Strategic Mgt. Final Study Gudie Q1-80
Which of the following is part of Geert Hofstede's cultural dimensions?
power distance
Which of the following is true of acquisitions?
Acquisitions can be friendly or hostile.
Although long-standing enemies, Apple and IBM formed an alliance partnership. How did this partnership benefit both Apple and IBM?
Apple's core competency with consumer services and IBM's core competency with business services complemented each other.
Which of the following is an observable feature in the Globalization 3.0 stage?
Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.
Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks?
Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone.
Which of the following scenarios best illustrates horizontal integration?
Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.
Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany?
significant differences between its U.S. personnel policies and Germany's culture
Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.?
GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.
Although demand for IKEA's low-cost furnishings has increased, its annual store growth has slowed to fewer than ten new stores a year. Why has this happened?
IKEA's global supply chain has become bottlenecked.
How did the strategic alliance between HP and DreamWorks Animation SKG affect HP?
It enabled HP to compete head on with Cisco's videoconferencing solution.
How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010?
It has access to convenience stores and a new distribution channel.
Which of the following is a disadvantage of a horizontal integration corporate strategy?
It increases the potential for legal repercussions.
Plethora Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in United Bejukistan, which has been recognized as one of the less-developed nations in the world. How will this strategic move most likely affect Plethora Inc.?
It will be able to benefit from economic arbitrage.
Which of the following is a feature of the Globalization 2.0 stage?
Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.
PureSource Pharma Inc. recently acquired BioChem Pharmaceuticals Inc. It now sells its own products along with the products originally sold by BioChem Pharmaceuticals. As a result, PureSource Pharma's sales force will also be marketing the acquired company's products. How will this horizontal integration most likely affect PureSource Pharma?
PureSource Pharma will lower its costs through economies of scale.
Zeda is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Zeda in terms of cultural distance?
Segar, where people speak English and have a low standard of living
How has China been affected by its one-child-per-family policy and appreciation of its currency?
The country's advantage in low-cost manufacturing has reduced.
What does the relational view of competitive advantage propose?
The locus of competitive advantage is often not found within the individual firm but within a strategic partnership.
Which of the following is a result of horizontal integration in terms of Porter's five forces model?
There is a reduction of excess capacity in the market.
How will an increase in coordinated economic and political integration between countries affect the world economy?
There will be gains in social welfare and living standards across the globe.
Which of the following statements is true of strategic alliances?
They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles.
Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode?
They reduce a firm's exposure to loss of reputation.
Which of the following statements is true with regard to international trade between countries?
Wealthy countries engage in relatively more cross-border trade than poorer ones.
For which of the following companies will geographic distance be the most relevant factor in deciding whether or not to trade with a target country?
a firm that extracts and exports iron ore
Terranova Autos Inc., a large automobile company, made an initial small investment in a start-up company that was developing a solar-powered car. This gave Terranova Autos controlling interests in the start-up company. However, Terranova Autos had no obligations to make continued investments in the experiments of the start-up company. It could invest in small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Terranova Autos would have the right to buy out the start-up company. This approach to strategic alliance is referred to as
a real-options perspective.
Vibgyor Inc., a manufacturer of smartphones, has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its cell phones. This would mean that both the companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Vibgyor and the software company best referred to as in this scenario?
a strategic alliance
Octa Autos Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though it may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Octa Autos Inc.?
acquisition
When large, incumbent firms buy start-up companies, the transaction is generally described as a(n)
acquisition.
The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 billion. All the hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are known as Mansion hotels. What does this scenario best illustrate?
an acquisition
Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India?
because of the large economic distance between U.S. and India
Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage?
benefits from lower labor costs in manufacturing and services
How has the administrative and political distance between Canada, Mexico, and the United States been reduced?
by establishing the North American Free Trade Agreement (NAFTA)
How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers?
by lowering competitive intensity in the industry overall
How does horizontal integration within an industry affect the surviving firms?
by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ________ distance
cultural
Which of the following foreign entry modes primarily involves producing goods in one country to sell in another?
exporting
Which of the following modes of entering a foreign market allows for the lowest level of control?
exporting
During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved
exporting goods.
Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to
fill gaps in its competency lineup.
Which of the following types of organizations comparatively requires the lowest levels of investment and control?
franchising
Lucar Steels Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.?
greenfield operation
Emirates, Etihad Airlines, and Qatar Airways are a threat to U.S. legacy carriers because they offer
higher quality for lower costs for international routes
Olympia Autos Inc. merged with its competitor Vaca Autos Inc. This allowed Olympia Autos to use its technological competencies along with Vaca Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate?
horizontal integration
A greater cultural distance between two trading countries
increases the liability of foreignness
Japanese and European engineering companies entered China to participate in building the world's largest network of high-speed trains worth billions of dollars. Companies such as Kawasaki Heavy Industries (Japan), Siemens (Germany), and Alstom (France) were joint-venture partners with domestic Chinese companies. These firms now allege that the Chinese partners built on the Japanese and European partners' advanced technology to create their own, next-generation high-speed trains. This example best highlights the ________ that firms can experience when expanding overseas.
intellectual property exposure
Because keeping cost low is critical to IKEA's value innovation, it switched from a(n)
international strategy to a global-standardization strategy.
A firm is said to be pursuing a polycentric innovation strategy when
it draws from multiple, equally important research facilities located throughout the world.
Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because
it underestimates its liability of foreignness when entering the Zevar market
Ridemore Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Ridemore Autos Inc. is reaping the benefits of
location economies.
Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations on-site while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to
location economies.
United Nerumbia and Fernsland are two neighboring countries with strong economic disparities. However, both the countries share a common national language and the same political ideologies. The relationship between these two countries will most likely affect the trade of
luxury items manufactured in United Nerumbia.
Dream Slope Inc. is a leader in producing winter sports equipment, including skis and skates. Recently, the firm decided to expand into the bobsled market and acquired Sleek Phantom Inc. This company produced bobsleds, but its sales had slowed. The managers of Dream Slope convinced themselves that they were able to manage the business of Sleek Phantom more effectively even though they had no experience in the bobsled market. However, this move backfired and the sale of Sleek Phantom's bobsleds plummeted. Which of the following terms is often used to describe this scenario?
managerial hubris
The main reason behind Google's decision to acquire the Israeli start-up company Waze for $1 billion was to
preempt its competitors from buying Waze.
JetStream Airway's decision to acquire Rex Fuels Inc. proved to be ill-fated because its managers had overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers' capabilities were restricted to the airlines industry. What does this scenario best illustrate?
managerial hubris
A trend observed during the Globalization 3.0 stage involves
multinational companies organizing as global-collaboration networks.
Jane is the CEO of a clothing brand, Diva Rule Inc., which has retail stores and production units in five different countries. The firm's shareholders ensure the proper management of Diva Rule Inc. through their appointed board of directors. In this scenario, Diva Rule Inc. is most likely a
multinational enterprise.
India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because
of an abundance of well-educated, English-speaking young people
Adidas acquired Reebok primarily to
overcome its competitive disadvantage against Nike
What causes the winner's curse?
overpaying for an acquisition
The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Movo Automobile is most likely a result of
principal-agent problems.
A ________ is best described as an approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time.
real-options perspective
SmallWorld Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. SmallWorld Inc. is most likely doing this to
reduce its cultural distance from the other countries.
Disney became the world's leading media company to a large extent by pursuing a corporate strategy of
related-linked diversification
The ________ is a strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries
relational view of competitive advantage
A drawback involved in using cross-border strategic alliances to enter new foreign markets is that
some of the firm's proprietary know-how may be appropriated by the foreign partner.
A ________ is best described as a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services.
strategic alliance
The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market in 2013 because
the U.S. population was growing slowly and becoming more health conscious.
Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with
the absence of a trading bloc.
Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion in 2012?
the desire to gain a new capability
One of the first new business apps resulting from the alliance of Apple and IBM will help airline pilots determine the right amount of fuel to carry on a particular flight. This task not only requires significant data analytics but also the need to display the information in an easily understandable way so that pilots can digest it quickly when glancing on their iPad in a cockpit prior to departure. Which of the following parts of this example will Apple be responsible for?
the display of information in an easy-to-understand way
It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the European Commission to approve any large horizontal integration activity because
the horizontal integration activity has the potential to reduce competitive intensity in an industry.
In 1990, Roche, a Swiss pharmaceutical company, initially invested $2.1 billion to purchase a controlling interest in the biotech startup Genentech. In 2009, after witnessing the success of Genentech's drug discovery and development projects, Roche spent $47 billion to purchase the remaining minority interest in Genentech, making it a wholly owned subsidiary. In terms of strategic alliances, this scenario best indicates
the real-options perspective.
The success of the Pixar-Disney strategic alliance demonstrated that
the two entities' complementary assets matched.
Which of the following factors is the most important determinant of economic distance?
the wealth and per capita income of consumers
The administrative and political distance between two trading countries reduces when
there is a well-functioning capital market in the host country.
Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups?
to make small-scale investments in ventures poised to disrupt existing market economics
Which of the following is not a reason why firms enter alliances?
to replace competitive advantage with competitive parity
European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it is employing this strategy?
to take advantage of lower taxes in the southern United States
When does a merger between companies typically occur?
when two firms of comparable size join to form a combined entity
As a result of globalization, the
world's market economies are becoming more integrated