MGMT 498 Chap 9

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.

True or false: In most cases, mergers and acquisitions create competitive advantage.

False

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.

What is a true statement about strategic alliances?

They have a high failure rate.

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.

What allows firms to manage both strategic alliances and mergers and acquisitions?

a relational capability

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

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

internal development strategic alliances acquisition of new resources

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

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

make acquisitions

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

non-equity alliance

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

non-equity alliances equity alliances joint ventures

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

A firm with alliance management capability is able to effectively manage which of the following tasks? (Check all that apply.)

partner selection and alliance formation alliance design and governance post-formation alliance management

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

Which of the following are benefits of a horizontal integration? (Check all that apply.)

reduced competition increased differentiation

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

Which of the following forms of agreement do non-equity alliances typically take? (Check all that apply.)

supply distribution licensing

Equity alliances allow for the sharing of ______, which involves information that cannot be codified for completing tasks.

tacit knowledge

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

alliance design and governance post-formation alliance management partner selection and alliance formation

At which level of the corporation should strategic alliances and mergers and acquisitions be managed?

at the corporate level

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

How does Lyft benefit from its strategic alliances with GM and Waymo?

It allows Lyft to more effectively compete against Uber.

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

equity alliance

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

flexibility and ease of initiation

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

hedge against uncertainty

Horizontal integration can ______.

help a firm improve its strategic position in an industry

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

horizontal integration

A firm must decide whether to build, borrow, or buy to answer the question of ______.

how it will achieve growth

Sources of COSTS in a horizontal integration strategy are ______.

integration failure reduced flexibility

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

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

alliance management capability

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

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

acquisitions alliances organic growth

On average, mergers and acquisitions ______ shareholder value.

destroy

Which of the following are reasons why firms enter into strategic alliances? (Check all that apply.)

to learn new capabilities to enter new markets to strengthen their competitive position

Why does Facebook acquire startups?

to preempt rivals

Which are the three main reasons firms make acquisitions? (Check all that apply.)

to preempt rivals to gain access to new distribution channels and markets to gain access to a new capability or competency

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.