Strategic Management Final Exam

Adidas acquired Reebok primarily to A. overcome its competitive disadvantage against Nike B. Get access to the superior technology of Reebok C. Overcome its principal-agent problem D. Pursue an unrelated diversification strategy

A

Companies must evaluate the relevancy of their internal resources. This happens in two ways: they test whether resources are (1) similar to those the firms needs to develop and (2) superior to those of competitors in the targeted area. Which of the following is the best way in which firms assess the second test? A. Firms can apply the VRIO framework for the second test B. Firms can implement various financial metrics like NPV and IRR C. Firms can employ external analysis tools like PESTEL and Porters Five Forces D. Firms can use an international framework to determine global relevancy

A

Which of the following best illustrates a merger between the two companies Scotfind Inc. and Inity Inc.? A. Scotfind Inc. and Inity Inc. join together to form a single new company called ScotfindInity Inc. B. Scotfind Inc. purchases Inity Inc. for $80 billion despite Inity Inc. being against the purchase C. Scotfind Inc. and Inity Inc. join together to form a new third entity, while they also operate seperately D. Scotfind Inc. outsources a few of its business activities to Inity Inc. for competitive advantage

A

_____________, which captures the cultural fit between different firms, is one key element needed when selecting an alliance partner? A. partner compatibility B. partner commitment C. joint ventures D. partner competency

A

Bill's Hockey Pucks Inc. wishes to pursue international markets like China and Russia. In order to do this, they may wish to consider a possible A. government partnership that may lead to lobbying B. strategic alliance with another firm already established in those markets C. hostile takeover with a firm operating in the United States D. marketing strategy that strengthens the international value chain

B

Can't Believe It's Not Hair Inc. (CBNH) dominates the ladies' wig market and wants to expand into men's toupees. How can CBNH 's managers determine whether the company should develop a toupee division internally, ally with a toupee maker, or acquire a toupee-making firm? A. To protect themselves, CBNH's managers should choose the option that leads to the largest company with the most managerial positions B. The managers need to determine whether the skills needed to create wigs and toupees are similar and whether CBNH creates better hairpieces than its competitors do C. The managers must determine whether wig making and toupee making require substantially different skills. If so, the company should pursue internal development D. Unless the market for toupees is booming, CBNH should stick to what it knows and focus on creating the best ladies' wigs in the industry

B

Top managers at ABC Company meet every Friday to review daily operational reports and year-to-date data. This is an example of: A. Behavioral control. B. Informational control. C. Strategy formulation. D. Strategy implementation.

B

Donware 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 Sleds by Gogozoom LLC This company produced bobsleds, but its sales had slowed. The managers of Donware convinced themselves that they were able to manage the business of Sleds by Gogozoom LLC more effectively even though they had no experience in the bobsled market. However, this move backfired and the sale of Sleds by Gogozoom LLC's bobsleds plummeted. Which of the following terms is often used to describe this scenario? A. Winner's curse B. Winner's disadvantage C. Managerial hubris D. Interdepartmental apathy

C

For businesses facing complex and turbulent business environments, which of the following is true? A. Goals and objectives that are uncertain prevent opportunism B. Detailed plans are needed to maintain order C. Traditional strategic controls are not very effective D. Complacency about predetermined milestones can prevent adaptability

C

Rules and regulations, rather than culture or rewards, would probably be used for strategic control at what type of company? A. Software developer. B. Stock brokerage firm. C. Manufacturer of mass-produced products. D. High-tech research facility.

C

Which of the following is not one of the characteristics of a contemporary control system? A. It is a key catalyst for an ongoing debate about underlying data, assumptions, and action plans. B. It must focus on constantly changing information that is strategically important. C. It circumvents the need for face-to-face meetings among superiors, subordinates, and peers. D. It generates information that is important enough to demand regular and frequent attention.

C

the dual-leadership structure wherein the CEO acts simultaneously as the chair of the board of directors

CEO duality

Codehow Inc. is a large firm involved in the highly competitive market of high-tech medical equipment. In this market, smaller firms that focus on research are constantly making new technological developments. Which of the following approaches would best serve the needs of Codehow? A. mergers B. Serial mergers C. Acquisitions D. Serial Acquisitions

D

Informational control systems are concerned with which of the following? A. Are rules and regulations being followed? B. Is the organization viable? C. Is the organization doing things correctly? D. Is the organization doing what is right?

D

Jerry is the proud owner of American BBQ Eateries LLC. They currently operate in the southeast and have recently entered into a nonequity alliance with Big Bills BBQ Grills Inc., with a promise of sharing codified information via a licensing agreement. Which of the following best represents this level of sharing knowledge? A. core competency knowledge B. strategic alliance knowledge C. tacit knowledge D. explicit knowledge

D

Primary participants in corporate governance are ____________,_____________, and ________________. A. Employees; management; board of directors B. CEO; outside stakeholder; board of directors C. Management; stakeholders; community D. Shareholders; management; board of directors

D

The traditional approach to strategic control is sequential. Which of the following is not one of the steps in the sequence? A. Performance is measured against the predetermined goal. B. Strategies are formulated, and top management sets goals C. Strategies are implemented D. Lower and middle management set strategic goals

D

Which of the following is an example of how organizational culture exerts behavioral control? A. Culture discourages individual identification with the organization by creating a framework of shared values B. Culture sets a framework of shared values that discourages individual identification with the organizational objectives C. Culture sets explicit boundaries that discourage individual identification with the organization objectives D. Culture sets implicit boundaries that encourage individual identification with the organization objectives

D

Which of the following scenarios best illustrates horizontal integration? A. Sillis Inc. enters into a licensing contract with a distributor in a new international market B. SIllis Inc. acquires a component parts manufacturer who previously supplied to Sillis' competitor C. Sillis Inc. sets up its own distribution channel and retail stores D. Sillis Inc. joins with Cancity Inc., one of its direct competitors

D

the purchase or takeover of one company by another; can be friendly or unfriendly

acquisition

a theory of the relationship between principals and their agents, with emphasis on two problems: 1. The conflicting goals of principals and agents, along with the difficulty of principals to monitor the agents 2. The different altitudes and preferences toward risk of principals and agents

agency theory

a firm's ability to effectively manage three alliance related tasks concurrently: (1) partner selection and alliance formation, (2) alliance design and governance, and (3) post-formation alliance management

alliance management capability

a method of organizational control in which a firm influences the actions of employees through culture, rewards, and boundaries

behavioral control

a group that has a fiduciary duty to ensure that the company is run consistently with long-term interests of the owners, or shareholders, of a corporation and that acts as an intermediary between the shareholders and management

board of directors

If a firm is seeking a highly tradable resource, should they build, borrow, or buy?

borrow

If a firm is seeking a resource that does not require close proximity, should they build, borrow, or buy?

borrow

If a firm's existing resources are highly relevant to closing the identified gap, should they build, borrow, or buy?

build

____________: internal organic growth through development _____________: external growth through a contract/strategic alliance ______________: external growth through acquiring new resources, capabilities, and competencies

build, borrow, buy

a conceptual model that aids firms in deciding whether to pursue internal development (build), enter a contractual arrangement or strategic alliance (borrow), or acquire new resources, capabilities, and competencies (buy)

build-borrow-or-buy framework

a set of firms that, though legally independent, are bound together by a constellation of formal and informal ties and are accustomed to taking coordinated action

business group

If a firm's existing resources have low relevance, the resources they want have low tradability, and there is a high need for closeness, should the firm build, borrow, or buy?

buy

cooperation by competitors to achieve a strategic objective

co-opetition

the relationship among various participants in determining the direction and performance of corporations

corporate governance

a system of unwritten rules that forms an internalized influence over behavior

culture

partnership in which at least one partner takes partial ownership in the other

equity alliance

What type of knowledge is exchanged in a non-equity alliance?

explicit

knowledge that can be codified; concerns knowing about a process or product

explicit knowledge

What type of knowledge is exchanged in a joint venture?

explicit, tacit

What type of knowledge is exchanged in an equity alliance?

explicit, tacit (potentially)

activities that enrich the controlling shareholders at the expense of the minority shareholders

expropriation of minority shareholders

methods that ensure that managerial actions lead to shareholder value maximization and do not harm other stakeholder groups that are outside the control of the corporate governance system

external governance control mechanisms

What are the three steps of the traditional approach to strategic control?

formulate, implement, measure

the process of merging with competitors, leading to industry consolidation

horizontal integration

acquisition in which the target company does not wish to be acquired

hostile takeover

a method of organizational control in which a firm gathers and analyzes information from the internal and external environment in order to obtain the best fit between the organization's goals and strategies and the strategic environment

informational control

________ control asks is the organization "doing the right things?" and ____________ control asks is the organization "doing things right" in the implementation of its strategy

informational, behavioral

The least common alliance type is:

joint venture

a standalone organization created and jointly owned by two or more parent companies

joint venture

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

learning races

a form of self-delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary

managerial hubris

an external control mechanism in which shareholders dissatisfied with a firm's management sell their shares

market for corporate control

What are the different types of external governance control mechanisms?

market for corporate control, auditors, banks and analysts, governmental regulatory bodies, media and public activists

the joining of two independent companies to form a combined entity

merger

The most common alliance type is:

non-equity

partnership based on contracts between firms

non-equity alliance

is a system of shared values (what is important) and beliefs (how things work)

organizational culture

conflicts between two classes of principals- controlling shareholders and minority shareholders- within the context of a corporate governance system

principal-principal conflicts

What are the benefits of horizontal integration?

reduction in competitive intensity, lower costs, increased differentiation

What are the four questions/topics relevant to the build-borrow-or-buy framework

relevant, tradable, close, integrate

the use of performance-based incentive systems to motivate

rewards

written and explicit guidelines that provide external constraints on behavior

rules

actions by large shareholders to protect their interests when they feel that managerial actions of a corporation diverge from shareholder value maximization

shareholder activism

Who are the three groups that corporate governance relates to?

shareholders, management, board of directors

voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services

strategic allainces

the process of monitoring and correcting a firm's strategy and performance

strategic control

is related to the reduction in competitive intensity as a motivation to acquire

strategic preemption

Firms enter into strategic alliances for five reasons. What are those reasons?

strengthen competitive position, enter new markets, hedge against uncertainty, access critical complementary assets, learn new capabilities

knowledge that cannot be codified; concerns knowing how to do a certain task and can be acquired only through active participation in that task

tacit knowledge

the risk to management of the firm being acquired by a hostile raider

takeover constraint

a sequential feedback loop from performance measurement to strategy formulation; involves lengthy time lags, "single-loop" learning

traditional approach to strategic control

As a rule, firms should go ahead with horizontal integration if the target firm is more ____________ inside the acquiring firm than as a continued standalone company

valuable