Management Exam 2- Review Questions
Samuelsons entered into a joint venture with a Japanese firm to gain entry into parts of the Asian market. Excessive conflict between the two firms is getting in the way of success. If the conflict remains unmanageable, Samuelsons would probably be better off considering what option to meet its goals?
Acquisition
What occurs when one firm buys a controlling, or 100 percent interest, in another firm?
Acquisition
Ambrose is a scientist working for a pharmaceutical company. His company was acquired by a rival pharmaceutical company, and now it is involved in downsizing and downscoping. Ambrose is concerned about his job security, since he is actively involved in amateur sports in his community and does not wish to disrupt his current lifestyle. Ambrose's job will MOST likely be secure if
Ambrose is a key employee in the firm's primary business.
Which of the following is a value-reducing reason for diversification?
Expanding the business portfolio in order to diversify managerial employment risk
Japan, which has a lack of undeveloped land, would be an unusual choice of location for a U.S. cattle company to set up local grazing operations. This limiting factor would be identified in what part of Porter's determinants of national advantage?
Factors of production
McDonald's, Hilton International, and Subway all license their trademarks and methods to other businesses. In doing so, they rely on which type of strategy?
Franchising
Which of the following is NOT a characteristic of a successful acquisition?
Investments in advertising and image building are made quickly.
Which of the following is NOT a result of overdiversification?
Managers emphasize strategic controls rather than financial controls.
Which of the following is NOT a disadvantage associated with exporting?
Potential loss of proprietary technologies
Which of the following reasons for diversification is MOST likely to increase the firm's value?
Reducing costs through business restructuring
Virgin Group Ltd. successfully transfers its marketing core competence across airlines, cosmetics, music, drinks, mobile phones, health clubs, and a number of other businesses. Virgin follows which diversification corporate strategy?
Related linked
For which of the following reasons are alliances in the airline industry unstable?
The alliances require cooperation among firms that must also compete with one another.
Consider the case of two smartphone manufacturers, Apple and Samsung, who are fierce competitors in the market. Despite their rivalry, they recognize that there are areas where collaboration can lead to shared advantages. These areas are that of standardization of certain technologies related to the smartphones, R&D by performing joint research, supply chain efficiency, etc. In free-market economies, who must decide how rivals can collaborate with their competitors without violating established regulations?
The government
In 2001, Sony and Ericsson formed a 50-50 joint venture known as Sony Ericsson to compete in the rapidly growing mobile phone market. The alliance aimed to leverage Sony's brand strength and Ericsson's expertise in telecommunications technology to develop innovative mobile devices. However, the partnership faced significant challenges, leading to its eventual dissolution. More broadly, which of the following is a primary reason for failure of cross-border strategic alliances?
The incompatibility of the partners
Which of the following is NOT an incentive for firms to become multinational?
To avoid high domestic taxation on corporate income
In China, Starbucks is standardizing its operations while simultaneously decentralizing some decision-making responsibility to local levels to meet customers' tastes. Starbucks is following which type of international corporate-level strategy?
Transnational
ElectroTech Manufacturing Solutions is a mid-size steel company that you are interning for in the summer. They are looking to acquire a smaller firm to expand operations. Without effective due diligence, th
acquiring firm is likely to overpay for an acquisition
In Porter's model, if a country is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors, then it is likely that its production factors are both
advanced and specialized.
A company that benefits from locating facilities in other countries is Nike. The multinational sportswear and apparel company has strategically positioned its facilities in various countries to make the most of several location advantages that include all of the following EXCEPT:
avoidance of host country governmental regulations.
Advanced Steel, Inc., needs a particular type of brick to line its kilns in order to safely achieve the high temperatures needed for the unusually strong steel it produces. The clay to make this brick is very rare, and only two brick plants in the United States make this type of brick. Advanced Steel has decided to buy one of these brick plants. This is an example of
backward integration
In the franchising strategy, the most important competitive advantage for the franchisee is usually the franchisor's
brand name.
A global corporate-level strategy differs from a multidomestic corporate-level strategy in that in a global strategy
competitive strategy is dictated by the home office.
A firm practicing unrelated diversification can make better capital allocations to its subsidiary businesses than the external capital market can for all the following reasons EXCEPT:
corporate headquarters can direct the acquisition of other firms with innovative products instead of allocating capital to research and developmen
When using cooperative strategies, firms most frequently develop strategic alliances that
create a competitive advantage.
The curvilinear relationship of corporate performance and diversification indicates that
dominant-business corporate strategies tend to be higher performing than related constrained or unrelated business strategies.
Compared with downsizing, which strategy has (have) a more positive effect on firm performance?
downscoping
Researchers have found that shareholders of acquired firms often
earn above-average rates
Legitimately, a firm may pursue an international strategic alliance for all of the following reasons EXCEPT to
enhance the compensation packages of top managers
A strategic alliance in which the partners own different percentages of the new company they have formed is called a(n)
equity strategic alliance.
Problems associated with acquisitions include all of the following EXCEPT:
excessive time spent on the due diligence process.
A clothing retailer based in the United States can enter the European market to reach a broader customer base, take advantage of the fashion-conscious population, produce the product less expensively, and have geographic synergies. The benefits of expanding into international markets include all of the following opportunities EXCEPT:
favorable tax concessions and economic incentives by home-country governments.
Successful unrelated diversification through restructuring is typically accomplished by
focusing on mature, low-technology businesses
Managerial motives to seek diversification beyond value-creating and value-neutral levels include a desire to
increase compensation
When a firm simultaneously practices operational relatedness and corporate relatedness
it is difficult for investors to identify the value created by the firm.
The transnational strategy is becoming increasingly necessary to compete in international markets for all of the following reasons EXCEPT
it is easy to use because of its unifying goals.
South Korea faced resource constraints due to its limited availability of natural resources such as oil, minerals, and arable land. However, the country focused on building a knowledge-based economy and investing heavily in education, research and development, and technological innovation. A fundamental reason for a country's development of advanced and specialized factors of production is often its
lack of basic resources.
Disney suffered lawsuits in France, at Disneyland Paris, because of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of the
liability of foreignness.
In 2014, Apple made a substantial acquisition, purchasing Beats Music and Beats Electronics for $3 billion dollars. This is an example of the strategy of acquisition. Compared to an internal product development, this acquisition would allow for
more accurate prediction of return on investment.
Synthronix Industries is a firm that is looking to make an acquisition of a competing firm. They are in the stages of examining the internal business model and financials of the company. Acquisitions can take a lot of time for top level managers for all the following reasons EXCEPT:
only top managers can perform the required due diligence.
The four determinants in Porter's model of international competitive advantage include all of the following EXCEPT:
political and economic institutions.
Magma, Inc., acquired Vulcan, Inc., three years ago. Effective integration of the two companies' culture was never achieved, and the two firms' assets were not complementary. It is very likely that Magma will
restructure.
Firms participate in strategic alliances for all of the following reasons EXCEPT to:
retain tight control over intangible core competencies.
The Walt Disney Company has successfully used related diversification to create value by
sharing activities and transferring core competencies
The lowest level of diversification is
single businesses
In some countries, the only legal way for foreign firms to invest in the country is through
strategic alliance with a local firm
All of the following are reasons why firms use international strategic alliances EXCEPT:
strategic alliances are easy to manage.
International strategy refers to a(n)
strategy through which the firm sells its goods or services outside its domestic market.
Factors of production in Porter's model of international competitive advantage include all of the following EXCEPT:
supporting industries.
When the target firm does not solicit the acquiring firm's bid, it is referred to as a(n)
takeover or unfriendly acquisition.
A multidomestic corporate-level strategy is one in which
the firm customizes the product for each country in which it competes
Due diligence includes all of the following activities EXCEPT assessing
the level of private synergy between the two firms.
The main difference between the related constrained level of diversification and the related linked level of diversification is
the level of resources and activities shared among the businesses.
Italy has become the leader in the shoe industry because of related and supporting industries such as a well-established leather-processing industry that provides the leather needed to construct shoes and related products.
true
In the process of a merger
two firms agree to integrate their operations on a relatively coequal basis.
One problem with becoming too large is that large firms
usually increase bureaucratic controls.
The two dominant types of complementary strategic alliances are
vertical and horizontal.
