GM 105 - PART II

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

flexibility and ease of initiation

High-end pen manufacturer Mont Blanc pursues a differentiation strategy with a(n) ___scope of competition, pursuing only those who need or want an expensive writing instrument.

Narrow.

In a focused differentiation strategy, the competitive scope is ___than in a traditional differentiation strategy.

Narrower.

Which of the following are extremely important aspects of alliance success?

inter-organizational trust partner compatibility

A partnership that is based on contracts between companies is referred to as ___.

non-equity alliance

joint venture

A stand-alone organization created and jointly owned by two or more parent companies.

Which of the following are types of strategic alliances?

- equity alliances -long-term contracts - joint ventures

To get the benefits of vertical integration without the accompanying risks, companies can

- use taper integration - choose strategic outsourcing

Types of vertical integration along the industry value chain?

-Backward -Forward

Which of the following are advantages of platform businesses compared to pipeline businesses?

1. They unlock new sources of value creation and supply 2. They scale more efficiently by eliminating gatekeepers.

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 are examples of ways that a large retailing firm can increase the perceived value of its offerings by focusing on customer service?

An increase in value must exceed the increase in costs.

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

Change the industry structure

Unique features and attributes that differentiate a product from competitors' offerings allow the firm to ______?

Charge premium pricing.

Which value driver would be the focus of a company that sells products that are similar in cost and features to competing products that provides a 60-day guarantee with no questions asked?

Customer service.

Boston Consulting Group Matrix

Each of the four categories in the matrix represents a different investment strategy.

How to compete on a business level is defined by the variables value and cost. Together they define the ____.

Economic value created.

Which of the following are questions that managers must answer when pursuing value innovation?

Eliminate, reduce, raise, create.

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

False

A manufacturer of electronic components can use its manufacturing machines to produce many different components such as semiconductors, sensors. and capacitors. In this case, the firm benefits from an economy of ___, reducing overall production costs by finding multiple uses for its components and facilities.

SCOPE.

What are the main types of corporate diversification?

Single business, dominant business, related diversification, and unrelated diversification: the conglomerate.

The forms of specialized assets include which of the following?

Site specificity, physical-asset specificity, and human-asset specificity.

At which stage of the industry life cycle does the size of the market expand rapidly?

growth

Advantages of organizing economic activity at the market level include which of the following?

high-powered incentives increased flexibility

The second step of the four step process involves the transformation of an idea into a new product or process is known as

invention

In terms of competitive positioning, erosion of margins is a risk for which of the following competitive forces?

Threat of entry, power of buyers, power of suppliers.

Unlike short-term contracts, long-term contracts encourage firms to make______investments.

Transaction-specific investments

True or False: Firms can use strategic alliances to strengthen their competitive advantage when competing in battles to control industry standards.

True

A firm with alliance mgmt capability is able to effectively manage which of the following tasks?

Post-formation alliance mgmt, alliance design and governance, partner selection and alliances formation.

The beneficial effect of a differentiation strategy on the power of suppliers in an industry is ___?

Protection against an increase in input prices.

in order for an alliance to qualify as ___, it must have the potential to alter a company's competitive advantage.

Strategic

A company's strategic profile is based on value creation and cost in a specific product market is the company's_______?

Strategic position.

Choosing a business-level strategy helps to define a firm's _____in a given product market.

Strategic position.

Offshoring

The practice of exporting U.S. jobs to lower paid employees in other nations. The act of outsourcing some of the firm's activities outside of the home country to another nation.

Which of the following states that important resources and capabilities are commonly embedded in strategic alliances that cross firm boundaries?

The relational view of competitive advantage

equity alliance

partnership in which at least one partner takes partial ownership in the other

Input factors?

raw materials, capital, labor, IT services

When a company makes incremental investments as part of a larger 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

Advantages of Joint Ventures

strong ties, trust, and commitment that can result between the partners.

Which of the following are components of a cost-leadership strategy?

-Lowest costs in the industry -Acceptable value

Cash Cows (BCG Matrix)

Compete in a low-growth market but hold considerable market share. Their earnings and cash flows are high and stable.

Value drivers known as ____add value to a product or service when they are consumed in tandem with the focal product.

Complements.

Which type of strategy is being used if a company offers a product at a lower cost than its competitors?

Cost-leadership strategy.

A firm that offers a liberal return policy and free shipping on goods ordered online hopes to increase its perceived value by focusing on___?

Customer service.

Managers must make strategic trade-offs involving choices between cost and value bc ___?

Higher value tends to require higher costs.

Positive adjustments in product features, customer services, and complements may enable managers to ___?

Improve the firm's strategic position.

What does the incomplete nature of contracts mean for post-formation alliance mgmt?

It means that trust is critical to success.

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

Learning race

The four quadrants of the core competence-market matrix are which of the following?

New competencies with existing markets; existing competencies with new markets, new competencies with new markets, existing competencies with existing markets.

What are the three mechanisms that alliances can be governed by?

Non-equity alliances, equity alliances, joint ventures.

In the taper integration system, a firm has ___ reliance on outside markets.

Partial

Specialized assets

Unique assets with high opportunity cost: They have significantly more value in their intended use than in their next best use. They come in three types: site specificity, physical asset specificity, and human-asset specificity.

In terms of business strategy, blue oceans represents which of the following?

Untapped market space and increased demand.

Amazon's explosive success is largely due to which of the following?

Vertical integration and diversification.

The goal of a ____-______ strategy is to achieve costs below those of competitors while maintaining similar value. A firm w/ this strategy could or couldn't achieve differentiation parity.

cost-leadership

A partnership in which at least one parent takes partial ownership in the other is an

equity alliance

What are the risks of vertical integration?

increasing costs, reducing quality, reducing flexibility, increasing the potential for legal repercussions.

principal-agent problem

is a major disadvantage of organizing economic activity within firms?

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

increases in the value of a product or service that result from a corresponding increase in the number of users are known as?

network effects

information asymmetry

situation in which one party is more informed than another because of the possession of private information

How can firms build alliance management capability?

Through experienced repeated experiences over time.

What is the main goal of corporate venture capital investments?

To create real options in terms of gaining access to new technologies.