MGT 449 Ch 9
The downside of equity alliances is: A) the amount of investment that can be involved. B) that they are not useful stepping stones toward full integration of the partner firms. C) the weaker ties and reduced trust between partners. D) that the alliances cannot be abandoned if not promising.
a
Which of the following is a disadvantage of a horizontal integration corporate strategy? A)It increases the potential for legal repercussions. B)It increases the costs associated with increasing value. C)It increases the threat of new entrants in an industry. D)It increases competitive intensity within an industry
a
Which of the following is an advantage of equity alliances when compared to non-equity alliances? A) They produce stronger ties between partners. B) They are based on contracts rather than ownership. C) They are more flexible and easy to initiate and terminate. D) They require smaller capital investments.
a
______ are best described as contractual alliances in which the participants regularly exchange codified knowledge. A) Licensing agreements B) Acquisitions C) Cartels D) Equity alliances
a
Adidas acquired Reebok primarily to ________. A) pursue an unrelated diversification strategy B) get access to the superior technology of Reebok C) overcome its competitive disadvantage against Nike D) overcome its principal-agent problems
c
Aro Shoes Inc. and Mova Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other competencies. Aro Shoes entered the strategic alliance to acquire the production system pioneered by Mova Shoes. Similarly, Mova Shoes agreed to the strategic alliance to study the designing process of Aro Shoes. However, Aro Shoes was more successful and faster than Mova Shoes in accomplishing its alliance goal. What does this scenario best illustrate? A) Time compression diseconomies B) Network effects C) Learning races D) Economies of scope
c
Which of the following statements is true of explicit knowledge? A) Explicit knowledge is knowledge that cannot be codified. B) Equity knowledge is acquired only through actively participating in a process. C) Explicit knowledge is shared in non-equity alliance firms. D) Explicit knowledge is about knowing how to do a certain task.
c
Equity alliances are less common than non-equity alliances because they: A) produce weaker ties between partners. B) depend on contractual agreements. C) fail to facilitate the transfer of tacit knowledge. D) often require larger investments.
d
The main reason behind Google's decision to acquire the Israeli startup company Waze for $1 billion was to: A) share its capabilities with Waze. B) gain access to technology that is alien to it. C) support startup companies with venture capital. D) preempt its competitors from buying Waze.
d
What did Microsoft do to gain a foothold in the online search and advertising market dominated by Google? A) It sold part of its equity to Yahoo. B) It acquired Yahoo. C) It outsourced its non-core business activities to Yahoo. D) It entered into a strategic alliance with Yahoo.
d
A(n) ________ is best described as a partnership in which at least one partner takes partial ownership in the other partner. A) non-equity alliance B) acquisition C) joint venture D) equity alliance
d
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. A) strategic alliance B) proprietorship C) cooperative D) leveraged buyout
a
A consumer electronics company is in the process of evaluating whether it should pursue an internal development strategy or an external growth strategy. To make this decision, the management needs to assess whether the company's internal resources are superior to those of competitors in the targeted area. Which of the following strategic management models would be most useful in this assessment? A) The VRIO framework B) The transaction-cost economics model C) The Boston Consulting Group (BCG) matrix D) The core competence matrix
a
In a non-equity alliance, which of the following types of information would firms most likely share? A) The documented information about the material composition of a product B) A top-level manager's experience related to making strategic decisions C) A manager's knowledge related to solving non-routine problems D) The employees' entrepreneurial skills
a
A(n) ________ occurs when firms enter into a partnership based on contractual agreements, which results in vertical strategic alliances, that connect different parts of the industry value chain. A)greenfield venture B)non-equity alliance C)equity alliance D)joint venture
b
FlyOne Airway's decision to acquire TrueGear 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? A) Managerial capitalism B) Managerial hubris C) Managerial feasibility D) Managerial empathy
b
Which of the following is a drawback of joint ventures? A) They are based on contractual agreements rather than partial ownership. B) They necessitate the sharing of rewards between the partners. C) They produce weak ties, trust, and commitment between the partners. D) They do not enable the transfer and sharing of tacit knowledge.
b
Which of the following is an ineffective practice in alliance management? A) Coordinating a firm's portfolio of alliances B) Focusing on developing an alliance-management capability in isolation C) Establishing knowledge-sharing routines between alliance partners D) Developing relational capabilities to manage mergers and acquisitions
b
In the New United Motor Manufacturing, Inc. (NUMMI) joint venture, why did Toyota enter into a strategic alliance with General Motors (GM)? A) To access GM's distribution system and marketing expertise B) To access GM's completely new production system C) To learn how to implement its lean manufacturing program with an American work force D) To learn and implement the just-in-time inventory system pioneered by GM
c
Amiware Inc., a manufacturer of ceramic cookware, has entered into a contractual agreement with Micoware Inc. The agreement involves vertical strategic alliances connecting different parts of the industry value chain. This arrangement between the two companies best illustrates a(n) ________. A) joint venture B) greenfield venture C) acquisition D) non-equity alliance
d
Dow Corning is a company owned by Dow Chemical and Corning. This is most likely an example of a(n) ________. A) joint venture B) non-equity alliance C) equity alliance D) sole proprietorship
a
The process of alliance management begins with ________. A) selecting the best possible partner B) designing the alliance C) creating resource combinations that obey the VRIO criteria D) choosing an appropriate governance mechanism
a
The success of the Pixar-Disney strategic alliance demonstrated that: A)the two entities' complementary assets matched. B)the companies were effectively managing an unrelated diversification strategy. C)Disney was in desperate need of Pixar's graphic display systems. D)it was easier for the alliance partners to reduce the value gap created
a
When North Autos Inc. wanted to sell its cars in the country of Balvia, it lacked access to distribution channels and marketing expertise in the country. Thus, North Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner's well-established distribution channels. Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario? A) Accessing critical complementary assets B) Reducing differentiation of product and service offerings C) Procuring additional capital investments D) Increasing competitive intensity
a
Which of the following best illustrates an equity alliance? A) A partnership in which RedGate Insurance Inc. has a 40 percent ownership claim in TwinTrust Finance Inc. B) A contractual agreement that provides Ocia Pharma Inc. the exclusive rights to distribute the drugs of Marvel Pharma Inc. in the Asian market C) An alliance between GoldWing Systems Inc. and GM Computers Inc. that results in GM Wing Inc., an independent third company D) A collusion between two competitors, Torque Steels Inc. and Vizor Metals Inc., to fix prices
a
Which of the following is NOT a reason why firms enter alliances? A) To replace competitive advantage with competitive parity B) To enter new markets, either in terms of geography or products and services C) To learn new capabilities D) To strengthen competitive position
a
Which of the following is a result of horizontal integration in terms of Porter's five forces model? A) There is a reduction of excess capacity in the market. B) The industry structure becomes potentially less profitable. C) The industry structure becomes less consolidated. D) There is an increase in rivalry among existing firms.
a
Which of the following is true of acquisitions? A) Acquisitions can be friendly or hostile. B) In acquisitions, two independent companies join to form a separate third entity. C) Acquisitions can occur only when the involved entities are of comparable size. D) Acquisitions increase the competitive intensity in an industry.
a
Which of the following scenarios best illustrates horizontal integration? A) Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors. B) Regal Autos Inc. enters into a licensing contract with a distributor in a new international market. C) Regal Autos Inc. sets up its own distribution channel and retail stores. D) Regal Autos Inc. acquires a component parts manufacturer who previously supplied to Regal Autos' competitor.
a
____ are best described as situations in which both partners in a strategic alliance are motivated to form an alliance for learning, but the rate at which the firms learn may vary. A) Learning races B) Learning networks C) Learning matrices D) Learning effects
a
How does horizontal integration within an industry affect the surviving firms? A) By increasing the threat the surviving firms will face from new entrants B) By strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers C) By strengthening the rivalry among existing firms D) By requiring the surviving firms to shift their focus from non-price to price competition
b
Partner compatibility and partner commitment are necessary conditions for successful alliance formation. Partner compatibility captures: A) the readiness to accept short-term sacrifices to ensure long-term awards. B) aspects of cultural fit between different firms in an alliance. C) the willingness to make available necessary resources. D) features of the financial health of the different alliance partners.
b
The ________ is a strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries. A) real-options perspective B) relational view of competitive advantage C) non-differentiation strategy D) stakeholder strategy
b
Titan Autos Inc. merged with its competitor, Cadvia Autos Inc. This allowed Titan Autos to use its technological competencies along with Cadvia Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate? A) Forward integration B) Horizontal integration C) Vertical integration D) Backward integration
b
To position itself more strongly after the 2001 bursting of the Internet and tech stock bubble, Cisco Systems embarked on a(n) ________. A) exit strategy B) acquisitions-led growth strategy C) unrelated diversification strategy D) harvest strategy
b
Wave Motors Inc., a Kempa-based automobile company, has entered into a partnership with Sphere Autos Inc. headquartered in United Cadvia. The parent companies, together, have established a standalone firm called Genuine Autos Inc. This arrangement best exemplifies a ________. A) partnership B) joint venture C) proprietorship D) non-equity alliance
b
When a firm does not have the resource required for pursuing a growth strategy, and if the resource in question is not easily tradable, the implication for the strategist is most likely to: A) enter into a licensing agreement. B) consider an outright acquisition. C) borrow via a contractual agreement. D) pursue internal development.
b
When does a merger between companies typically occur? A)When a target firm does not want to be acquired B)When two firms of comparable size join to form a combined entity C)When two or more firms enter a temporary vertical strategic alliance D)When large, incumbent firms buy startup companies
b
When large, incumbent firms buy startup companies, the transaction is generally described as a(n) ________. A) alliance B) acquisition C) partnership D) joint venture
b
Which alliance type is the Renault-Nissan alliance, where Nissan owns 15 percent of Renault, and Renault owns 44.4 percent in Nissan? A) Non-equity alliance B) Equity alliance C) Greenfield venture D) Joint venture
b
Which of the following is a disadvantage of equity alliances? A) They do not permit the exchange of explicit knowledge. B) They can entail significant investments. C) They can bring about a lack of commitment. D) They are reflective of weaker ties between firms.
b
Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion in 2012? A) The need to reduce its level of horizontal integration B) The desire to gain a new capability C) The desire to pursue an unrelated diversification strategy D) The need to enter a new geographical market
b
Which of the following types of strategic alliances is the least common in terms of frequency? A) Mergers B) Joint ventures C) Equity alliances D) Acquisitions
b
Why did Yahoo enter into a strategic alliance with Microsoft? A) To share its continuously updated search technology with Microsoft B) To overcome its competitive disadvantage in comparison to Google C) To pursue an unrelated diversification strategy D) To invest its excess cash flow in Microsoft's superior technology
b
) New United Motor Manufacturing, Inc. (NUMMI), formed between General Motors (GM) and Toyota in 1984 was the first ________ in the U.S. automobile industry. A) hostile takeover B) equity alliance C) joint venture D) non-equity alliance
c
A drawback involved in using cross-border strategic alliances to enter new foreign markets is that: A) the foreign firm will need to make larger investments when compared to entering the new market on its own. B) all potential business risks in the new market will have to be faced alone by the foreign firm. C) some of the firm's proprietary know-how may be appropriated by the foreign partner. D) the shareholder value of the foreign partner will decline drastically.
c
Disney became the world's leading media company to a large extent by pursuing a corporate strategy of ________. A)hostile takeovers B)cost-leadership C)related-linked diversification D)unrelated diversification
c
NorthStar Inc. and The Royal Group have together established The Royal Star Group of hotels. NorthStar owns 49 percent and The Royal Group has a 51 percent share in The Royal Star Group of hotels. However, the management of The Royal Star Group of hotels is separate from its parent companies. What alliance type does this scenario best illustrate? A) Sole Proprietorship B) Non-equity alliance C) Joint venture D) Equity alliance
c
Supply, distribution, and licensing contractual agreements between firms, which result in vertical strategic alliances, are all examples of ________. A) cartel arrangements B) equity alliances C) non-equity alliances D) joint ventures
c
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? A) A joint venture B) A merger C) An acquisition D) An equity alliance
c
The partnership between Toyota and Tesla Motors, in which Toyota has made a $50 million investment in the California startup company to learn new knowledge and gain a window into new technology, is an example of a(n) ________. A) joint venture B) non-equity alliance C) equity alliance D) acquisition
c
When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because: A) the strategic alliance will reduce the differentiation of its product and service offerings. B) the local partner can better protect its proprietary know-how. C) building downstream complementary assets can be expensive and time-consuming. D) the value gap created by the firm can be easily lowered in an alliance.
c
Which of the following best illustrates a merger between the two companies GD Inc.and VS Inc.? A)GD Inc. outsources a few of its business activities to VS Inc. for competitive advantage. B)GD Inc. purchases VS Inc. for $80 billion despite VS Inc. being against thepurchase. C)GD Inc. and VS Inc. join together to form a single new company called GDVSInc. D)GD Inc. and VS Inc. join together to form a third new entity, while they also operate separately
c
Which of the following best illustrates a non-equity alliance? A) An alliance that allows Virtue Insurance Inc. to claim 49 percent ownership in Mercury Finance Inc. B) A collusion between two competitors, RP Pharma Inc. and Vital Pharma Inc., to fix prices C) A contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc. D) An alliance between RedGate Systems Inc. and DB Computers Inc. that results in DB Gate Inc., an independent third company
c
Which of the following is an advantage of non-equity alliances? A) They facilitate the sharing of tacit knowledge between the alliance partners. B) They are based on ownership rather than contracts. C) They are flexible and easy to initiate and terminate. D) They produce strong ties between alliance partners as they are permanent in nature.
c
Which of the following statements is NOT true of tacit knowledge? A) It is knowledge that cannot be easily codified. B) It is concerned with knowing how to do a certain task. C) It is regularly shared between partners in a non-equity alliance. D) It is acquired only through actively participating in the process.
c
Which of the following statements is true of strategic alliances? A) They are known as strategic alliances whether or not they have the potential to affect a firm's competitive advantage. B) They are always focused on joining the same value chain activities. C) They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles. D) They enable firms to achieve goals faster, but at higher costs.
c
With regard to New United Motor Manufacturing, Inc. (NUMMI), why did General Motors (GM) enter into a strategic alliance with Toyota? A) To transfer its knowledge of a completely new production system B) To better understand the American work force C) To learn the lean manufacturing system pioneered by Toyota D) To get access to Toyota's distribution system and marketing expertise
c
How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers? A) By preventing mergers from taking place B) By facilitating excess capacity in the industry C) By increasing the threat of entry in the industry D) By lowering competitive intensity in the industry overall
d
In a strategic alliance, the firm that learns faster: A) has the incentive to invest further in the alliance. B) has the tendency to lose its competitive advantage. C) has the tendency to move up a learning curve. D) has the incentive to reduce its knowledge sharing.
d
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? A) PureSource Pharma will increase its cost of distribution. B) PureSource Pharma will reduce the size of its sales force. C) PureSource Pharma will diminish its economic value creation. D) PureSource Pharma will lower its costs through economies of scale.
d
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: A) experience-curve effects. B) resource ambiguity. C) time compression diseconomies. D) principal-agent problems.
d
Toyota's President, Akio Toyoda, hopes that a transfer of tacit knowledge will take place through its equity alliance with Tesla Motors. He is referring to: A) the product information documented in Tesla's database. B) the lean manufacturing process pioneered by Tesla. C) the safety measures followed in Tesla, recorded in its user manuals. D) the entrepreneurial spirit in Tesla.
d
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) A proprietorship B) A leveraged buyout C) An acquisition D) A strategic alliance
d
When a standalone organization is created and owned by two or more parent companies together, the strategic alliance is referred to as a(n) ________. A) proprietorship B) non-equity alliance C) equity alliance D) joint venture
d
When should mergers and acquisitions (M&A) be considered the "buy" option for a strategist trying to determine which corporate strategy to implement? A) When the resource in question is highly tradable B) After it has been established that the firm's internal resources are sufficient to build C) Before the strategist has considered borrowing the necessary resources through integrated strategic alliances D) When extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge
d
Which of the following is an advantage of joint ventures? A) They are based on contractual agreements rather than partial ownership. B) They can be easily initiated and terminated. C) They require the lowest amount of investment relative to the other alliance types. D) They create strong ties, trust, and commitment between the partners.
d
Which of the following statements is true of joint ventures? A) They are characterized by single reporting lines. B) They cannot entail long negotiations. C) They reduce the possibilities of trust and commitment. D) They enable the exchange of both tacit and explicit knowledge.
d
