Business Capstone Test 3

Which of the following are disadvantages of the multidomestic strategy? (Check all that apply.)

It is costly and inefficient

A benefit of an international strategy is ______.

Leveraging core competences

In ______ societies, competitiveness, assertiveness, and the exercise of power are considered ideal.

Masculine

In order to build alliance management capabilities in small companies, it is recommended that firms take the ______ approach.

"Learning-by-doing"

Which bodies regulate mergers and acquisitions?

European Commission and Federal Trade Commission (FTC)

True or false: Firms tend to enter strategic alliances when they have no other choice.

False

The primary purpose of the board of directors is ______.

General strategic oversight and guidance

Which of the following did Kraft see as an advantage of integration with Cadbury?

Access to new markets

Which of the following is true regarding the government and horizontal integration?

Large horizontal integration activity typically needs to be approved by government authorities.

Which statements about joint ventures are true?

They are the least common of the three types of strategic alliances and involve the sharing of both explicit and tacit knowledge.

What is a true statement about strategic alliances?

They have a high failure rate.

True or false: A horizontal integration strategy leads to industry consolidation.

True

The ratio of CEO to average employee pay in the United States is about ______.

300 to 1

Pavel works for a successful pharmaceutical company. Despite several years of unprecedented growth, the company wants to boost profits even more. It has taken steps to drastically raise the prices of its most widely distributed medications, which are difficult to imitate. Research into employee ethical decision-making capacity indicates that Pavel will ______.

Act in a manner that reflect's his company's organizational culture.

Financial statements by public companies must ______. (Check all that apply.)

Adhere to generally accepted accounting principals (GAAP) and be audited by certified public accountants

Which term refers to a company's ability to handle the three specific tasks related to an alliance concurrently and effectively?

Alliance management capability

One of the key characteristics of a leveraged buyout (LBO) is that it _______.

Changes the ownership structure of a company from public to private

Firms can achieve increased competitive advantage as a result of ______, which are firms that produce a good or service that increases the perceived value of a focal firm's offering when the two are combined.

Complementors

Searching for low-cost labor can lead to a loss of reputation for MNEs under which of the following conditions?

Corrupt local governments fail to enforce safety standards.

In order to reconcile economic and social needs within the shared value creation network, managers need to focus on ______. (Check all that apply.)

Creating new regional clusters and business centers, expanding value chains to include NGOs and other organizations committed to social goals, and making products affordable for the poorest socioeconomic groups in order to improve standards of living.

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

What are the factors in Michael Porter's model of national competitiveness? (Check all that apply.)

Demand conditions, related industries/complementors, competitive intensity in a focal industry, and factors conditions

The idea of corporate social responsibility (CSR) suggests that a firm's obligations should ______.

Exceed the traditional imperative to increase profits

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.

When looking at the modes of foreign-market entry, one could conclude that ______. Multiple choice question.

Exporting might be the earliest stage of commitment because it allows the firm to test whether a foreign market is ready for its products.

Social consequences of business activities, including pollution, energy loss, and dangerous accidents, are known as ______.

Externalities

True or false: The benefits of local responsiveness always outweigh the costs.

False

True or false: Though low-skilled laborers make much less in developing countries, no such difference in wages exists for high-skilled workers.

False

An advantage of using a non-equity alliance to govern a strategic alliance is its ______.

Flexibility and ease of initiation

Incentives that are too high-powered, such as an outsized bonus, may cause individuals to ______.

Focus too much attention on the incentive and not enough on strategic activities

Under the shared value creation framework, which of the following strategic actions would fail to connect economic and societal needs?

Focusing exclusively on maximizing returns for shareholders.

What must strategic alliances do in order to create the foundation for a competitive advantage?

Form unique resource combinations that obey the VRIO criteria.

Before World War II, business strategy, implementation, and knowledge typically flowed ______.

From domestic headquarters to outposts abroad.

Multinational enterprises that manufacture commodity products that focus on cost leadership tend to use 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

Which of the following have been found to be ethical norms in business? (Check all that apply.)

Honesty, fairness, and reciprocity

In order for a company to be considered a multinational enterprise, it must operate ______.

In more than one country

Which of the following is true of tacit knowledge?

It can only be acquired through actively participating in the process.

Which of the following are benefits of a transnational strategy? (Check all that apply.)

It harnesses economies of scale and 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.

A firm should consider using mergers and acquisitions only when ______.

It is important to be extremely close to the resource partner in order to understand underlying information.

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 and it is difficult to implement

Strategy scholars believe that firms should create a dedicated alliance function with which of the following features? (Check all that apply.)

It should have its own resources and support staff and it should be led by a vice president or director of alliance management.

Svanhildur's company is committed to corporate social responsibility but also understands that growth and profit are imperative for survival. What should Svanhildur's company do to achieve this balance?

It should use the shared value creation framework

The three mechanisms to govern alliances are non-equity alliances, equity alliances, and ______.

Joint venture

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

A fiduciary responsibility is a(n) ______.

Legal duty to act in another party's interest

In ______, a single investor or group of investors buys, with the help of borrowed money, the outstanding shares of a publicly traded company and assumes control of it.

Leveraged buyout

According to ______, consumer needs and preferences throughout the world are converging and becoming increasingly homogeneous.

Levitt's globalization hypothesis

MNEs pursuing a multidomestic strategy hope that ______.

Local consumers will perceive them to be a domestic company.

Which of the following risks do companies face when expanding internationally? (Check all that apply.)

Loss of intellectual property, the liability of forgiveness, and loss of reputation

One notable advantage of a multidomestic strategy is ______.

Lower exchange-rate exposure

A multidomestic strategy is appropriate when which of the following conditions exist? (Check all that apply.)

Markets in the host country are idiosyncratic, the firm feels little need to reduce costs, and the firm faces high demand for local responsiveness.

The main goal of a poison pill is to ______.

Minimize the threat of a hostile takeover

What are some managerial advantages of building a firm into a large organization? (Check all that apply.)

More job security (greater pay), greater prestige, and increased power

Employees who work in organizations that emphasize ethical behavior are ______.

More likely to act ethically

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

Gunther is transferred from the United States to Hong Kong for work. He notices that his colleagues at the new office, most of whom are Hong Kong natives, behave and communicate in a similar manner that is a striking contrast to what Gunther is accustomed to. Gunther is observing his colleagues' ______.

National culture

If the economic value creation of international expansion is negative, a firm should ______.

Not expand internationally

According to agency theory, which of the following managerial functions can be used to avoid adverse selection and moral hazard? (Check all that apply.)

Organization and control

When companies face a highly competitive environment at home, they are more likely to ______.

Outperform global competition that lacks such intense domestic competition

The primary difference between outside and inside members of the board of directors is that ______.

Outside directors are not employees of the firms, whereas inside directors are

Although the three tasks of alliance management capability often occur at the same time, in general what is the first phase of alliance management? Multiple choice question.

Partner selection and alliance formation

What are the phases of alliance management? (Check all that apply.)

Partner selection and alliance formation, alliance design and governance, and post-formation alliance management

When multinationals draw on multiple innovation hubs that all have equal status, they pursue a ______.

Polycentric innovation strategy

What are three advantages of equity alliances? (Check all that apply.)

Possible emergence of trust and commitment, stronger ties, and a window into new technology (option value)

Corporate governance addresses the ______ problem, which underscores the risk of delegating responsibility and control to individuals who may not have the firm's best interests in mind.

Principal-agent

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

In a global-standardization strategy, the main competitive element is ______.

Reduced cost

During the first stage of globalization, business functions that took place abroad were limited to which of the following? (Check all that apply.)

Sales and distribution

Which of the following is a federal regulatory agency whose task it is to oversee stock trading and enforce federal securities laws?

Securities and Exchange Commission (SEC)

The shared value creation framework encourages managers to focus on which of the following needs? (Check all that apply.)

Social and economic

Which of the following factors contribute to the existence of high-quality suppliers and complementors in a given industry?

Sophisticated customers and a high level of competition

Which of the following are the three choices in the build-borrow-or-buy framework? (Check all that apply.)

Strategic alliances, internal development, and acquisition of new resources

Which of the following are important components of fostering ethical behavior in employees?

Strategic goals that are achievable with legal means, executive behavior that is in sync with the organization's vision and values, and board members setting clear ethical expectations.

Which of the following are distinctive features of globalization 3.0? (Check all that apply.)

Technology helps reduce communication distances, firms create global networks of local expertise, and MNEs reorganize into a more seamless global enterprise.

The belief that the importance of location is diminishing as an explanation of firm-level competitive advantage is called _____.

The dealth-of-distance hypothesis

An executive can legally earn a significant profit from stock options if ______.

The firm performs well and the actual price per share exceeds the negotiated strike price

An external governance mechanism that makes a poorly managed company vulnerable to takeover by outside investors is known as ______. Multiple choice question.

The market for corporate control

A firm should use an equity alliance, a joint venture, or an outright acquisition in order to gain use of a resource when ______.

The resource is not easily traded.

Which of the following best exemplifies the relational view of competitive advantage?

The strategic alliance between company A and company B creates more value than either company individually.

Which of the following factors help define the administrative and political distance between two countries? (Check all that apply.)

The strength of legal or financial institutions, the absence or presence of political hostilities, and the absence or presence of shared monetary associations.

Which of the following statements about equity alliances is true?

They require larger investments than non-equity alliances.

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, and 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.

Transitional

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: U.S. MNEs have a disproportionately positive impact on the U.S. economy.

True

Which of the following statistics regarding MNEs are correct? (Check all that apply.)

U.S. MNEs make up less than 1% of the number of total U.S. companies, but they: -Account for 11% of private-sector employment growth since 1990; -Employ 19% of the work force; -Pay 25% of the wages; -Provide for 31% of the U.S. gross domestic product (GDP); and -Make up 74% of private-sector R&D spending.

Which of the following helped motivate globalization after the end of World War II? (Check all that apply.)

Unfilled needs during the war years and the need to reconstruct economies damaged by war.

Private start-up companies valued at over $1 billion, such as some of those in the tech sector, are called ______.

Unicorns

For a U.S. company doing business internationally, which of the following would be examples of local responsiveness? (Check all that apply.)

Walmart selling live animals for food preparation in China, McDonald's selling teriyaki burgers in Japan, and Ikea selling metal chopsticks in South Korea

Which of the following have the effect of shrinking the administrative and political distance between countries? (Check all that apply.)

A colony-colonizer relationship, trade agreements, and shared currency

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

Eli Lilly, a company known for its alliance management, manages its alliances using a three-person team consisting of which of the following? (Check all that apply.)

An alliance manager, an alliance champion, and an alliance leader

When firms from wealthy countries trade with firms from poor countries, they benefit from economic _______.

Arbitrage

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.

Following the rise of institutional investors, the use of poison pills to avoid hostile takeover has ______.

Become rarer

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

Narrowly defining public stock companies in terms of financial performance can lead to ______.

Black swan events

In a public stock company, the centerpiece of corporate governance is the ______.

Board of directors

In general, if a resource is highly tradable, then it should be ______ using a license or contractual agreement.

Borrowed

Internal development should occur when the firm's resources are _____ to those of competitors in the targeted area.

Both similar and superior

A real option gives a firm the right to continue making investments ______.

But does not obligate the firm to do so.

How can horizontal integration increase product differentiation?

By filling the empty spaces in a firm's offerings.

Under Globalization 3.0, MNEs freely locate business functions anywhere in the world based on an optimal mix of which factors? (Check all that apply.)

Capabilities, PESTEL factors, and costs

A firm might want to use a strategic alliance to ______.

Change the industry structure

When Pfizer and Wyeth merged, they reduced the size of their combined sales force while also increasing the number of drugs they could promote. This is an example of which source of value creation for M&As?

Decreased costs

Non-equity alliances tend to share ______, which allows the firms to understand a certain process or product.

Explicit

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: Any action taken by a manager that is within the bounds of the law is, by definition, an ethical action.

False

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

Companies seek to access international markets as a means of ______.

Increasing their economic value creation

Due to globalization, the world's market economies are becoming more ______.

Integrated and interdependent

A situation in which one party has an incentive to shirk their responsibility because the costs will fall to the other party is known as ______.

Moral hazard

The integration-responsiveness framework suggests that companies facing high pressure for local responsiveness and low pressure for cost reduction should follow a(n) ______ strategy. Multiple choice question.

Multidomestic

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.

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.

Which type of knowledge cannot be codified and can only be gained through active participation in the task?

Tacit knowledge

Which of the following is a major drawback of public stock companies, according to Michael Porter and others?

They prioritize financial performance over all else

If an alliance between two firms succeeds, it is likely that the firms in the alliance _____.

Trust each other

Which framework can companies use to assess whether their internal resources are superior to those of competitors in the targeted area? Multiple choice question.

VRIO Framework

Which of the following are the most important determinants of economic distance? (Check all that apply.)

Wealth and per capita income

When facing an ethical dilemma, a manager should ______. (Check all that apply.)

Consider whether the action in question conforms to the firm's code of conduct and industry practices and determine whether he or she could comfortably defend the action to the public.

In 2010 Kraft Foods bought UK-based Cadbury PLC in a hostile takeover. Kraft felt that a ______ with Cadbury would help Kraft break into emerging countries because of the strong position Cadbury had in India, Egypt, Thailand. and other countries.

Horizontal integration

Chao's Coffee is a large chain of coffee shops. It wants to join with Rigoberto Roasters, a large coffee roasting company. Rigoberto Roasters wants to stay independent, but Chao's is able to purchase Rigoberto. This describes a(n) ______.

Hostile takeover

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

Gaining new capabilities or competencies is one of the three main reasons companies ______.

Make acquisitions

The Finnish company Nokia was an early industry leader in cell phones. This is an example of ______.

National competitive advantage

Why might a firm create a joint venture when entering a new geographic market?

To adhere to local law, to access local contracts, and to access local expertise

The hiring of a job seeker who claims to have extensive computer programming experience when his knowledge of the subject is minimal would be an example of ______.

Adverse selection

Which of the following statements are correct regarding the interests of principals and agents? (Check all that apply.)

Agents may be more interested in personal goals, such as maximizing their compensation or gaining power and principals want to maximize shareholder returns.

Which of the following factors enabled India to gain a competitive advantage in business process outsourcing? (Check all that apply.)

Its low-cost labor and its well-educated, English-speaking workforce

What are the three mechanisms that alliances can be governed by? (Check all that apply.)

Non-equity alliances, equity alliances, and joint ventures.

The extent to which members of a society feel anxious when faced with an unknown situation is known as ______.

Uncertainty avoidance

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

IKEA offers the same products in every market. This indicates that IKEA has followed a(n) ______ strategy.

International

What is a component of post-formation alliance management?

Establishing knowledge sharing routines

How does horizontal integration affect Porter's Five Forces for the surviving firms? (Check all that apply.)

It reduces rivalry among existing firms, strengthens bargaining power vis-à-vis buyers (in regards to buyers), and reduces the threat of entry

What are downsides of equity alliances? (Check all that apply.)

The amount of investment involved and the time and effort for assembling the partnership.

Which of the following are examples of moral hazard? (Check all that apply.)

A company dumps pollution into a local lake that will be cleaned using taxpayer money. A CEO with a multi-million-dollar severance agreement performs poorly knowing he will be well compensated even if he is laid off. Banks make very risky loans with the knowledge that the government will bail them out if necessary.

In team-based environments, the principal may have difficulty determining individual contributions by members. This can create a situation in which an opportunistic employee does little work but takes credit. This is known as ______.

Adverse selection

Optics Incorporated, a publicly traded eyewear business, places profits ahead of all other performance metrics. This practice ______. (Check all that apply.)

Fails to take into account the idea of corporate social responsibility and conforms to the traditional notion of shareholder capitalism

Managers who act upon secret company information for personal gain, such as by trading stocks based on the knowledge of future initiatives, are guilty of ______.

Insider trading

What are the four quadrants of the integration-responsiveness framework? (Check all that apply.)

International strategy, multidomestic strategy, global standardization strategy, and transitional strategy

In regard to the public stock company, limited liability means that ______.

Investors are not responsible for any debts incurred by the company and are only at risk of losing the invested capital.

Which of the following characteristics help make an MNE's international strategy successful? (Check all that apply.)

Large domestic markets, strong reputation, and prominent brand names

What three of the following are the primary benefits of horizontal integration? (Check all that apply.)

Lower costs, increased differentiation, and a reduction in competitive intensity

What are sources of value creation in a horizontal integration strategy? (Check all that apply.)

Lower costs, increased differentiation, and reduction in competitive intensity

The interests of inside directors on the board of directors typically align with those of ______.

Senior management

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, quiet, and energy-efficient

What are true statements about mergers and acquisitions?

Some firms are able to successfully complete mergers and acquisitions and there is an unequal distribution of acquisition and integration capabilities across firms.

What are the two significant issues regarding the CEO pay debate? (Check all that apply.)

The relationship between firm performance and CEO pay and the size of the CEO compensation in relation to average employee pay.

If an MNE wishes to be responsive to the needs of its local consumers but also wants to attain a lowest-cost position, it should follow a(n) ______ strategy.

Transitional

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.

Who sets the tone for the ethical climate within an organization?

Strategic leaders

Which of the following is an example of an application of agency theory?

Employment contracts

An unfriendly acquisition of one company of another is known as a(n) ______.

Hostile takeover

A partnership in which at least one partner takes partial ownership in the other is a(n) ______.

Equity alliance

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

According to agency theory, conflicts such as the principal-agent problem are considered ______ issues.

Legal

The subprime mortgage crisis of the early 2000s is an example of ______.

Poor corporate governance

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 to pursue horizontal integration as a corporate strategy?

To lower costs, to provide such benefits as complementary products in their offering, and to enhance their economic value creation

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

Which of the following factors helped make Germany, which was a tough environment for a car company, conducive to successful car companies?

Demanding customers, fierce domestic competition, and no-speed-limit autobahn

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, and integration failure

How can firms build alliance management capability?

Through repeated experiences over time.

When Walmart posted a list of banned suppliers on its website, this was an example of ______.

Corporate social responsibility

What are the components of post-formation alliance management? (Check all that apply.)

Establish knowledge-sharing routines, make relation-specific investments, and build inter-firm trust.

Under agency theory, a manager should seek to align ______ between principals and agents to minimize opportunism.

Incentives

When pursuing an international strategy, a company ______.

Sells the same product in both domestic and foreign markets

A voluntary arrangement between firms to share knowledge, resources, and capabilities to develop products, processes, or services is known as a ______.

Strategic alliance

Which of the following are advantages of joint ventures? (Check all that apply.)

Strong ties, trust, and commitment

A multinational enterprise would likely be motivated to pursue a global-standardization strategy in order to ______. (Check all that apply.)

Take advantage of location economies and take advantage of economies of scale

Which theory suggests that location is diminishing in importance to firms since most inputs can be sourced globally?

The dealth-of-distance hypothesis

Why does Facebook acquire startups?

To preempt rivals

The shared value creation framework is a tool intended to help businesses ______. Multiple choice question.

Benefit all stakeholders, not just shareholders

The code of professional conduct based on societal norms and expectations is known as ______.

Business ethics

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

If a company is poorly managed, its stock price may fall low enough for the firm to become a target for a(n) ______. Multiple choice question.

Hostile takeover

What is an important aspect of alliance success? (Check all that apply.)

Inter-organizational trust

When two firms that have formed a strategic alliance to learn vary in the rate at which they learn, a(n) __ may result.

Learning race

The right to buy a company's stock at a predetermined price sometime in the future is known as a(n) ______.

Stock option

Horizontal integration is a good option if ______.

The target firm will have more value when combined with the acquiring firm.

Horizontal integration can reduce ______.

The threat of entry

True or false: Because the size of organizations is typically positively correlated with prestige, power, and pay, principal-agent problems might be a reason to pursue M&As.

True

True or false: Multinational enterprises are the driving force behind globalization.

True

National culture, according to Geert Hofstede, can be defined as different groups' distinctive ______.

"Programming of the mind."

Knowledge that can be codified is also called ______ knowledge.

Explicit

Foreign direct investments are investments in ______.

Value chain activities abroad.

Which of the following statements about workers in the United States versus workers in other countries is true?

A manufacturing worker in the United States makes several times what a similar worker in China does.

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.

Which type of company is considered a unicorn?

A private start-up company valued at more than $1 billion

Calculating cultural distance involves comparing the cultures of which of the following? (Check all that apply.)

A targeted host country and a firm's home country

Multinational enterprises need an effective global strategy in order to ______.

Achieve a competitive advantage against other companies

Strategists can grow their firms by growing organically through internal development or externally through alliances and ______.

Acquisitions

When an MNE does NOT face strong pressure for cost reductions or local responsiveness, an international strategy is typically ______. Multiple choice question.

Advantageous

Additional functions of a board of directors beyond general strategic oversight include ______. (Check all that apply.)

Assessing and mitigating risk, ensuring that the firm's accounting practices and reports are accurate, and selecting, evaluating, and compensating the CEO

Which of the following terms is used to describe cooperation by competitors?

Co-opetition

The mechanism used to guide a company toward meeting its strategic goals within the bounds of the law is known as ______.

Corporate governance

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 strategic foundations of the globalization hypothesis are based primarily on ______.

Cost reduction

Marketing, manufacturing, and after-sale service are examples of ______.

Critical complementary assets

On average, mergers and acquisitions ______ shareholder value.

Destroy

Which of the following dimensions are considered in the CAGE distance framework? (Check all that apply.)

Economic distance, geographic distance, cultural distance, and administrative and political distance

The oldest form of internationalization is ______, which involves producing goods in one country to sell in another country.

Exporting

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

Which of the following occurs when agents are better informed than principals?

Information asymmetry

Which of the following statements about pursuing international expansion is true?

It can enhance a firm's competitive advantage

Which of the following is a disadvantage of a joint venture?

Knowledge shared with the new partner could be misappropriated by opportunistic behavior.

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 forgiveness

All other things equal, the greater the cultural distance, ______.

The greater the liability of forgiveness.

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.

Why do incumbent companies enter into strategic alliances with startups?

To hedge against uncertainty

What are the four characteristics of a public stock company that make it an attractive corporate form? (Check all that apply.)

Transferability of investor interests, limited liability for investors, legal personality, and separation of ownership and control

A(n) ______ strategy focuses on integration at the business level by attempting to reconcile product differentiations at low cost.

Transitional

The relationship between CEO pay and job performance has been shown to be ______.

weak

When two competitors merge, leading to industry consolidation, they are engaging in ______.

Horizontal integration

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 and it involves partner selection and alliance formation.

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." Multiple choice question.

Build-borrow-or-buy

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

How well the firms in an alliance fit together culturally is referred to as partner ______.

Compatibility

When an established firm makes an equity investment in an entrepreneurial venture it is known as a(n) ______ investment.

Corporate venture capital (CVC)

A firm has a core competency in R&D but little else, so it enters into a strategic alliance with a larger firm to gain distribution channels and marketing expertise. In this case, distribution channels and marketing expertise would be examples of ______.

Critical complimentary assets

How do foreign governments typically influence a firm's use of strategic alliances to enter new markets?

Governments may requires that foreign firms have a local joint venture partner in order to conduct business within the country's borders.

One reason why a firm might enter into a strategic alliance is to ______.

Hedge against uncertainty

The acquisition of PeopleSoft enabled Oracle to offer its customers expertise in human resource management systems (PeopleSoft's core competency) in addition to database management systems (Oracle's core competency). This is an example of which source of value creation of M&As?

Increased differentiation

When managers of acquiring companies incorrectly convince themselves that they are able to manage the business of the target company more effectively than its current managers, they are engaging in ______. Multiple choice question.

Managerial hubris

Zoe is a manager at a large company engaged in the acquisition of a smaller company. The smaller company has operated at a loss for the last three years under three different managers, but Zoe is convinced that she can turn the company around despite the evidence to the contrary. Zoe is engaging in ______.

Managerial hubris

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 most expensive, complicated, and difficult to undo options used to grow a firm?

Mergers and Acquisitions

A partnership that is based on contracts between companies is referred to as a(n) ______.

Non-equity alliance

The most common type of alliance is a(n) ______.

Non-equity alliance

What are three options used by executives to drive firm growth? (Check all that apply.)

Organic growth, alliances, and acquisitions

Which of the following is true of firms' acquisition and integration capabilities?

SOME firms can consistently use mergers and acquisitions to increase their competitive advantage

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

What are common reasons a firm might pursue a merger? (Check all that apply.)

To overcome competitive disadvantage, to address principal-agent problems, and to gain superior acquisition and integration capability.