 year or more
How do mergers and acquisitions differ?
A merger describes the joining of two independent companies, while an acquisition describes the purchase or takeover of a firm.
What are the factors in Michael Porter's model of national competitiveness? (Check all that apply.)
Competitive intensity in a focal industry Related industries/complementors Factors conditions Demand conditions
In order for a firm to lower costs, it must ______.
Grow
What is a true statement about strategic alliances?
They have a high failure rate.
Kava Botanicals, a boutique retailer that sells high-end makeup and accessories, is owned by two makeup manufacturers. Kava Botanicals is an example of which type of strategic alliance?
a joint venture
Multinational enterprises need an effective global strategy in order to ______.
achieve a competitive advantage against other companies
When a multi-business firm pools and shares resources and leverages competencies across different business lines, it is following a(n) ______.
related diversification strategy
What are downsides of equity alliances? (Check all that apply.)
The amount of investment involved The time and effort for assembling the partnership
On average, mergers and acquisitions ______ shareholder value.
destroy
True or false: A horizontal integration strategy leads to industry consolidation.
true
Amazon's continued focus on ______ is a key to its ongoing success.
Innovation
What are the three dimensions along which executives formulate corporate strategy?
The degree of vertical integration The geographic scope The type of diversification
When a business answers the question of where to compete, it is determining ___.
corporate strategy
The benefits to be accrued from locating value chain activities in the world's optimal geographies for a specific activity are known as ____ economies
location(s)
______ are partnerships in which at least one partner takes partial ownership in the other partner.
Equity alliances
Which of the following is an example of the principal-agent problem even when the principal's goal is to create shareholder value?
a manager flying first class on all business trips
Vasily is a manager at a large snack foods company. Vasily believes his company would benefit from being larger and thinks the shareholders would support such growth. The company is doing relatively well but needs to focus on stabilizing profits and expenditures. Vasily pushes for an acquisition anyway. The reason for this acquisition is ______.
a principal-agent problem
The benefits of competing on a global scale exist ______.
for an increasing number of firms
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
Sources of COSTS in a horizontal integration strategy are ______.
reduced flexibility integration failure
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
Which of the following were black swan events that occurred in the early 21st century and helped reshape the global economy?
the European debt crisis the Global financial crisis the European refugee crisis
What are the components of post-formation alliance management? (Check all that apply.)
Build inter-firm trust. Make relation-specific investments. Establish knowledge-sharing routines.
What are some advantages of strategic alliances? (Select all that apply.)
They might give companies a competitive advantage. They help firms achieve goals faster than they would alone.
IKEA offers the same products in every market. This indicates that IKEA has followed a(n) ______ strategy.
international
What is a major problem for between 30% and 70% of all strategic alliances?
At least one partner in the alliance considers the venture to be a failure.
Which of the following is true of tacit knowledge?
It can only be acquired through actively participating in the process.
______ is a way of orchestrating value activities in which a firm is backwardly or forwardly integrated and relies on outside-market firms for supplies or distribution.
Taper integration
Firms that pursue an unrelated diversification strategy and are unable to create additional value tend to experience which of the following?
a diversification discount
Which of the following terms refers to when one firm purchases or takes over another firm?
acquisition
Strategists can grow their firms by growing organically through internal development or externally through alliances and ______.
acquisitions
Spex is a leading manufacturer of eyeglasses. Spex is based in the United States but opens a facility in a Japanese city known for cutting-edge eyeglass innovations. Spex is counting on which of the following?
benefiting from location economies
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
Which of the following are the four underlying strategic management concepts that determine the scope of a firm? (Check all that apply.)
core competencies transaction costs economies of scope economies of scale
During the first stage of globalization, business functions that took place abroad were limited to which of the following? (Check all that apply.)
distribution sales
In order to assess whether ______ is working, managers can ask if the individual businesses are worth more under the firm's management or if they are worth more under individual management.
diversification
Zipster is a local manufacturer of athletic shoes. Zipster has decided it wants to expand to global markets and to offer a larger selection of items. It plans to offer not just athletic shoes but also luggage and car accessories. Zipster is engaging in ______.
diversification
A(n) ______ is a situation in which the stock price of a highly diversified firms is valued as less than the sum of their individual business units.
diversification discount
What is a component of post-formation alliance management?
establishing knowledge-sharing routines
Specialized assets have ______.
high opportunity cost
When two competitors merge, leading to industry consolidation, they are engaging in ______.
horizontal integration
Mount Mountain is a manufacturer of outdoor gear and apparel. It uses American sizing and standards for its apparel and gear across all markets. Which strategy is Mount Mountain adhering to?
international
Some foreign countries require companies to be structured as __ in order to enter that foreign market. The companies gain access to the market, while the country gains advanced technology and know-how.
joint ventures
What are the three mechanisms that alliances can be governed by? (Check all that apply.)
joint ventures equity alliances non-equity alliances
Rising wages and other costs are likely to negate any benefits MNEs have of access to ______.
low-cost inputs
What three of the following are the primary benefits of horizontal integration? (Check all that apply.)
lower costs a reduction in competitive intensity increased differentiation
In ______ societies, competitiveness, assertiveness, and the exercise of power are considered ideal.
masculine
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
What are the four quadrants of the core competence-market matrix? (Check all that apply.)
new competencies with new markets existing competencies with new markets new competencies with existing markets existing competencies with existing markets
Which of the following factors helped make Germany, which was a tough environment for a car company, conducive to successful car companies?
no-speed-limit autobahn demanding customers fierce domestic competition
Match the type of alliance (on the left) with its definition (on the right).
non-equity alliance - partnership based on contracts between firms equity alliance - partnership in which at least one partner takes partial ownership in the other joint venture - standalone organization created and owned by two or more parent companies
What is the opportunity cost of investmenting in specialized assets that is characterized by self-interest seeking with guile?
opportunism
When companies face a highly competitive environment at home, they are more likely to ______.
outperform global competition that lacks such intense domestic competition
What are the two necessary conditions for successful alliance formation? (Check all that apply.)
partner compatibility partner commitment
Which type of alternative on the make-or-buy continuum involves competitive bidding by external companies hoping to acquire a temporary arrangement with a firm?
short-term contracts
What are the main types of corporate diversification? (Check all that apply.)
single business diversification related diversification dominant business diversification unrelated diversification
In the taper integration system, a firm has ______ reliance on outside markets.
some
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 lemons problem suggests that information asymmetries can cause ______.
superior goods to be replaced by inferior ones
Which of the following forms of agreement do non-equity alliances typically take? (Check all that apply.)
supply distribution licensing
A multinational enterprise would likely be motivated to pursue a global-standardization strategy in order to ______. (Check all that apply.)
take advantage of economies of scale take advantage of location economies
Which of the following are among the primary considerations when determining the mode in which a firm enters a foreign market? (Check all that apply.)
the desired level of control over foreign operations the degree of investment
Transaction costs include ______ costs associated with an economic exchange.
the internal and external
What is a major disadvantage of organizing economic activity within firms?
the principal-agent problem
What is the main goal of corporate venture capital investments?
to create real options in terms of gaining access to new technologies
Which of the following are reasons why firms enter into strategic alliances? (Check all that apply.)
to enter new markets to strengthen their competitive position to learn new capabilities
Why do incumbent companies enter into strategic alliances with startups?
to hedge against uncertainty
Why might a firm want to enter into an equity alliance instead of a short- or long-term contract? (Check all that apply.)
to make a credible commitment to get insider information about the partner's business to facilitate transaction-specific investments
Why does Facebook acquire startups?
to preempt rivals
Which of the following is true regarding the government and horizontal integration?
Large horizontal integration activity typically needs to be approved by government authorities.
True or false: Multinational enterprises are the driving force behind globalization.
True
A company should only expand abroad if ______.
the benefits outweigh the costs
Which of the following are true of alliance management capability? (Select all that apply.)
A firm may need to employ it with several different alliances. It involves partner selection and alliance formation.
A partnership that is based on contracts between companies is referred to as a(n) ______.
non-equity alliance
During globalization 1.0 all important business functions were located in the home country, whereas during globalization 2.0 multinationals began to copy themselves _______.
in a few key countries
As the standard of living rises in emerging economies, MNEs are hoping that ______.
increased purchasing power will enable workers to purchase the products previously made only for export
In the Boston Consulting Group growth-share matrix, each of the four categories in the matrix represents ______.
a different investment strategy
What are three options used by executives to drive firm growth? (Check all that apply.)
alliances acquisitions organic growth
At which level of the corporation should strategic alliances and mergers and acquisitions be managed?
at the corporate level
Which of the following are common reasons for companies to make foreign direct investments? (Check all that apply.)
to reduce tax burdens to reduce labor costs to avoid import restrictions
The integration-responsiveness framework suggests that companies facing high pressure for both local responsiveness and cost reduction should follow a(n) ______ strategy.
transnational
True or false: Firms can use strategic alliances to strengthen their competitive advantage when competing in battles to control industry standards.
true
True or false: It can be riskier to own parts of the supply chain than to rely on external supply chains.
true
True or false: Related diversification is more likely to generate incremental value than unrelated diversification.
true
Which types of diversification tend to have the lowest performances? (Check all that apply.)
unrelated diversification single business
The ______ is a corporate planning tool in which the corporation is viewed as a portfolio of business units.
Boston Consulting Group (BCG) growth-share matrix
The decision framework that is based on the relative distance between home and a foreign target country is the ______.
CAGE distance framework
Which country experienced rapid economic growth in the early 21st century and now challenges the United States for global economic supremacy?
China
__ strategy involves the decisions that senior management makes and the goal-directed actions it takes to gain and sustain competitive advantage in several industries and markets simultaneously.
Corporate
Which of the following pressures opposes local responsiveness on the integration-responsiveness framework?
Cost reductions
True or false: The benefits of local responsiveness always outweigh the costs.
False
Which bodies regulate mergers and acquisitions?
Federal Trade Commission European Commission
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 country has become a hub for MNEs seeking to outsource business processes such as IT and customer service due to an abundance of highly educated but low-cost labor?
India
______ is a situation in which one party has more knowledge than another due to the possession of private knowledge.
Information asymmetry
What is an important aspect of alliance success?
Inter-organizational trust
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 statements about pursuing international expansion is true?
It can enhance a firm's competitive advantage.
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 benefits of a transnational strategy? (Check all that apply.)
It harnesses economies of scale. It promotes global learning and the diffusion of best practices and innovations.
Which of the following statements about the CAGE distance framework is true?
It is designed to aid MNEs in deciding where to compete in the world.
How does horizontal integration affect Porter's Five Forces for the surviving firms? (Check all that apply.)
It reduces rivalry among existing firms. It reduces the threat of entry.
Though many benefits exist, which of the following are among the drawbacks of a transnational strategy? (Check all that apply.)
It requires implementing a complex organizational structure. It's difficult to implement.
Peter's Pans makes cast-iron cookware. It decides to acquire another similar-sized cast-iron cookware company in the hope that its larger size will enable it to snag some market share away from Iron Maiden, the industry leader. What is Peter's Pans strategy?
Peter's Pans is trying to overcome competitive disadvantage.
______ refers to the assets whose physical and engineering properties are designed to satisfy a particular customer.
Physical-asset specificity
Which of the following have helped make globalization possible? (Check all that apply.)
Reductions in transportation costs Falling trade barriers Advances in telecommunications
Which of the following statements about the make-or-buy continuum is true?
The "make" and "buy" choices anchor each end of the continuum.
A multidomestic strategy is appropriate when which of the following conditions exist? (Check all that apply.)
The firm feels little need to reduce costs. The firm faces high demand for local responsiveness. Markets in the host country are idiosyncratic.
What are some advantages of strategic alliances? (Select all that apply.)
They help firms achieve goals faster than they would alone. They might give companies a competitive advantage.
Which statements about joint ventures are true?
They involve the sharing of both explicit and tacit knowledge. They are the least common of the three types of strategic alliances.
Which of the following statements about equity alliances is true?
They require larger investments than non-equity alliances.
What are common reasons a firm might pursue a merger? (Check all that apply.)
To gain superior acquisition and integration capability To overcome competitive disadvantage To address principal-agent problems
What are common reasons a firm might pursue a merger? (Check all that apply.)
To overcome competitive disadvantage To address principal-agent problems To gain superior acquisition and integration capability
True or false: According to the make-or-buy continuum, strategic alliances are more integrated than short-term contracts.
True
A firm with alliance management capability is able to effectively manage which of the following tasks? (Check all that apply.)
alliance design and governance partner selection and alliance formation post-formation alliance management
Internal development should occur when the firm's resources are _____ to those of competitors in the targeted area.
both similar and superior
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-borrow-or-buy
A real option gives a firm the right to continue making investments ______.
but does not obligate the firm to do so
When an established firm makes an equity investment in an entrepreneurial venture it is known as a(n) ______ investment.
corporate venture capital
At a basic level, the concept of "liability of foreignness" refers to the additional ______.
cost of doing business in an unfamiliar cultural and economic environment
The cultural disparity between the internationally expanding firm's home country and its targeted host country is known as ______.
cultural distance
In the ______ quadrant of the core competence--market matrix, the focus is on leveraging current core competencies to improve current market position.
existing competence--existing market
In the ______ quadrant of the core competence--market matrix, a firm combines existing core competencies with existing markets.
existing core competence--existing market
The oldest form of internationalization is ______, which involves producing goods in one country to sell in another country.
exporting
When looking at the modes of foreign-market entry, one could conclude that ______.
exporting might be the earliest stage of commitment because it allows the firm to test whether a foreign market is ready for its products
Companies that transact in the open market incur ______.
external transaction costs
A country's natural, human, and other resources can be expressed in terms of ______.
factor conditions
Porter's diamond framework to explain national competitive advantage includes four interrelated factors: demand conditions, competitive intensity in a focal industry, related and supporting industries/complementors, and ______.
factor conditions
True or false: Firms tend to enter strategic alliances when they have no other choice.
false
An advantage of using a non-equity alliance to govern a strategic alliance is its ______.
flexibility and ease of initiation
If a company moves ownership of activities closer to the end customer, such as providing after-sales support, it is engaging in ______ vertical integration.
forward
Which of the following are types of vertical integration along the industry value chain? (Check all that apply.)
forward backward
Long-term contracts include which of the following forms? (Check all that apply.)
franchising licensing
Before World War II, business strategy, implementation, and knowledge typically flowed ______.
from domestic headquarters to outposts abroad
A company's ______ is the part of a corporate strategy that addresses how to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world.
global strategy
Multinational enterprises that manufacture commodity products that focus on cost leadership tend to use a(n) ______ strategy.
global-standardization
Since expanding internationally, IKEA has shifted focus, concentrating on effectively managing a global supply chain in order to achieve economies of scale. This is reflective of a(n) ______ strategy.
global-standardization
The process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs, is known as ______.
globalization
Gaining new capabilities or competencies is one of the three main reasons companies ______.
make acquisitions
One way to overcome the principal-agent problem is to ______.
make managers owners through stock options
What level of diversification leads to the highest levels of performance?
moderate
When a country's demand conditions include high-density urban living and high energy costs, consumers can be expected to prefer air conditioners that are which of the following? (Check all that apply.)
small energy-efficient quiet
Which of the following are part of culture?
social mores social norms beliefs
Which of the following have significantly more value in their intended use than in their next-best use?
specialized assets
The Boston Consulting Group growth-share matrix locates a firm's individual SBUs in which of the following dimensions? (Check all that apply.)
speed of market growth relative market share
Companies from wealthy countries benefit from cross-border trade with other wealthy countries when their competitive advantage is based on which of the following factors?
standardization economies of scale economies of experience
Which of the following are among the reasons firms need to grow? (Check all that apply.)
to motivate management to increase profits
Shaniqua's Shirts uses both in-house and outside suppliers and also sells its shirts through its own retail stores and through independent retailers. Shaniqua's Shirts uses ______.
taper integration
The two alternatives to vertical integration are which of the following? (Select all that apply.)
taper integration strategic outsourcing
Horizontal integration can reduce ______.
the threat of entry
Which of the following are common reasons for companies to make foreign direct investments? (Check all that apply.)
to reduce labor costs to reduce tax burdens to avoid import restrictions
If an alliance between two firms succeeds, it is likely that the firms in the alliance _____.
trust each other
To get the benefits of vertical integration without the accompanying risks, companies can ______. (Check all that apply.)
use taper integration choose strategic outsourcing
Foreign direct investments are investments in ______.
value chain activities abroad
______ refers to the firms' ownership of its production of needed inputs or of the channels by which it distributes its outputs.
vertical integration
Amazon's explosive success is largely due to which of the following? (Check all that apply.)
vertical integration, diversification
What happens when the markets along the industry value chain are too risky and alternatives too costly in time or money?
vertical market failure
When a firm is more efficient in organizing economic activity than markets are, the firm should ______.
vertically integrate
Which of the following statements regarding factor conditions in Porter's diamond framework is true?
Natural resources are not necessarily needed to generate world-leading companies.
Which framework can companies use to assess whether their internal resources are superior to those of competitors in the targeted area?
VRIO framework
Calculating cultural distance involves comparing the cultures of which of the following? (Check all that apply.)
a firm's home country a targeted host country
What is licensing?
a long-term contract that enables firms to commercialize intellectual property
Which approach to strategic decision making takes a larger investment decision and divides it into multiple smaller decisions that happen over time?
a real-options perspective
What allows firms to manage both strategic alliances and mergers and acquisitions?
a relational capability
What are three advantages of equity alliances? (Check all that apply.)
a window into new technology (option value) possible emergence of trust and commitment stronger ties
MNEs pursuing a ___ ocean strategy tend to also pursue a transnational strategy.
blue
A firm might want to use a strategic alliance to ______.
change the industry structure
The specific characteristics of needs in a firm's domestic market, such as customers who hold companies to a high standard of value creation and cost containment, are also called ______.
demand conditions
______ refers to an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes.
diversification
A partnership in which at least one partner takes partial ownership in the other is a(n) ______.
equity alliance
Which of the following is the best option if a company wants to show strong commitment to a partner firm without acquiring that firm?
equity alliance
Horizontal integration can ______.
help a firm improve its strategic position in an industry
A firm must decide whether to build, borrow, or buy to answer the question of ______.
how it will achieve growth
The forms of specialized assets include which of the following? (Check all that apply.)
human-asset specificity physical-asset specificity site specificity
Horizontal integration through mergers and acquisitions can create costs. Which of the following are sources of such costs? (Check all that apply.)
increased potential for legal repercussions reduced flexibility
What are some managerial advantages of building a firm into a large organization? (Check all that apply.)
increased power greater prestige more job security
Companies seek to access international markets as a means of ______.
increasing their economic value creation
Which of the following are the three choices in the build-borrow-or-buy framework? (Check all that apply.)
internal development acquisition of new resources strategic alliances
If a firm's goal is to leverage home-based core competencies in foreign markets, it should pursue a(n) ______ strategy.
international
Which of the following factors enabled India to gain a competitive advantage in business process outsourcing? (Check all that apply.)
its well-educated, English-speaking workforce its low-cost labor
A(n) __ is a standalone organization created and jointly owned by two or more parent companies.
joint venture
Corporate strategy needs to be dynamic over time in order to ______. (Check all that apply.)
keep and maintain a competitive advantage respond to the ever-changing external environment diversify to capture growth opportunities
Benicio's Burritos is a leader in the Mexican fast-food category in the United States. It decides to expand internationally, starting in Japan. Benicio's Burritos fails within a year, learning later that Mexican food is uncommon in Japan and that the flavor profiles are not compatible with Japanese palates. The failure of Benicio's Burritos can be attributed to which of the following?
liability of foreignness
Which of the following risks do companies face when expanding internationally? (Check all that apply.)
loss of reputation the liability of foreignness loss of intellectual property
The Japanese market is very particular, and MNEs tend to have a challenging time breaking into the market successfully. To provide the most local responsiveness and to influence Japanese consumers in believing that the products are local, an MNE should follow a(n) ______ strategy.
multidomestic
A company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries is a ______.
multinational enterprise
Despite a growing belief in the death-of-distance hypothesis, there remains evidence that certain countries remain leaders in specific industries and maintain a kind of ______ advantage.
national competitive
The Finnish company Nokia was an early industry leader in cell phones. This is an example of ______.
national competitive advantage
Although the three tasks of alliance management capability often occur at the same time, in general what is the first phase of alliance management?
partner selection and alliance formation
The forms of specialized assets include which of the following? (Check all that apply.)
physical-asset specificity human-asset specificity site specificity
A firm with alliance management capability is able to effectively manage which of the following tasks? (Check all that apply.)
post-formation alliance management alliance design and governance partner selection and alliance formation
What are the phases of alliance management? (Check all that apply.)
post-formation alliance management alliance design and governance partner selection and alliance formation
A firm follows a(n) ______ diversification strategy when it derives less than 70% of its revenues from a single business activity and obtains revenues from other lines of business that are linked to the primary business activity.
related
To figure out if a firm's type of diversification is ______, one can ask questions about the degree to which the corporation's business units share core competencies.
related or unrelated
When engaging in short-term contracting, a firm sends out ___ ___ ___ to potential companies, which initiate competitive bidding for contracts to be awarded with a short duration.
requests for proposals
A(n) ______ is a voluntary arrangement between firms that involves sharing of resources and capabilities with the intent of developing processes, products, or services.
strategic alliance
Long-term contracts (such as licensing and franchising), equity alliances, and joint ventures are examples of which of the following?
strategic alliances
Which type of knowledge cannot be codified and can only be gained through active participation in the task?
tacit knowledge
As MNEs compete internationally, a focus on local responsiveness allows them to do which of the following?
tailor product offerings to fit local preferences and requirements
All other things equal, the greater the cultural distance, ______.
the greater the liability of foreignness
Which of the following helped motivate globalization after the end of World War II? (Check all that apply.)
the need to reconstruct economies damaged by war unfilled needs during the war years
The degree of vertical integration corresponds to ______.
the number of industry value chain stages in which a firm directly participates
Why might a firm create a joint venture when entering a new geographic market?
to access local contacts to access local expertise to adhere to local law
Which of the following is the term for the costs associated with an economic exchange?
transaction costs
Unlike short-term contracts, long-term contracts encourage firms to make ______ investments.
transaction-specific
Google's choice to hire programmers in-house suggests that they decided that the ______ costs associated with this strategy are ______ than the costs associated with contracting in the open market.
transaction; lower
A(n) ______ strategy focuses on integration at the business level by attempting to reconcile product differentiations at low cost.
transnational
Which of the following is the most important determinant of economic distance?
wealth and per capita income
When companies get involved in a bidding war and the winner overpays for the acquisition, the acquiring company has fallen victim to the ______.
winner's curse