MGMT 328 - Chapter 11
cross-shareholding
A business strategy in which each partner in an alliance holds stock in the other firm.
strategic investment
A business strategy in which one firm invests in another.
Which of the following statements is true of alliances?
Alliances cost less than acquisitions
Contractual (non-equity-based) alliances
An association between firms that is based on a contract and does not involve the sharing of ownership.
Equity-based alliances
An association between firms that is based on shared ownership or financial interest.
real option
An investment in real operations as opposed to financial capital.
Which of the following post-acquisition problems causes cross-border acquisitions to fail?
Clashes of national culture
According to the three stage model of formation of alliances, which of the following best illustrates the sequential order of major decisions to be taken during the process?
Decision on the mode of growth in Stage One; choice between a contract or an equity approach in Stage Two; and decision on the specification of relationship in Stage Three
Hubris
Exaggerated pride or overconfidence.
In the context of alliance performance, which of the following statements about learning and experience is true?
Experience is relatively easy to measure when compared to learning.
Which of the following statements is true of the relation between experience and alliance performance?
Experience tends to be directly proportional to alliance performance up to a certain limit beyond which the performance is not affected by further increase in experience.
In the context of financial investments, which of the following statements is true of a real option?
It is an investment in practical operations as opposed to financial capital.
managerial motives
Managers' desire for power, prestige, and money, which may lead to decisions that do not benefit the firm overall in the long run.
Which of the following pre-acquisition problems causes cross-border acquisitions to fail?
Nationalistic media-level concerns against foreign takeovers
Which of the following pre-acquisition problems causes acquisitions to fail?
Overpayments for targets
Which of the following is a disadvantage of strategic alliances?
Partner opportunism is always a threat in strategic alliances.
Which of the following post-acquisition problems causes acquisitions to fail?
Poor organizational fit
relational (or collaborative) capabilities
The ability to successfully manage interfirm relationships.
For acquisitions to add value, which of the following conditions must be met by one or all of the firms involved in creating acquisitions?
The capabilities of the firm must be unique.
merger
The combination of operations and management of two firms to establish a new legal entity.
acquisition premium
The difference between the acquisition price and the market value of target firms.
strategic fit
The effective matching of complementary strategicc apabilities.
Which of the following statements is true of hubristic motives for acquisitions from a resource-based view?
The hubristic motives stem from overconfidence in one's capabilities.
Which of the following is the most important action that a manager should take while managing alliances?
The manager should pay attention to the soft relationship capabilities.
In the context of dissolution of alliances, who among the following is likely to have a first-mover advantage?
The party that breaks the news of dissolution first
organizational fit
The similarity in cultures, systems, and structures between two or more firms.
acquisition
The transfer of the control of operations and management from one firm (target) to another (acquirer), the former becoming a unit of the latter.
Which of the following is true of non-equity-based alliances?
They are associations between firms based on contracts between them.
Which of the following is an advantage of strategic alliances?
They help companies to sequentially scale up or scale down their investments.
Which of the following statements is true of equity-based strategic alliances?
They include strategic investment
Which of the following is the most important synergistic motive for acquisitions from a resource-based view?
To leverage superior resources
Which of the following is a difference between a merger and an acquisition?
Unlike a merger, an acquisition is a transfer of the control of operations from one firm to another.
Strategic alliances
Voluntary agreement of cooperation between firms.
When managing acquisitions, managers are advised to:
avoid overpayment for targets.
Firms adopting a contractual approach usually:
do not have direct control over joint activities on a continuing basis.
In the context of the stages of the dissolution process, mediation by third parties occurs during the phase called _____.
going public
According to the managerial motives for acquisitions, mergers and acquisitions (M&As) are carried out to:
satisfy one's desire for power, prestige, and money.
Acquisition premium is the difference between acquisition price and:
the market value of target firms.
Firms are most likely to adopt an equity approach of alliance formation when:
the shared capabilities are more tacit and hard to codify.