SEVI Exam 3
When deciding whether to build, borrow, or buy as a means of growth, firms no longer need to consider the need for physical closeness to their resource partners.
False
Which of the following is the best way for firms to assess whether their internal resources are superior to those of competitors in the targeted area?
Firms can apply the VRIO framework.
Which of the following is a common drawback of a non-equity alliance?
lack of trust between partners
As part of the board oversight responsibilities, it should have meaningful input and decision-making authority over the capital allocation process and strategy to find the right balance between ________ and ________ economic returns for its shareholders.
short-term; long-term
In choosing sides concerning CEO duality, two schools of thought exist. Which of the following would not be a consideration for the agency theory school of thought?
Firm performance typically improves under CEO duality.
The process of alliance management begins with
selecting the best possible partner.
In choosing sides concerning CEO duality, two schools of thought exist. Which of the following would not be a consideration for the Unity of Command school of thought?
CEO duality slows down decision making
One of the most critical roles of the board of directors is to create incentives that align the interests of the CEO and top executives with the interests of employees.
False
Which of the following statements about acquisitions is true?
They can be friendly or hostile
Which of the following is true of acquisitions?
They can be friendly or hostile.
Which of the following is the primary drawback of traditional strategic control systems?
They lack the flexibility needed to adjust to changes in the environment.
Firms tend to share only explicit knowledge in a non-equity alliance.
True
Good corporate governance plays an important role in the investment decisions of major institutions, and a premium is often reflected in the price of securities of companies that practice it.
True
Horizontal integration through M&A can help firms strengthen their competitive position by increasing the differentiation of their product and service offerings.
True
In order to have effective board operations, firms toned to cultivate engaged and committed boards.
True
In recent years strategic alliances have grown significantly due in part to the speed of technological change and innovation.
True
Organizations seeking strategic alliances often pursue non-equity alliances because they are the easiest to create and to sever. However, the short duration of these alliances often means there is little trust or commitment on either side.
True
If two large movie theater chains decide to merge, the result is likely a vertical integration that creates a more favorable industry structure by decreasing competition.
False
Managers who are eager to forge business alliances often forget that the expected benefits of the partnership must represent only a small percentage of its monetary and time-related costs.
False
Which of the following is not a disadvantage associated with outsider dominated board of directors?
The board receives more information about the operations of the firm because all information is filtered through the CEO.
The Konex Hotel Group purchased Green-Plus Hotels for an estimated value of $120 billion. All the hotels previously owned by Green-Plus Hotels are now managed by the Konex Hotel Group and are known as Konex hotels. What does this scenario best illustrate?
an acquisition
Takeover constraint describes
the risk of being acquired by a hostile raider.
When does a merger between companies typically occur?
when two firms of comparable size join to form a combined entity
All the following are types of information that a firm is required to disclose except
details of new products under development
Which term describes the process of merging with a competitor at the same stage of industry value chain?
horizontal integration
The acquisition by Disney of such firms as Marvel, Pixar, and Lucasfilm strengthened its competitive position by
increasing the differentiation of its product and service offerings
The power of shareholders has intensified in recent years because of the ________ influence of ________ institutional investors.
increasing; large
Which of the following accurately describes a common difference between a merger and an acquisition?
A merger tends to be friendly; an acquisition can be friendly or hostile.
A voluntary arrangement between firms that involves sharing of knowledge, resources, and capabilities to develop new processes, products or services is best described as:
A strategic alliance
The primary participants in corporate governance, according to Monks and Minow, are the shareholders, board of directors, and management.
True
Which of the following best illustrates a hostile takeover between the two companies Windfield Inc. and Zyco Inc.?
Windfield Inc. purchases Zyco Inc. for $95 billion despite Zyco Inc. being against the purchase.
Which of the following best describes a strategic alliance?
a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services
External governance control mechanisms include all the following except
competitors.
CEO duality refers to a situation in which the CEO
serves as both the CEO and the chair of the board of directors.
In terms of the Build-Borrow-Buy framework, a firm's internal resources are considered to be relevant when they are
similar to those that need to be developed and superior to those of competitors in the targeted area.
Tying CEO pay to ________ is an effective way to ensure that companies are walking the talk when it comes to prioritizing issues such as racial inclusion.
social objectives
Which of the following statements is true about managing alliance-related tasks?
Alliance management capability is based on three alliance-related tasks
Which of the following statements about managing alliance-related tasks is true?
Alliance management capability is based on three alliance-related tasks.
American Snacks Inc., a conglomerate, has a strategic alliance with Très Bien Limité, a French snack-maker. However, Très Bien managers are concerned that the different business units of American Snacks will set up partnerships with direct competitors of Très Bien in France. What can owners and managers at American Snacks do to respond to Très Bien's concern?
Arrange for the alliance to be managed at the corporate level.
Many institutional investors are aggressive in protecting and enhancing their investments. They are shifting from ________ to owners. They are assuming the role of ________ shareholders and rigorously analyzing issues of ________. In the process, they are reinventing systems of corporate monitoring and accountability.
traders; permanent; corporate governance
What is the main reason that most mergers and acquisitions negatively affect shareholder value?
Promised synergies never take place.
Which of the following is not a reason analyst recommendations are often more optimistic than warranted by an objective analysis of the facts?
Sell recommendations generate lower commissions than buy recommendations.
Which of the following scenarios best illustrates horizontal integration?
Silis Inc. joins with Cancity Inc., one of its direct competitors.
Agency theory is concerned with resolving two problems that can occur in agency relationships. Which of the following is not one of those problems?
Stockholders and management align with external stakeholders
Central to agency theory is the relationship between two primary players, the principals (employees of the firm) and agents (management).
False
Which of the following statements about equity alliances is true?
Equity alliances allow for the sharing of tacit knowledge.
Which of the following is an example of explicit knowledge?
a research summary
Which of the following is an ineffective practice in alliance management?
Omar trained the employees of his alliance partner in the skills needed to create a display for a wide-screen television.
Which of the following is one of the benefits of horizontal integration?
Lower costs
The downside of equity alliances is
the amount of investment that can be involved.
Which of the following statements is true of explicit knowledge?
Explicit knowledge is shared in non-equity alliance firms.
Research suggests that compensation is most effective in motivating behavior when the reward is issued at the moment the desired behavior occurs
True
Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks?
Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone.
Daniela wishes to strengthen her firm's marketing department by partnering with a large marketing firm that can complement her existing value chain. However, she fears potential legal repercussions, including potential lawsuits filed by U.S. federal agencies such as the Federal Trade Commission. Which of the following strategic options should Daniela pursue?
Daniela should consider forming a strategic alliance with the marketing firm.
Director independence and noninterlocking directorships are desirable traits of top-ranked boards. What does this mean?
Directors are free of all ties to the CEO and the company
Shareholders rely on CEOs to adopt policies and strategies that maximize the value of their shares. To motivate CEOs to maximize the value of their companies, boards of directors can consider all the following options except one. Which one is it?
Dismissal for poor performance is not an option
Which of the following statements is true of an equity alliance?
In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible.
A company that wants to enter a new geographic market within China or Saudi Arabia should avoid joint ventures with companies that are based in that country. Partnering with a foreign entity props up that entity's business rather than weakening it through competition.
False
Although Disney acquired Pixar through a hostile takeover, the merger has proven extremely profitable for both entities.
False
Which of the following examples describes the task of an alliance manager?
Omar trained the employees of his alliance partner in the skills needed to create a display for a wide-screen television.
How does horizontal integration within an industry affect the surviving firms?
by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
Individual and institutional shareholders have the same rights that include all the following except
the right to bring suit for damages if the economy declines.
Horizontal integration through mergers and acquisitions can help firms strengthen their competitive positions by increasing
differentiation.
________Blank tend to produce stronger ties between partners
equity alliances
The board of directors is a group that has a ________ duty to ensure that the company is run consistently with ________ interests of the owners, or shareholders of a corporation and that acts as an ________ between the ________ and management.
fiduciary; long-term; intermediary; shareholders
Alphabet's Google made a string of acquisitions of new ventures, such as DeepMind, in order to
preempt rivals.
Which of the following reasons motivated Meta Platforms to acquire Instagram, a photo and video-sharing social media site, for $1 billion?
the desire to preempt rivals
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