MGT 449 Exam 3
Which of the following best illustrates an equity alliance?
A partnership in which RedGate Insurance Inc. has a 40 percent ownership claim in TwinTrust Finance Inc.
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 joint ventures
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) Equity alliance
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) A contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc.
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) It is regularly shared between partners in a non-equity alliance.
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) They are flexible and easy to initiate and terminate.
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) They enable the exchange of both tacit and explicit knowledge.
Which of the following is an ineffective practice in alliance management?
Focusing on developing an alliance-management capability in isolation
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.
Which of the following is a disadvantage of a horizontal integration corporate strategy?
It increases the potential for legal repercussions.
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 TheRoyal 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?
Joint venture
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) ________.
Non-equity alliances
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?
The VRIO framework
Which of the following is an advantage of joint ventures?
The create strong ties, trust, and commitment between the partners.
In a non-equity alliance, which of the following types of information would firms most likely share?
The documented information about the material composition of a product
Which of the following is a disadvantage of equity alliances?
They can entail significant investments
Which of the following is a drawback of joint ventures?
They necessitate the sharing of rewards between the partners.
Which of the following is an advantage of equity alliances when compared to non-equity alliances?
They produce stronger ties between partners
When should mergers and acquisitions (M&A) be considered the "buy" option for a strategist trying to determine which corporate strategy to implement?
When extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge
When does a merger between companies typically occur?
When two firms of comparable size join to form a combined entity
Partner compatibility and partner commitment are necessary conditions for successful alliance formation. Partner compatibility captures:
aspects of cultural fit between different firms in an alliance
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:
consider an outright acquisition.
A(n) ________ is best described as a partnership in which at least one partner takes partial ownership in the other partner.
equity alliance
The partnership between Toyota and Tesla Motors, in which Toyota has made a $50 21) million investment in the California startup company to learn new knowledge and gain a window into new technology, is an example of a(n) ________.
equity alliance
Dow Corning is a company owned by Dow Chemical and Corning. This is most likely an example of a(n) ________.
joint venture
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 ________.
joint venture
When a standalone organization is created and owned by two or more parent companies together, the strategic alliance is referred to as a(n) ________.
joint-venture
A(n) ________ occurs when firms enter into a partnership based on contractual agreements, which results in vertical strategic alliances, that connect different parts ofthe industry value chain.
non-equity alliance
Equity alliances are less common than non-equity alliances because they:
often require larger investments
Disney became the world's leading media company to a large extent by pursuing a corporate strategy of ________.
related-linked diversification
The process of alliance management begins with ________.
selecting the best possible partner
The downside of equity alliances is:
the amount of investment that can be involved.
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:
the entrepreneurial spirit in Tesla
The success of the Pixar-Disney strategic alliance demonstrated that:
the two entities' complementary assets matched.
