Final 493 Quizlet
backward vertical integration
100. Firms that use taper integration also use _____ when they rely on outside-market firms for some of their supplies. A. backward vertical integration B. forward vertical integration C. backward horizontal integration D. forward horizontal integration
lack of trust between partners
102. Which of the following is a common drawback of a non-equity alliance? A. lack of trust between partners B. difficulty initiating the contract C. difficulty terminating the contract D. lack of flexibility for the partners
related constrained diversification strategy
103. In 2009, ExxonMobil bought XTO Energy, a natural gas company, for $31 billion. XTO Energy is known for its core competency to extract natural gas from unconventional places such as shale rock—the type of deposits currently being exploited in the United States. ExxonMobil hopes to leverage its core competency in the exploration and commercialization of oil into natural gas extraction. Based on this example, ExxonMobil is engaging in A. unrelated-linked diversification. B. unrelated-constrained diversification. C. related-linked diversification. D. related-constrained diversification.
a research summary
103. Which of the following is an example of explicit knowledge? A. knowing how to create surveys B. a research skill C. knowing how to assemble semiconductors D. a research summary
it allows the conglomerate to overcome institutional weaknesses in emerging economies
104. Why is following an unrelated diversification strategy especially advantageous in an emerging economy? A. It allows the conglomerate to overcome institutional weaknesses in emerging economies. B. It allows the conglomerate to form a monopoly in emerging economies. C. It allows the conglomerate to use well-defined legal systems in emerging economies. D. It allows the conglomerate to take advantage of strong capital markets in emerging economies.
equity alliance
105. A candy company called SweetThings Inc. forms an agreement with another candy company called Reverie Inc. Through this agreement, SweetThings owns 30 percent of Reverie. However, Reverie does not own any part of SweetThings. This type of agreement is called a(n) A. non-equity alliance. B. equity alliance. C. joint venture. D. capital venture.
diversification premium
106. Companies that pursue related diversification are more likely to improve their performance than companies that pursue unrelated diversification because they create a A. diversification discount. B. diversification premium. C. conglomerate discount. D. conglomerate premium.
alliance formation
107. Which of the following aspects of alliance management capability is paired with partner selection? A. alliance governance B. alliance design C. alliance formation D. post-formation alliance management
Fyodor trained the employees of his alliance partner in the skills needed to create a display for an e-notebook.
108. Which of the following examples describes the task of an alliance manager? A. Sophia oversaw the agreement between her company and the potential alliance partner and offered support when needed. B. Ira used his knowledge of digital watches to help him to manage the day-to-day operations of the alliance. C. Natasha reviewed the alliance portfolio to make sure it fit with the corporate strategy of her firm. D. Fyodor trained the employees of his alliance partner in the skills needed to create a display for an e-notebook.
diversification raising costs
108. Which of the following would hinder firm performance? A. diversification providing economies of scale B. diversification exploiting economies of scope C. diversification raising costs D. diversification raising value
study light was a star that developed into a cash cow
109. About 20 years ago, Sturdy Light, Inc., produced a sturdy, lightweight backpack in a market that was rapidly growing. Sturdy Light became a leader in this market. Eventually, the backpack market reached the maturity stage and slowed down. However, by this time, Sturdy Light had developed a strong brand name and continued to steadily lead the market. Which of the following describes this scenario? A. Sturdy Light was a star that developed into a cash cow. B. Sturdy Light was a question mark that developed into a star. C. Sturdy Light was a dog that developed into a question mark. D. Sturdy Light was a cash cow that developed into a star.
there is a reduction of excess capacity in the market
11. Which of the following is a result of horizontal integration in terms of Porter's five forces model? A. The industry structure becomes less consolidated. B. There is a reduction of excess capacity in the market. C. The industry structure becomes potentially less profitable. D. There is an increase in rivalry among existing firms.
DigitVision should acquire Tech Resources
110. Susan is a strategist for the firm, DigiVision Inc., which produces high-quality HD movie cameras. This company needs a specific material for a new camera they are developing, which is manufactured in large quantities by a competitor called Tech Resources Inc. However, this material is difficult to trade for. Because of this, which of the following is most likely the best strategy for Susan to suggest? A. DigiVision should acquire Tech Resources. B. DigiVision should form a short-term agreement with Tech Resources. C. DigiVision should form a long-term agreement with Tech Resources. D. DigiVision should enter into co-opetition with Tech Resources.
fill gaps in its competency lineup
18. Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to A. imitate the actions of its competitors like Apple and Facebook. B. solve its principal-agent problems. C. fill gaps in its competency lineup. D. expand through unrelated diversification.
vertical integration
2. Decisions relating to "what stages of the industry value chain to participate in" determine a firm's A. level of diversification. B. geographic scope. C. vertical integration. D. absorptive capacity.
joint venture
48. 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. joint venture B. non-equity alliance C. hostile takeover D. equity alliance
parent-subsidiary relationship
26. Stellar Products Inc. is a U.S.-based consumer electronics company. It owns smaller firms in Japan and Taiwan where most of its cell phone technology is developed and manufactured before being released worldwide. Which of the following alternatives to integration does this best illustrate? A. venture capitalism B. franchising C. joint venture D. parent-subsidiary relationship
the transaction costs that arise are frequently due to transfer prices
27. Which of the following is true of the parent-subsidiary relationship? A. The ability to create a community of knowledge is low. B. The parent firm has no control and command over the subsidiary. C. The transaction costs that arise are frequently due to transfer prices. D. The parent firm will lack specialization and division of labor.
relational view of competitive advantage
29. 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. stakeholder strategy C. relational view of competitive advantage D. non-differentiation strategy
to replace competitive advantage with competitive parity
32. Which of the following is not a reason why firms enter alliances? A. to replace competitive advantage with competitive parity B. to strengthen competitive position C. to enter new markets, either in terms of geography or products and services D. to learn new capabilities
Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities
34. How do firms benefit from vertical integration? A. Vertical integration allows firms to reduce organizational complexity and administrative costs. B. Firms that vertically integrate will have increased strategic flexibility when faced with technological changes. C. Firms that vertically integrate do not have to make transaction-specific investments. D. Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities.
Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities.
34. How do firms benefit from vertical integration? A. Vertical integration allows firms to reduce organizational complexity and administrative costs. B. Firms that vertically integrate will have increased strategic flexibility when faced with technological changes. C. Firms that vertically integrate do not have to make transaction-specific investments. D. Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities.
some of the firm's proprietary know-how may be appropriated by the foreign partner.
35. 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. some of the firm's proprietary know-how may be appropriated by the foreign partner. C. all potential business risks in the new market will have to be faced alone by the foreign firm. D. the shareholder value of the foreign partner will decline drastically.
transaction costs are necessary to explain and predict the boundaries of the firm
4. Which of the following statements is true of transaction costs? A. When the costs of pursuing an activity in-house are more than the costs of transacting for that activity in the market, then the concerned firm should vertically integrate. B. When companies transact in the open market, they incur internal transaction costs. C. Transaction costs exclusively consist of external costs associated with economic exchanges. D. Transaction costs are necessary to explain and predict the boundaries of a firm.
it allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade
41. How does taking a real-options perspective by entering strategic alliances help incumbent firms? A. It helps the incumbent firms gain the confidence of the partnering company by making credible commitments. B. It helps the incumbent firms reduce the value gap they create through their product and service offerings. C. It allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade. D. It reduces the incumbent firms' cost of acquisition by enabling them to make the entire investment decision in the beginning itself.
reduces its level of vertical integration
43. A firm that engages in strategic outsourcing typically A. increases its internal transaction costs. B. reduces its level of vertical integration. C. reduces its level of external transaction costs. D. increases its level of horizontal integration.
non equity alliance
52. 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. equity alliance B. joint venture C. non-equity alliance D. greenfield venture
the documented information about the material composition of a product
54. In a non-equity alliance, which of the following types of information would firms most likely share? A. a manager's knowledge related to solving non-routine problems B. a top-level manager's experience related to making strategic decisions C. the documented information about the material composition of a product D. the employees' entrepreneurial skills
licensing agreements
56. _____ are best described as contractual alliances in which the participants regularly exchange codified knowledge. A. Cartels B. Licensing agreements C. Equity alliances D. Acquisitions
non-equity alliance
57. 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. acquisition. C. non-equity alliance. D. greenfield venture.
they are flexible and easy to initiate and terminate
59. Which of the following is an advantage of non-equity alliances? A. They produce strong ties between alliance partners as they are permanent in nature. B. They are flexible and easy to initiate and terminate. C. They facilitate the sharing of tacit knowledge between the alliance partners. D. They are based on ownership rather than contracts.
the enable the exchange of both tactic and explicit knowledge
61. Which of the following statements is true of joint ventures? A. They enable the exchange of both tacit and explicit knowledge. B. They reduce the possibilities of trust and commitment. C. They are characterized by single reporting lines. D. They cannot entail long negotiations.
equity alliance
62. Which alliance type is the Renault-Nissan alliance, where Nissan owns 15 percent of Renault, and Renault owns 44.4 percent in Nissan? A. equity alliance B. non-equity alliance C. greenfield venture D. joint venture
joint venture
64. Dow Corning is a company owned by Dow Chemical and Corning. This is most likely an example of a(n) A. equity alliance. B. sole proprietorship. C. non-equity alliance. D. joint venture.
double reporting lines
65. A drawback of joint ventures is that they are characterized by A. involuntary mergers. B. double reporting lines. C. contractual agreements rather than ownership. D. weak ties between alliance partners.
it is regularly shared between partners in a non-equity alliance
69. Which of the following statements is not true of tacit knowledge? A. It is concerned with knowing how to do a certain task. B. It is knowledge that cannot be easily codified. C. It is regularly shared between partners in a non-equity alliance. D. It is acquired only through actively participating in the process.
corporate venture capital investments
73. _____ are best described as equity investments by large established firms making in entrepreneurial ventures to gain access to new, and potentially disruptive, technologies. A. Corporate venture capital investments B. Greenfield ventures C. Joint ventures D. Loan sharks
joint venture
76. EveningStar Inc. and The Luxur Group have together established The Luxur Star Group of hotels. EveningStar owns 49 percent and The Luxur Group has a 51 percent share in The Luxur Star Group of hotels. However, the management of The Luxur 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. equity alliance D. joint venture
joint venture
79. 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 stand-alone firm called Genuine Autos Inc. This arrangement best exemplifies a A. joint venture. B. partnership. C. non-equity alliance. D. proprietorship.
horizontal integration
8. 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? A. backward integration B. forward integration C. horizontal integration D. vertical integration
joint ventures
80. Which of the following types of strategic alliances is the least common in terms of frequency? A. mergers B. acquisitions C. equity alliances D. joint ventures
selecting the best possible partner
81. The process of alliance management begins with A. selecting the best possible partner. B. choosing an appropriate governance mechanism. C. designing the alliance. D. creating resource combinations that obey the VRIO criteria.
aspects of cultural fit between different firms in an alliance
82. Partner compatibility and partner commitment are necessary conditions for successful alliance formation. Partner compatibility captures A. aspects of cultural fit between different firms in an alliance. B. features of the financial health of the different alliance partners. C. the readiness to accept short-term sacrifices to ensure long-term awards. D. the willingness to make available necessary resources.
by using internal capital markets as a source of value creation
88. How can a firm pursuing a diversification strategy enhance its overall corporate performance by leveraging financial economies? A. by using internal capital markets as a source of value creation B. by adding more unrelated businesses into its corporate portfolio C. by increasing its coordination and influence costs D. by investing in businesses under the question mark quadrant of the BCG matrix
related-link diversification
89. A strategy of _____ will be most beneficial for a firm to enhance its overall corporate performance. A. unrelated level of diversification B. single-business level of diversification C. dominant-business level of diversification D. related-linked diversification
when extreme closeness to the resource partner is necessary to understand and obtain its underlying knoweldge
90. 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. before the strategist has considered borrowing the necessary resources through integrated strategic alliances C. after it has been established that the firm's internal resources are sufficient to build D. when extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge
to finance and distribute its newly created computer-animated movies
91. Why did Pixar enter into a strategic alliance with Disney? A. to develop into a live-action feature film company B. to finance and distribute high-end graphic display systems for theaters C. to develop into a computer hardware company D. to finance and distribute its newly created computer-animated movies
coordination costs
91. _____, which are incurred when pursuing a related-diversification strategy, are a function of the number, size, and types of businesses that are linked to one another. A. Coordination costs B. Fixed costs C. Agency costs D. Network costs
serial acquisitions
95. Medetect 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 Medetect? A. mergers B. serial mergers C. acquisitions D. serial acquisitions
Disney managed its new subsidiaries more like alliances rather than attempting full integration.
96. Which of the following best explains why Disney showed superior post-merger integration capabilities? A. Disney pursued a combination of horizontal and vertical integration through its acquisitions. B. Disney did a thorough job in eliminating principal-agent problems in the firms it acquired. C. Disney managed its new subsidiaries more like alliances rather than attempting full integration. D. Disney used a corporate strategy based on a build-borrow-or-buy framework for its acquisitions.
joint venture partner
98. When entering new geographic markets, some governments, such as those of Saudi Arabia and China, require that foreign firms have a local A. market partner. B. joint venture partner. C. strategic alliance partner. D. merger partner.
early majority
Relies on endorsement by others. They seek out reputable references such as reviews i prominent trade journals and magazines.
non-equity alliances.
Supply, distribution, and licensing contractual agreements between firms, which result in vertical strategic alliances, are all examples of A. cartel arrangements. B. non-equity alliances. C. joint ventures. D. equity alliances.
parent-subsidiary relationship
The most-integrated alternative to performing an activity within one's own corporate family. The corporate parent OWNS the subsidiary and can direct it via command and control.
explicit knowledge is shared in non equity alliance firms
Which of the following statements is true of explicit knowledge? A. Explicit knowledge is about knowing how to do a certain task. B. Explicit knowledge is knowledge that cannot be codified. C. Explicit knowledge is shared in non-equity alliance firms. D. Equity knowledge is acquired only through actively participating in a process.
shakeout stage
rates of growth declines. Demand is largely satisfied in the prior growth stage. Demand now consists of replacement or repeat purchases only
