Strategic Management Chapter 9

True or false: In most cases, mergers and acquisitions create competitive advantage. True false question. True False

False

What are sources of value creation in a horizontal integration strategy? (Check all that apply.) Multiple select question. restricted access to suppliers and distribution channels decreased differentiation reduction in competitive intensity lower costs

reduction in competitive intensity lower costs

Why does Facebook acquire startups? Multiple choice question. to preempt rivals to put the startups out of business to secure a monopoly to find tax shelters

to preempt rivals

Which statements about joint ventures are true? Multiple select question. They involve the sharing of both explicit and tacit knowledge. Only one partner contributes equity. They are primarily used in short-term commitments. They are the least common of the three types of strategic alliances.

They involve the sharing of both explicit and tacit knowledge. They are the least common of the three types of strategic alliances.

Which of the following are benefits of a horizontal integration? (Check all that apply.) Multiple select question. integration failure increased rivalry increased differentiation reduced competition

increased differentiation reduced competition

Equity alliances allow for the sharing of ______, which involves information that cannot be codified for completing tasks. Multiple choice question. weak ties temporary commitments explicit knowledge tacit knowledge

tacit knowledge

The partners in non-equity alliances can have weak ties because such alliances are often ______ in nature, which can cause lack of trust and commitment. Multiple choice question. temporary permanent sufficient intangible

temporary

One reason why a firm might enter into a strategic alliance is to ______. Multiple choice question. exit markets increase the number of entrants in the market weaken competitive position hedge against uncertainty

hedge against uncertainty

When two competitors merge, leading to industry consolidation, they are engaging in ______. Multiple choice question. backward integration forward diversification vertical integration horizontal integration

horizontal integration

The three mechanisms to govern alliances are non-equity alliances, equity alliances, and ______. Multiple choice question. licensing structure joint venture wholly owned subsidiaries franchise

joint venture

The three mechanisms to govern alliances are non-equity alliances, equity alliances, and ______. Multiple choice question. wholly owned subsidiaries franchise licensing structure joint venture

joint venture

Gaining new capabilities or competencies is one of the three main reasons companies ______. Multiple choice question. submit to hostile takeovers make acquisitions eliminate employees enter new markets

make acquisitions

A(n) ______ is when two firms agree to join and create a combined entity, and a(n) ______ is when one firm buys or takes over another firm. Multiple choice question. joint venture; non-equity alliance non-equity alliance; joint venture merger; acquisition acquisition; merger

merger; acquisition

A partnership that is based on contracts between companies is referred to as a(n) ______. Multiple choice question. non-equity alliance diversification allowance alliance wholly owned subsidiary

non-equity alliance

In order for an alliance to qualify as ______, it must have the potential to alter a company's competitive advantage. Multiple choice question. a partnership strategic a merger tradable

strategic

A voluntary arrangement between firms to share knowledge, resources, and capabilities to develop products, processes, or services is known as a ______. Multiple choice question. wholly owned subsidiary merger strategic alliance hostile takeover

strategic alliance

Sources of COSTS in a horizontal integration strategy are ______. Multiple select question. displaced competitive intensity integration failure reduced flexibility reduced potential for legal repercussions

integration failure reduced flexibility

Which of the following statements about equity alliances is true? Multiple choice question. They are more common than contractual, non-equity alliances. They are based on full ownership. They result in weak ties between the partners. They require larger investments than non-equity alliances.

They require larger investments than non-equity alliances.

Which of the following are true of alliance management capability? (Select all that apply.) Multiple select question. Every firm has alliance management capability. A firm may need to employ it with several different alliances. It has little effect on a firm's competitive advantage. It involves partner selection and alliance formation.

A firm may need to employ it with several different alliances. It involves partner selection and alliance formation.

What is a major problem for between 30% and 70% of all strategic alliances? Multiple choice question. At least one partner in the alliance considers the venture to be a failure. The government forces the alliance to shut down due to monopoly concerns. One partner buys the other partner out at a major discount. One partner effectively steals the product of the venture, cutting the other out of the profits.

At least one partner in the alliance considers the venture to be a failure.

True or false: Firms tend to enter strategic alliances when they have no other choice. True false question. True False

False

What is a true statement about strategic alliances? Multiple choice question. They have a high failure rate. They rarely, if ever, fail. They have an average failure rate. They have a low failure rate.

They have a high failure rate.

A firm with alliance management capability is able to effectively manage which of the following tasks? (Check all that apply.) Multiple select question. purchase of the alliance partner alliance design and governance post-formation alliance management partner selection and alliance formation

alliance design and governance post-formation alliance management partner selection and alliance formation

Which term refers to a company's ability to handle the three specific tasks related to an alliance concurrently and effectively? Multiple choice question. alliance management capability alliance governance formative specification partner alliance design

alliance management capability

Which term refers to a company's ability to handle the three specific tasks related to an alliance concurrently and effectively? Multiple choice question. formative specification alliance governance alliance management capability partner alliance design

alliance management capability

Horizontal integration can ______. Multiple choice question. help a firm improve its strategic position in an industry decrease the geographic scope of a firm lower the cost of production through decreased economies of scope

help a firm improve its strategic position in an industry

A firm must decide whether to build, borrow, or buy to answer the question of ______. Multiple choice question. how it will achieve growth when to start growth why it must grow who must initiate growth

how it will achieve growth

Horizontal integration through mergers and acquisitions can create costs. Which of the following are sources of such costs? (Check all that apply.) Multiple select question. increased differentiation reduction in competitive intensity increased potential for legal repercussions reduced flexibility

increased potential for legal repercussions reduced flexibility

A standalone organization that two or more parent companies create and own together is a ___. Multiple choice question. franchise joint venture non-equity alliance licensing agreement

joint venture

A standalone organization that two or more parent companies create and own together is a ___. Multiple choice question. licensing agreement franchise non-equity alliance joint venture

joint venture

Some foreign countries require companies to be structured as __ in order to enter that foreign market. The companies gain access to the market, while the country gains advanced technology and know-how. Multiple choice question. joint ventures equity alliances non-equity alliances contractual market agreements

joint ventures

Which of the following forms of agreement do non-equity alliances typically take? (Check all that apply.) Multiple select question. innovation marketing licensing distribution supply

licensing distribution supply

A(n) ______ is when two firms agree to join and create a combined entity, and a(n) ______ is when one firm buys or takes over another firm. Multiple choice question. joint venture; non-equity alliance acquisition; merger merger; acquisition non-equity alliance; joint venture

merger; acquisition

The most common type of alliance is a(n) ______. Multiple choice question. acquisition non-equity alliance joint venture equity alliance

non-equity alliance

The most common type of alliance is a(n) ______. Multiple choice question. non-equity alliance joint venture acquisition equity alliance

non-equity alliance

Although the three tasks of alliance management capability often occur at the same time, in general what is the first phase of alliance management? Multiple choice question. post-formation alliance management strategic network manipulation partner selection and alliance formation alliance design and governance

partner selection and alliance formation

Horizontal integration is a good option if ______. Multiple choice question. the target firm will have more value when combined with the acquiring firm the acquiring firm is new to the industry and has no competitors the target firm is in a different industry than the acquiring firm the target firm is more valuable as a continued standalone company

the target firm will have more value when combined with the acquiring firm

When companies get involved in a bidding war and the winner overpays for the acquisition, the acquiring company has fallen victim to the ______. Multiple choice question. principal-agent problem winner's curse hostile takeover strategic preemption

winner's curse

Which of the following terms refers to when one firm purchases or takes over another firm? Multiple choice question. merger wholly owned subsidiary strategic alliance acquisition

acquisition

hich of the following terms refers to when one firm purchases or takes over another firm? Multiple choice question. acquisition strategic alliance merger wholly owned subsidiary

acquisition

Strategists can grow their firms by growing organically through internal development or externally through alliances and ______. Multiple choice question. divesting businesses PESTEL analysis capabilities acquisitions

acquisitions

What are the phases of alliance management? (Check all that apply.) Multiple select question. alliance design and governance post-formation alliance management tacit and explicit knowledge collaboration strategic network manipulation partner selection and alliance formation

alliance design and governance post-formation alliance management partner selection and alliance formation

An advantage of using a non-equity alliance to govern a strategic alliance is its ______. Multiple choice question. ability to distract new entrants to the industry use of tacit knowledge flexibility and ease of initiation long-term planning period

flexibility and ease of initiation

A conceptual model that helps strategists choose between seeking internal development, entering into an alliance, or acquiring new resources, capabilities, and competencies is called the "______ framework." Multiple choice question. build-borrow-or-buy organic growth capability development internal-versus-external growth

build-borrow-or-buy

On average, mergers and acquisitions ______ shareholder value. Multiple choice question. create take the place of strengthen destroy

destroy

non-equity alliance matches Choice, partnership based on contracts between firms partnership based on contracts between firms equity alliance matches Choice, partnership in which at least one partner takes partial ownership in the other partnership in which at least one partner takes partial ownership in the other joint venture matches Choice, standalone organization created and owned by two or more parent companies standalone organization created and owned by two or more parent companies

non-equity alliance matches Choice, partnership based on contracts between firms partnership based on contracts between firms equity alliance matches Choice, partnership in which at least one partner takes partial ownership in the other partnership in which at least one partner takes partial ownership in the other joint venture matches Choice, standalone organization created and owned by two or more parent companies standalone organization created and owned by two or more parent companies

What are the three mechanisms that alliances can be governed by? (Check all that apply.) Multiple select question. non-equity alliances equity alliances joint ventures upstream alliance downstream alliance

non-equity alliances equity alliances joint ventures

Which of the following are the three choices in the build-borrow-or-buy framework? (Check all that apply.) Multiple select question. elimination of product costs strategic alliances acquisition of new resources internal development

strategic alliances acquisition of new resources internal development