Strategic Management 4490 Final Study Guide
Which of the following pressures opposes local responsiveness on the integration-responsiveness framework?
Cost reductions
True or false: A horizontal integration strategy leads to industry consolidation.
True
What allows firms to manage both strategic alliances and mergers and acquisitions?
a relational capability
Which type of organization attempts to balance and harness different activities in trade-off situations?
ambidextrous organization
Which type of organization has a flat organizational structure and employs decentralized decision making?
an organic organization
The organizational structure element that deals with the degree to which employees are guided by specific, codified rules and processes is known as _________.
formalization
Thanh works in the engineering and manufacturing division of his company. Other departments include marketing, accounting, human resources, and research and development. Each department reports to the CEO. Thanh's company is organized according to a(n) ______ structure.
functional
When a firm covers a limited geographic area and is narrowly focused in terms of product/service offerings, a ______ structure is recommended.
functional
Ravi works for a small company. The company owner makes all strategic decisions and manages the day-to-day operations. Ravi's company has a _____ structure.
simple
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
What are the factors in Michael Porter's model of national competitiveness?
related industries/complementors; factors conditions; competitive intensity in a focal industry; demand conditions
Global events in the 2000s and 2010s contributed to a rise of ___________ political parties in the United States and Europe which could significantly alter the global trade landscape in coming years.
nationalist
The element of organizational structure that separates the tasks of one job from the tasks of another is known as __________.
specialization
A company should only expand abroad if ___________.
the benefits outweigh the costs
A multidomestic strategy is appropriate when which of the following conditions exist?
the firm faces high demand for local responsiveness; the firm feels little need to reduce costs; markets in the host country are idiosyncratic
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 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.
Which of the following statements about formalization is true?
It is often necessary to achieve consistent and predictable results
Which of the following best defines national competitive advantage?
It is the extent to which a country can compete in international 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.
What are the components of post-formation alliance management?
Make relation-specific investments; Build inter-firm trust; Establish knowledge-sharing routines
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 market share away from Iron Maiden, the industry leader. What is Peter's Pans strategy?
Peter's Pans is trying to overcome competitive disadvantage.
What are common reasons a firm might pursue a merger?
The desire to overcome competitive disadvantage; superior acquisition and integration capability; principal-agent problems
Which of the following statistics regarding MNE's are correct?
They pay 25% of the wages in the United States; They account for 11% of the private sector employment growth since 1990; They make up 74% of the private sector R&D
Which of the following statements about equity alliances is true?
They require larger investments than non-equity alliances.
Which term refers to a company's ability to handle three specific tasks related to an alliance concurrently and effectively?
alliance management capability
MNEs pursuing a __________ ocean strategy tend to also pursue a transnational strategy.
blue
The cultural disparity between the internationally expanding firm's home country and its targeted host country is known as ___________.
cultural distance
Which of the following dimensions are considered in the CAGE distance framework?
economic distance; cultural distance; geographic distance
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
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
The benefits of competing on a global scale exist _________.
for an increasing number of firms
Companies pursuing business-level strategies like cost leadership, differentiation, and integration should organize using a _____ structure.
functional
Firms that follow a single-business or dominant-business strategy at the corporate level generally employ a ______ structure.
functional
Multinational enterprises that manufacture commodity products that focus on cost leadership tend to use a(n) ____________ strategy.
global-standardization
Match the global strategy (on the left) with the appropriate structure (on the right).
international ^ functional multidomestic ^ multidivisional with divisions according to geographic areas; decentralized decision making global standardization ^ multidivisional with divisions according to products; centralized decision making transnational ^ global matrix; balance of centralized and decentralized decision making, two layers of hierarchy (geographic and product)
The three mechanisms to govern alliances are non-equity alliances, equity alliances, and ___________.
joint venture
According to Porter, the enduring competitive advantages in a global economy lie increasingly in ___________.
local things such as knowledge, relationships, and motivation
Rising wages and other costs are likely to negate any benefits MNEs have of access to:
low-cost inputs
The type of structure that is used by experienced firms and consists of distinct, essentially independent strategic business units is the ______ structure.
multidivisional
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
The Finnish company Nokia was an early industry leader in cell phones. This is an example of _________.
national competitive advantage
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
The structure, processes, and procedures of an organization are designed, put into place, reviewed, and reworked through a process known as __________.
organizational design
Graciela's used to be the industry leader in restaurant supplies, but over the years competition grew and the company's market share declined. Graciela's has launched several marketing campaigns and introduced new products and services. However not much else in the company has changed, and it still relies on the same team of managers. Graciela's is experiencing ______.
organizational inertia
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?
quiet; small; energy efficient
Sources of COSTS in a horizontal integration strategy are _____________.
reduced flexibility; integration failure
When pursuing an international strategy, a company ___________.
sells the same product in both domestic and foreign markets
Which of the following are among the primary considerations when determining the mode in which a firm enters a foreign market?
the degree of investment; the desired level of control over foreign operations
What is the goal of organizational design?
to enable managers to translate their chosen strategy into a realized one
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.
transnational
The integration-responsiveness framework suggests that companies facing high pressure for both local responsiveness and cost reduction should follow a(n) ____________ strategy.
transnational
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
True or false: Firms that pursue either related or unrelated diversification generally employ a multidivisional structure.
True
Which type of knowledge cannot be codified and can only be gained through active participation in the task?
tacit knowledge
What is a major problem 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 an M-form?
Each division operates independently.
Which bodies regulate mergers and acquisitions?
European Commission; Federal Trade Commission
True or false: The benefits of local responsiveness always outweigh the costs.
False
Which of the following are true of alliance management capability?
It involves partner selection and alliance formation; It involves alliance design and governance
Which of the following statements about blue ocean strategy is true?
It requires reconciling the trade-offs between differentiation and low cost.
What are the phases of alliance management?
Partner selection and alliance formation; Alliance design and governance; Post-formation alliance management
Why does Facebook acquire startups?
Strategic preemption
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
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
What is a component of post-formation alliance management?
establishing knowledge-sharing routines
An advantage of using a non-equity alliance to govern a strategic alliance is its ___________.
flexibility and ease of implementation
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
Hiroshi is considering a job offer from a large pharmaceutical company. At his interview he asks who his boss would be and how jobs and teams are assigned. Hiroshi is asking about the company's ______.
organizational structure
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
Simple structures tend to be used by which group?
small companies with low organizational complexity
The functional areas present in a functional structure frequently correspond to which of the following?
stages in the value chain
When "____________," managers limit themselves to strategies that maintain the status quo.
strategy follows structure
The portion of the strategic management process that concerns the organization, coordination, and integration of work processes is _____________.
strategy implementation
A multinational enterprise would likely be motivated to pursue a global-standardization strategy in order to ___________.
take advantage of location economies; take advantage of economies of scale
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
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
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
Which of the following are reasons firms expand internationally?
to develop new competencies; to gain access to a larger market; to gain access to low-cost input factors
If an alliance between two firms succeeds, it is likely that the firms in the alliance _____________.
trust each other
What must a firm that pursues a cost-leadership strategy do in order to nurture and constantly upgrade core competencies in manufacturing and logistics?
use a functional structure that has mechanistic organizational elements
equity alliance
partnership in which at least one partner takes partial ownership in the other
Which of the following terms describes searching for new knowledge that may enhance a firm's future performance?
Exploration
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
Which of the following determines the allocation of resources and the organization and operations of workers?
a firm's organizational structure
Larger firms, such as Fortune 100 companies, tend to have ___________.
a higher degree of specialization than smaller companies
Multinational enterprises need an effective global strategy in order to ____________.
achieve a competitive advantage against other companies
At which level of corporation should strategic alliances and mergers and acquisitions be managed?
at the corporate level
Which of the following are part of culture?
beliefs; social norms; social mores
The extent to which the ability to make decisions rests with the people at the top of a firm is referred to as ______.
centralization
A firm might want to use a strategic alliance to ________.
change the industry structure
On average, mergers and acquisitions __________ shareholder value.
destroy
A partnership in which at least one partner takes partial ownership in the other is a(n) ___________.
equity alliance
Which of the following are frequently associated with organic organizations?
greater employee creativity; high levels of employee satisfaction; fast decision making
Which of the following defines who reports to whom?
hierarchy
As the standard for living rises in emerging economies, MNEs are hoping that _________.
increased purchasing power will enable workers to purchase the products previously made only for export
What is an important aspect of alliance success?
inter-organizational trust
Companies seek to access international markets as a means of ___________.
increasing their economic value creation
IKEA offers the same products in every market. This indicates that IKEA has followed a(n) ___________ strategy.
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
Which of the following forms of agreement do non-equity alliances typically take?
licensing; distribution; supply
MNEs pursuing a multidomestic strategy hope that ___________.
local consumers will perceive them to be a domestic company
In ____________ societies, competitiveness, assertiveness, and the exercise of power are considered ideal.
masculine
What are three advantages of equity alliances?
possible emergence of trust and commitment; stronger ties; a window into new technology (option value)
In the global economy, according to Porter, competitive advantages increasingly exist in __________, such as Silicon Valley.
regional geographic clusters
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
In the late 2010's, a trade war between which two countries threatened to upend decades of globalization and international trade?
the United States and China
Which of the following is the most important determinant of economic distance?
wealth and per capita income
Although the three tasks of alliance management capability often occur at the same time, in general what is the firm phase of alliance management?
partner selection and alliance formation
non-equity alliance
partnership based on contracts between firms
What are downsides of equity alliances?
The time and effort for assembling the partnership; The amount of investment involved
Effective strategy implementation, in general, will help a firm __________.
gain and sustain competitive advantage
What are some managerial advantages of building a firm into a large organization?
greater prestige; more job security; increased power
A top-down strategic plan generally takes place in which type of organization?
highly centralized
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
Which of the following are benefits of a functional structure that also apply to the matrix structure?
decentralized focus; responsiveness
Which of the following is true of tacit knowledge?
It can only be acquired through actively participating in the process.
Which of the following statements are true of the network organizational structure?
It enables firms to access communities of practice; It should be supported by uniform, company-wide policies and procedures.
What is a true statement about strategic alliances?
They have a high failure rate.
Which two of the following accurately describe mechanistic organizations?
They have a tall hierarchy; They are highly specialized
True or false: U.S. MNEs have a disproportionally positive impact on the U.S. economy.
True
Internal development should occur when the firm's resources are ___________ to those of competitors in the targeted area.
both similar and superior
The specific characteristics of needs in a firm's domestic market, such as consumers who hold companies to a high standard of value creation and cost containment, are also called _________.
demand conditions
Why might a firm create a joint venture when entering a new geographic market?
to adhere to local law; to access local expertise; to access local contracts
What is the main goal of corporate venture capital investments?
to create real options in terms of gaining access to new technologies
Why do incumbent companies enter into strategic alliances with startups?
to hedge against uncertainty
What are the four quadrants of the integration-responsiveness framework?
global standardization strategy; transnational strategy; multidomestic strategy; international strategy
The organizational element that determines the organization's formal, position-based reporting lines is known as ______.
hierarchy
What are three mechanisms that alliances can be governed by?
joint ventures; non-equity alliances; equity alliances
Which are the three main reasons firms make acquisitions?
to gain access to new distribution channels and markets; to gain access to a new capability or competency; to preempt rivals
What are three options used by executives to drive firm growth?
acquisitions; organic growth; alliances
The most common type of alliance is a(n) __________.
non-equity alliance
True or false: Firms tend to enter strategic alliances when they have no other choice.
False
True or false: In most cases, mergers and acquisitions create competitive advantage.
False
How does horizontal integration affect Porter's Five Forces for the surviving firms?
It reduces the threat of entry; It reduces rivalry among existing firms
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
True or false: Firms can use strategic alliances to strengthen their competitive advantage when competing in battles to control industry standards.
True
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 three of the following are the primary benefits of horizontal integration?
a reduction in competitive intensity; increased differentiation; lower costs
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 innovation. Spex is counting on which of the following?
benefitting from location economies
In general, if a resource is highly tradeable, then it should be ___________ using a license or contractual agreement.
borrowed
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
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?
economies of experience; standardization; economies of scale
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
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
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
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
What are the most expensive, complicated, and difficult to undo options used to grow a firm?
mergers; acquisitions
If the economic value creation of international expansion is negative, a firm should ___________.
not expand internationally
Horizontal integration through mergers and acquisitions can create costs. Which of the following are sources of such costs?
reduced flexibility; increased potential for legal repercussions
joint venture
standalone organization created and owned by two or more parent companies
