Strategic Management Part 2 (58-110)

58. Supply, distribution, and licensing contractual agreements between firms, which result in vertical strategic alliances, are all examples of B. nonequity alliances. 60. A. cartel arrangements. B. non-equity alliances. C. joint ventures. D. equity alliances. 59. 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. C. DigiVision should form a long-term agreement with Tech Resources. D. DigiVision should enter into co-opetition with Tech Resources. B. a real-options perspective. A. a break-even analysis. B. a real-options perspective. C. credible commitment. A. DigiVision should acquire Tech Resources. B. DigiVision should form a short-term agreement with Tech Resources. Terranova Autos Inc., a large automobile company, made an initial small investment in a start-up company that was developing a solar-powered car. This gave Terranova Autos controlling interests in the start-up company. However, Terranova Autos had no obligations to make continued investments in the experiments of the start-up company. It could invest in small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Terranova Autos would have the right to buy out the start-up company. This approach to strategic alliance is referred to as D. transaction cost economics. 61. Toyota's President, Akio Toyoda, hopes that a transfer of tacit knowledge will take place through its equity alliance with Tesla Motors. He is referring to A. the lean manufacturing process pioneered by Tesla. B. the entrepreneurial spirit in Tesla. C. the safety measures followed in Tesla, recorded in its user manuals. D. the product information documented in Tesla's database. B. the entrepreneurial spirit in Tesla. 62. Vibgyor Inc., a manufacturer of smartphones, has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its cell phones. This would mean that both the companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Vibgyor and the software company best referred to as in this scenario? B. a strategic alliance 64. B. overpaying for an acquisition C. buying a firm with a competitive disadvantage D. underpaying for an acquisition B. a strategic alliance 65. C. a leveraged buyout D. a proprietorship 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. B. overpaying for an acquisition A. buying a firm with principal-agent problems A. an acquisition 63. What causes the winner's curse? A. joint venture. What does the relational view of competitive advantage propose? A. A strategic alliance has the potential to help a firm gain a competitive advantage when it joins together resources that are common, inexpensive, and easy to imitate. B. The locus of competitive advantage is often not found within the individual firm but within a strategic partnership. C. Strategic alliances fail to provide competitive advantage when they involve joining different parts of a firm's value chain, such as R&D and marketing. D. A firm has a competitive advantage over its rivals when it can provide goods or services similar to the competitors' at a higher price. B. The locus of competitive advantage is often not found within the individual firm but within a strategic partnership. 66. What is horizontal integration? A. the process of merging with a competitor at a different stage of the value chain B. the process of merging with a competitor at the same stage of the value chain 69. A. when two firms of comparable size join to form a combined entity B. the process of merging with a competitor at the same stage of the value chain C. when a target firm does not want to be acquired D. the process of acquiring a competitor at a lower stage of the value chain When a firm does not have the resource required for pursuing a growth strategy, and if the resource in question is not easily tradable, the implication for the strategist is most likely to D. consider an outright acquisition. A. borrow via a contractual agreement. D. consider an outright acquisition. A. non-equity alliance. B. equity alliance. C. proprietorship. D. joint venture. 70. When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because B. building downstream complementary assets can be expensive and timeconsuming. C. enter into a licensing agreement. When a stand-alone organization is created and owned by two or more parent companies together, the strategic alliance is referred to as a(n) D. when two or more firms enter a temporary vertical strategic alliance A. the local partner can better protect its proprietary know-how. B. pursue internal development. 68. A. when two firms of comparable size join to form a combined entity B. when large, incumbent firms buy startup companies C. the process of acquiring a competitor at a higher stage of the value chain 67. When does a merger between companies typically occur? D. joint venture. C. the strategic alliance will reduce the differentiation of its product and service offerings. D. the value gap created by the firm can be easily lowered in an alliance. B. building downstream complementary assets can be expensive and time-consuming. 71. When entering new geographic markets, some governments, such as those of Saudi Arabia and China, require that foreign firms have a local B. joint venture partner. 73. A. market partner. B. joint venture partner. C. strategic alliance partner. When large, incumbent firms buy start-up companies, the transaction is generally described as a(n) B. accessing critical complementary assets C. acquisition. C. procuring additional capital investments D. reducing differentiation of product and service offerings A. joint venture. B. partnership. C. acquisition. D. alliance. B. accessing critical complementary assets A. increasing competitive intensity D. merger partner. 72. When North Autos Inc. wanted to sell its cars in the country of Balvia, it lacked access to distribution channels and marketing expertise in the country. Thus, North Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner's wellestablished distribution channels. Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario? 74. 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 when extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge 75. 76. Which alliance type is the RenaultNissan alliance, where Nissan owns 15 percent of Renault, and Renault owns 44.4 percent in Nissan? A. equity alliance 77. Which of the following aspects of alliance management capability is paired with partner selection? A. equity alliance A. alliance governance B. non-equity alliance B. alliance design C. greenfield venture C. alliance formation D. joint venture D. post-formation alliance management Which of the following accurately describes a common difference between a merger and an acquisition? A. A merger tends to include mostly small firms; an acquisition can often involve large firms. B. A merger involves the combination of three or more firms; an acquisition involved the combination of two firms. C. A merger involves firms of different size; an acquisition involved firms of the same size. D. A merger tends to be friendly; an acquisition can be friendly or unfriendly. D. A merger tends to be friendly; an acquisition can be friendly or unfriendly. 78. 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 buildborrow-or-buy framework for its acquisitions. C. alliance formation C. Disney managed its new subsidiaries more like alliances rather than attempting full integration. 79. Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.? D. GD Inc. and VS Inc. join together to form a single new company called GDVS Inc. 81. A. a contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc. A. GD Inc. purchases VS Inc. for $80 billion despite VS Inc. being against the purchase. B. GD Inc. and VS Inc. join together to form a third new entity, while they also operate separately. C. a collusion between two competitors, RP Pharma Inc. and Vital Pharma Inc., to fix prices D. GD Inc. and VS Inc. join together to form a single new company called GDVS Inc. Which of the following best illustrates an equity alliance? A. a contractual agreement that provides Ocia Pharma Inc. the exclusive rights to distribute the drugs of Marvel Pharma Inc. in the Asian market B. an alliance between GoldWing Systems Inc. and GM Computers Inc. that results in GM Wing Inc., an independent third company C. a collusion between two competitors, Torque Steels Inc. and Vizor Metals Inc., to fix prices D. a partnership in which RedGate Insurance Inc. has a 40 percent ownership claim in TwinTrust Finance Inc. A. a contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc B. an alliance between RedGate Systems Inc. and DB Computers Inc. that results in DB Gate Inc., an independent third company C. GD Inc. outsources a few of its business activities to VS Inc. for competitive advantage. 80. Which of the following best illustrates a non-equity alliance? D. a partnership in which RedGate Insurance Inc. has a 40 percent ownership claim in TwinTrust Finance Inc. D. an alliance that allows Virtue Insurance Inc. to claim 49 percent ownership in Mercury Finance Inc. 82. Which of the following corresponds to the use of tacit knowledge? A. Pedro studies a fact sheet about France. B. Heather reads a demographic report about minorities in Texas. C. John assembles the motorcycle from memory. D. Henrietta uses a scientific article to defend her thesis about global warming. C. John assembles the motorcycle from memory. 83. 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. D. Fyodor trained the employees of his alliance partner in the skills needed to create a display for an e-notebook. 85. B. It increases the potential for legal repercussions. C. It increases the costs associated with increasing value. C. Natasha reviewed the alliance portfolio to make sure it fit with the corporate strategy of her firm. D. It increases the threat of new entrants in an industry. 86. D. Fyodor trained the employees of his alliance partner in the skills needed to create a display for an e-notebook. Which of the following is a common drawback of a nonequity alliance? A. lack of trust between partners B. difficulty initiating the contract C. difficulty terminating the contract D. lack of flexibility for the partners B. It increases the potential for legal repercussions. A. It increases competitive intensity within an industry. B. Ira used his knowledge of digital watches to help him to manage the day-to-day operations of the alliance. 84. Which of the following is a disadvantage of a horizontal integration corporate strategy? Which of the following is a disadvantage of equity alliances? A. They are reflective of weaker ties between firms. A. lack of trust between partners B. They do not permit the exchange of explicit knowledge. C. They can bring about a lack of commitment. D. They can entail significant investments. D. They can entail significant investments. 87. Which of the following is a drawback of joint ventures? A. They produce weak ties, trust, and commitment between the partners. D. They necessitate the sharing of rewards between the partners. 89. B. They are based on contractual agreements rather than partial ownership. C. They do not enable the transfer and sharing of tacit knowledge. C. They require the lowest amount of investment relative to the other alliance types. D. They necessitate the sharing of rewards between the partners. Which of the following is an advantage of equity alliances when compared to non-equity alliances? A. They are more flexible and easy to initiate and terminate. B. They require smaller capital investments. C. They produce stronger ties between partners. D. They are based on contracts rather than ownership. A. They create strong ties, trust, and commitment between the partners. A. They create strong ties, trust, and commitment between the partners. B. They are based on contractual agreements rather than partial ownership. 88. Which of the following is an advantage of joint ventures? C. They produce stronger ties between partners. D. They can be easily initiated and terminated. 90. 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. B. They are flexible and easy to initiate and terminate. 91. Which of the following is an example of explicit knowledge? D. a research summary 93. A. knowing how to create surveys A. The industry structure becomes less consolidated. B. a research skill B. There is a reduction of excess capacity in the market. C. knowing how to assemble semiconductors Which of the following is an ineffective practice in alliance management? A. coordinating a firm's portfolio of alliances B. establishing knowledgesharing routines between alliance partners C. developing relational capabilities to manage mergers and acquisitions D. focusing on developing an alliance-management capability in isolation B. There is a reduction of excess capacity in the market. C. The industry structure becomes potentially less profitable. D. a research summary 92. Which of the following is a result of horizontal integration in terms of Porter's five forces model? D. focusing on developing an alliance-management capability in isolation D. There is an increase in rivalry among existing firms. 94. 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 A. to replace competitive advantage with competitive parity 95. Which of the following is the best definition of a complementary asset? A. an asset a firm needs to complete the value chain from upstream innovation to downstream commercialization A. an asset a firm needs to complete the value chain from upstream innovation to downstream commercialization 97. B. the need to enter a new geographical market C. the need to reduce its level of horizontal integration D. the desire to pursue an unrelated diversification strategy C. an asset a firm can use to attract a potential joint venture partner 98. D. an asset a firm keeps because it helps them maintain a strong image for marketing Which of the following is true of acquisitions? A. Acquisitions can be friendly or hostile. B. Acquisitions can occur only when the involved entities are of comparable size. C. In acquisitions, two independent companies join to form a separate third entity. D. Acquisitions increase the competitive intensity in an industry. A. the desire to gain a new capability A. the desire to gain a new capability B. an asset a firm would like to add to its portfolio even though it is not vital to the running of the company 96. Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion in 2012? Which of the following scenarios best illustrates horizontal integration? A. Regal Autos Inc. enters into a licensing contract with a distributor in a new international market. A. Acquisitions can be friendly or hostile. B. Regal Autos Inc. acquires a component parts manufacturer who previously supplied to Regal Autos' competitor. C. Regal Autos Inc. sets up its own distribution channel and retail stores. D. Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors. D. Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors. 99. Which of the following statements is not true of tacit knowledge? A. It is concerned with knowing how to do a certain task. C. It is regularly shared between partners in a non-equity alliance. 101. A. An equity alliance is based on contractual agreements rather than partial ownership. B. It is knowledge that cannot be easily codified. D. It is acquired only through actively participating in the process. Which of the following statements is true about managing alliancesrelated tasks? A. Forming an alliance with another firm prohibits that firm from forming other alliances. B. Alliance management capability is based on three alliance-related tasks. C. A merger is one of the three options for alliance design and governance. D. In post-formation alliance management, none of the firms in an alliance is permitted to gain a competitive advantage. B. In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible. B. In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible. C. It is regularly shared between partners in a non-equity alliance. 100. Which of the following statements is true of an equity alliance? C. In an equity alliance, a standalone organization is created that is jointly owned by two or more parent companies. B. Alliance management capability is based on three alliancerelated tasks. D. An equity alliance creates weaker ties between the alliance partners when compared to a non-equity alliance. 102. 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. C. Explicit knowledge is shared in non-equity alliance firms. 103. Which of the following statements is true of joint ventures? A. They enable the exchange of both tacit and explicit knowledge. 105. A. They enable the exchange of both tacit and explicit knowledge. B. Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone. C. They are characterized by single reporting lines. D. They cannot entail long negotiations. Which of the following statements is true of strategic alliances? A. They are always focused on joining the same value chain activities. B. They enable firms to achieve goals faster, but at higher costs. C. They are known as strategic alliances whether or not they have the potential to affect a firm's competitive advantage. D. They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles. B. Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone. A. HP and DreamWorks each strengthened their separate markets without impinging on each other's markets. B. They reduce the possibilities of trust and commitment. 104. Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks? C. HP was able to enter a new market, and DreamWorks was able to strengthen its old market. D. They are most beneficial when they join together resources and knowledge in a combination that obeys the VRIO principles. D. DreamWorks was able to enter a new market, and HP was able to strengthen its old market. 106. 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 D. joint ventures 107. Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups? B. to make small-scale investments in ventures poised to disrupt existing market economics 109. B. managerial hubris C. inferior acquisitions ability B. to make small-scale investments in ventures poised to disrupt existing market economics D. shareholder unrest 110. C. to invest their excess cash flow in the superior technology of the biotech start-ups A. to develop into a live-action feature film company B. to finance and distribute highend graphic display systems for theaters C. to develop into a computer hardware company D. to finance and distribute its newly created computeranimated movies With regard to New United Motor Manufacturing, Inc. (NUMMI), why did General Motors (GM) enter into a strategic alliance with Toyota? A. to transfer its knowledge of a completely new production system D. to share their continuously updated research technology with the biotech start-ups Why did Pixar enter into a strategic alliance with Disney? B. managerial hubris A. strong competitive disadvantage A. to pursue an unrelated-options perspective without disrupting existing market economics 108. Why did Quaker Oats Company's acquisition of Snapple fail? D. to finance and distribute its newly created computer-animated movies B. to learn the lean manufacturing system pioneered by Toyota C. to better understand the American workforce D. to get access to Toyota's distribution system and marketing expertise B. to learn the lean manufacturing system pioneered by Toyota