Question 1

What does the relational view of competitive advantage propose?

Accepted Answer

A strategic alliance has the potential to help a firm gain and sustain a competitive advantage when it joins together resources and knowledge in a combination that obeys the VRIO principles. In other words, they are valuable, rare, difficult to imitate, and appropriately organized. The locus of competitive advantage is often not found within the individual firm but within a strategic partnership. According to this relational view of competitive advantage, critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries.

Question 2

A software firm is interested in acquiring an app development company that is small but highly profitable. The app developer also has a widely admired management structure and much lower attrition rates than are common in the industry. Which of these problems should the software firm anticipate?

Accepted Answer

A)  A rival software firm may imitate this approach by acquiring a similar app developer. 
B)  The software firm may overpay for the app developer, poorly serving the software firm's shareholders. 
C)  Because most acquisitions are profitable, there is little to worry about in this scenario. 
D)  The software firm may underpay for the app developer, cheating the app developer's shareholders of profit. 
A)  A rival software firm may imitate this approach by acquiring a similar app developer. 
B)  The software firm may overpay for the app developer, poorly serving the software firm's shareholders. 
C)  Because most acquisitions are profitable, there is little to worry about in this scenario. 
D)  The software firm may underpay for the app developer, cheating the app developer's shareholders of profit. B

Question 3

Juno LLC is a small, new pharmaceutical company that is developing a valuable new drug. Which of these strategies would it be wise for Juno's owners or managers to take?

Accepted Answer

A)  Quickly build downstream complementary assets. 
B)  Enter multiple learning races within strategic alliances. 
C)  Seek an alliance with a company or companies that will complete the value chain. 
D)  Pursue managerial hubris at all levels of development. 
A)  Quickly build downstream complementary assets. 
B)  Enter multiple learning races within strategic alliances. 
C)  Seek an alliance with a company or companies that will complete the value chain. 
D)  Pursue managerial hubris at all levels of development. C

Question 4

The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market because

Accepted Answer

A)  the U.S. population was growing slowly and becoming more health conscious. 
B)  its strategic position in the U.S. market was well protected through high entry barriers. 
C)  this would help the company gain access to large cocoa plantations in China. 
D)  Hershey's main strategic focus was on product and market diversification and not on the domestic market. 
A)  the U.S. population was growing slowly and becoming more health conscious. 
B)  its strategic position in the U.S. market was well protected through high entry barriers. 
C)  this would help the company gain access to large cocoa plantations in China. 
D)  Hershey's main strategic focus was on product and market diversification and not on the domestic market.

Question 5

If two large movie-theater chains decide to merge, the result is likely a horizontal integration that creates a more favorable industry structure by decreasing competition.

Accepted Answer

A) True 
 B)False

Question 6

Why do firms make acquisitions? Provide an example of how a successful acquisition increased or protected shareholder value.

Accepted Answer

Student examples will vary. A sample ans

Question 7

Why did Quaker Oats Company's acquisition of Snapple fail?

Accepted Answer

A)  intercompany competitiveness 
B)  managerial hubris 
C)  stockholder revolt 
D)  unstable market conditions 
A)  intercompany competitiveness 
B)  managerial hubris 
C)  stockholder revolt 
D)  unstable market conditions

Question 8

Which of the following examples describes the task of an alliance manager?

Accepted Answer

A)  Parker oversaw the agreement between her company and the potential alliance partner and offered support when needed. 
B)  Fred used his knowledge of digital watches to help him manage the day-to-day operations of the alliance. 
C)  Allyson reviewed the alliance portfolio to make sure it fit with the corporate strategy of her firm. 
D)  Hussein trained the employees of his alliance partner in the skills needed to create a display for an e-notebook. 
A)  Parker oversaw the agreement between her company and the potential alliance partner and offered support when needed. 
B)  Fred used his knowledge of digital watches to help him manage the day-to-day operations of the alliance. 
C)  Allyson reviewed the alliance portfolio to make sure it fit with the corporate strategy of her firm. 
D)  Hussein trained the employees of his alliance partner in the skills needed to create a display for an e-notebook.

Question 9

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.

Accepted Answer

A) True 
 B)False

Question 10

In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are

Accepted Answer

A)  similar to those that need to be developed and superior to those of competitors in the targeted area. 
B)  similar to those that need to be developed and inferior to those of competitors in the targeted area. 
C)  different from those that need to be developed and superior to those of competitors in the targeted area. 
D)  different from those that need to be developed and inferior to those of competitors in the targeted area. 
A)  similar to those that need to be developed and superior to those of competitors in the targeted area. 
B)  similar to those that need to be developed and inferior to those of competitors in the targeted area. 
C)  different from those that need to be developed and superior to those of competitors in the targeted area. 
D)  different from those that need to be developed and inferior to those of competitors in the targeted area.

Question 11

Because strategic alliances rarely work as well as managers expect they will, why do companies continue to go through with them?

Accepted Answer

A)  Recent advances in management science have greatly improved the success rate of strategic alliances. 
B)  Many owners, managers, and business analysts believe they are essential to survive in an industry. 
C)  Government entities such as the Federal Trade Commission or the European Union sometimes force companies into strategic alliances. 
D)  These alliances have an excellent record of success if managers have enough confidence in the outcome. 
A)  Recent advances in management science have greatly improved the success rate of strategic alliances. 
B)  Many owners, managers, and business analysts believe they are essential to survive in an industry. 
C)  Government entities such as the Federal Trade Commission or the European Union sometimes force companies into strategic alliances. 
D)  These alliances have an excellent record of success if managers have enough confidence in the outcome.

Question 12

Overall, was the Adidas acquisition of Reebok a success?

Accepted Answer

A)  No. Adidas has slipped from number two in the U.S. market to number three. 
B)  Yes. By acquiring Reebok, Adidas improved its market share and made sure that Nike could not acquire it. 
C)  The acquisition was a success for Reebok but not for Adidas. 
D)  The acquisition was a success for Adidas but not for Reebok. 
A)  No. Adidas has slipped from number two in the U.S. market to number three. 
B)  Yes. By acquiring Reebok, Adidas improved its market share and made sure that Nike could not acquire it. 
C)  The acquisition was a success for Reebok but not for Adidas. 
D)  The acquisition was a success for Adidas but not for Reebok.

Question 13

Provide a real-world example of how recent horizontal integration has brought about reduction in competitive intensity.

Accepted Answer

Student examples will vary. A sample ans

Question 14

R&M Chatelaine is one of the largest tax-preparation firms in the United States. It wants to acquire The Tax Experts, a smaller rival. After the merger, Chatelaine will be one of the two largest income-tax preparers in the U.S. market. What should Chatelaine include in its acquisition plans?

Accepted Answer

A)  It should refocus its attention from the national to the international market. 
B)  In addition to acquiring The Tax Experts, it should also determine the best way to drive independent "mom and pop" tax preparers out of business. 
C)  Chatelaine will need to explain to the Federal Trade Commission how the acquisition will not result in an increase in prices for consumers. 
D)  Chatelaine should enter a price-based competition with its other major competitor to force it out of business and become a monopoly. 
A)  It should refocus its attention from the national to the international market. 
B)  In addition to acquiring The Tax Experts, it should also determine the best way to drive independent "mom and pop" tax preparers out of business. 
C)  Chatelaine will need to explain to the Federal Trade Commission how the acquisition will not result in an increase in prices for consumers. 
D)  Chatelaine should enter a price-based competition with its other major competitor to force it out of business and become a monopoly.

Question 15

What causes the winner's curse?

Accepted Answer

A)  buying a firm with principal-agent problems 
B)  overpaying for an acquisition 
C)  buying a firm with a competitive disadvantage 
D)  underpaying for an acquisition 
A)  buying a firm with principal-agent problems 
B)  overpaying for an acquisition 
C)  buying a firm with a competitive disadvantage 
D)  underpaying for an acquisition

Question 16

Which of the following best explains why Disney showed superior post-merger integration capabilities?

Accepted Answer

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 build-borrow-or-buy framework for its acquisitions. 
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 build-borrow-or-buy framework for its acquisitions.

Question 17

Which of the following is a result of horizontal integration in terms of Porter's five forces model?

Accepted Answer

A)  The industry structure becomes less consolidated. 
B)  There is a reduction of excess capacity in the market. 
C)  The industry structure becomes potentially less profitable. 
D)  There is an increase in rivalry among existing firms. 
A)  The industry structure becomes less consolidated. 
B)  There is a reduction of excess capacity in the market. 
C)  The industry structure becomes potentially less profitable. 
D)  There is an increase in rivalry among existing firms.

Question 18

Fabulous Jewelry Inc. is considering a takeover of its competitor, Cranberry Dream Jewelry LLC. In general, Fabulous should go ahead with the acquisition as long as Cranberry is more valuable as a continued standalone company than it would be inside Fabulous.

Accepted Answer

A) True 
 B)False

Question 19

List the reasons that bring about the existence of mergers, though they tend to destroy rather than create shareholder value.

Accepted Answer

Given that mergers and acquisitions, on

Question 20

Which of the following corresponds to the use of tacit knowledge?

Accepted Answer

A)  Miguel studies a fact sheet about France. 
B)  Chandra reads a demographic report about minorities in Texas. 
C)  Igor assembles a motorcycle from memory. 
D)  Paulette uses a scientific article to defend her thesis about global warming. 
A)  Miguel studies a fact sheet about France. 
B)  Chandra reads a demographic report about minorities in Texas. 
C)  Igor assembles a motorcycle from memory. 
D)  Paulette uses a scientific article to defend her thesis about global warming.

What does the relational view of competitive advantage propose?

A software firm is interested in acquiring an app development company that is small but highly profitable. The app developer also has a widely admired management structure and much lower attrition rates than are common in the industry. Which of these problems should the software firm anticipate?

Juno LLC is a small, new pharmaceutical company that is developing a valuable new drug. Which of these strategies would it be wise for Juno's owners or managers to take?

The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market because

If two large movie-theater chains decide to merge, the result is likely a horizontal integration that creates a more favorable industry structure by decreasing competition.

Why do firms make acquisitions? Provide an example of how a successful acquisition increased or protected shareholder value.

Why did Quaker Oats Company's acquisition of Snapple fail?

Which of the following examples describes the task of an alliance manager?

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.

In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are

Because strategic alliances rarely work as well as managers expect they will, why do companies continue to go through with them?

Overall, was the Adidas acquisition of Reebok a success?

Provide a real-world example of how recent horizontal integration has brought about reduction in competitive intensity.

R&M Chatelaine is one of the largest tax-preparation firms in the United States. It wants to acquire The Tax Experts, a smaller rival. After the merger, Chatelaine will be one of the two largest income-tax preparers in the U.S. market. What should Chatelaine include in its acquisition plans?

What causes the winner's curse?

Which of the following best explains why Disney showed superior post-merger integration capabilities?

Which of the following is a result of horizontal integration in terms of Porter's five forces model?

Fabulous Jewelry Inc. is considering a takeover of its competitor, Cranberry Dream Jewelry LLC. In general, Fabulous should go ahead with the acquisition as long as Cranberry is more valuable as a continued standalone company than it would be inside Fabulous.

List the reasons that bring about the existence of mergers, though they tend to destroy rather than create shareholder value.

Which of the following corresponds to the use of tacit knowledge?

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Vertical Integration and Diversification

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters

Exam 9: Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions

What does the relational view of competitive advantage propose?

A software firm is interested in acquiring an app development company that is small but highly profitable. The app developer also has a widely admired management structure and much lower attrition rates than are common in the industry. Which of these problems should the software firm anticipate?

Juno LLC is a small, new pharmaceutical company that is developing a valuable new drug. Which of these strategies would it be wise for Juno's owners or managers to take?

The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market because

If two large movie-theater chains decide to merge, the result is likely a horizontal integration that creates a more favorable industry structure by decreasing competition.

Why do firms make acquisitions? Provide an example of how a successful acquisition increased or protected shareholder value.

Why did Quaker Oats Company's acquisition of Snapple fail?

Which of the following examples describes the task of an alliance manager?

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.

In terms of the build-borrow-or-buy framework, a firm's internal resources are considered to be relevant when they are

Because strategic alliances rarely work as well as managers expect they will, why do companies continue to go through with them?

Overall, was the Adidas acquisition of Reebok a success?

Provide a real-world example of how recent horizontal integration has brought about reduction in competitive intensity.

R&M Chatelaine is one of the largest tax-preparation firms in the United States. It wants to acquire The Tax Experts, a smaller rival. After the merger, Chatelaine will be one of the two largest income-tax preparers in the U.S. market. What should Chatelaine include in its acquisition plans?

What causes the winner's curse?

Which of the following best explains why Disney showed superior post-merger integration capabilities?

Which of the following is a result of horizontal integration in terms of Porter's five forces model?

Fabulous Jewelry Inc. is considering a takeover of its competitor, Cranberry Dream Jewelry LLC. In general, Fabulous should go ahead with the acquisition as long as Cranberry is more valuable as a continued standalone company than it would be inside Fabulous.

List the reasons that bring about the existence of mergers, though they tend to destroy rather than create shareholder value.

Which of the following corresponds to the use of tacit knowledge?

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Vertical Integration and Diversification

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters