Question 1

Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks?

Accepted Answer

A)  HP and DreamWorks each strengthened their separate markets without impinging on each other's markets. 
B)  Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone. 
C)  HP was able to enter a new market, and DreamWorks was able to strengthen its old market. 
D)  DreamWorks was able to enter a new market, and HP was able to strengthen its old market. 
A)  HP and DreamWorks each strengthened their separate markets without impinging on each other's markets. 
B)  Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone. 
C)  HP was able to enter a new market, and DreamWorks was able to strengthen its old market. 
D)  DreamWorks was able to enter a new market, and HP was able to strengthen its old market.

Question 2

Which of the following is a disadvantage of a horizontal integration corporate strategy?

Accepted Answer

A)  It increases competitive intensity within an industry. 
B)  It increases the potential for legal repercussions. 
C)  It increases the costs associated with increasing value. 
D)  It increases the threat of new entrants in an industry. 
A)  It increases competitive intensity within an industry. 
B)  It increases the potential for legal repercussions. 
C)  It increases the costs associated with increasing value. 
D)  It increases the threat of new entrants in an industry.

Question 3

When does a merger between companies typically occur?

Accepted Answer

A)  when two firms of comparable size join to form a combined entity 
B)  when large, incumbent firms buy start-up companies 
C)  when a target firm does not want to be acquired 
D)  when two or more firms enter a temporary vertical strategic alliance 
A)  when two firms of comparable size join to form a combined entity 
B)  when large, incumbent firms buy start-up companies 
C)  when a target firm does not want to be acquired 
D)  when two or more firms enter a temporary vertical strategic alliance

Question 4

A microchip company wants a computer company to produce more powerful tablets and therefore use more of its chips. That same computer company wants the microchip maker to create chips with faster processing power. What approach could these companies take so that both can serve stockholders well?

Accepted Answer

A)  Both companies should reduce prices to force out competitors and make entering the market less appealing to potential rivals 
B)  Whichever company is larger should acquire the smaller one and impose its management system on the acquired company. 
C)  The two companies should enter a strategic alliance to bring about a win-win situation for them and to limit their rivals' power. 
D)  For data security reasons, both companies should remain separate and refrain from sharing information. 
A)  Both companies should reduce prices to force out competitors and make entering the market less appealing to potential rivals 
B)  Whichever company is larger should acquire the smaller one and impose its management system on the acquired company. 
C)  The two companies should enter a strategic alliance to bring about a win-win situation for them and to limit their rivals' power. 
D)  For data security reasons, both companies should remain separate and refrain from sharing information.

Question 5

Elaborate on the real-options perspective.

Accepted Answer

A real-options perspective to strategic

Question 6

Nirvana Shoes Inc. and StepOut Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other's competencies. Nirvana Shoes entered the strategic alliance to acquire the production system pioneered by StepOut Shoes. Similarly, StepOut Shoes agreed to the strategic alliance to study the design process of Nirvana Shoes. However, Nirvana Shoes was more successful and faster than StepOut Shoes in accomplishing its alliance goal. What does this scenario best illustrate?

Accepted Answer

A)  network effects 
B)  economies of scope 
C)  learning races 
D)  time compression diseconomies 
A)  network effects 
B)  economies of scope 
C)  learning races 
D)  time compression diseconomies

Question 7

Anthonia is a senior manager at Buxley Corp., a motorcycle manufacturer. Buxley has entered an equity alliance with Supremo, a moped manufacturer. "Don't worry, Anthonia," her counterpart at Supremo tells her. "I'm going to send you all our guidelines and documentation for manufacturing catalytic converters, and then you'll be all set." What else should Anthonia request from Supremo?

Accepted Answer

A)  personnel exchanges to share tacit knowledge 
B)  a gradual change from an equity alliance to a non-equity alliance to show greater commitment 
C)  nothing, because the information transfer described is complete and appropriate 
D)  a licensing agreement so that Buxley can exchange codified knowledge with Supremo 
A)  personnel exchanges to share tacit knowledge 
B)  a gradual change from an equity alliance to a non-equity alliance to show greater commitment 
C)  nothing, because the information transfer described is complete and appropriate 
D)  a licensing agreement so that Buxley can exchange codified knowledge with Supremo

Question 8

What is horizontal integration?

Accepted Answer

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 
C)  the process of acquiring a competitor at a higher stage of the value chain 
D)  the process of acquiring a competitor at a lower stage of the value chain 
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 
C)  the process of acquiring a competitor at a higher stage of the value chain 
D)  the process of acquiring a competitor at a lower stage of the value chain

Question 9

How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers?

Accepted Answer

A)  by facilitating excess capacity in the industry 
B)  by preventing mergers from taking place 
C)  by lowering competitive intensity in the industry overall 
D)  by increasing the threat of entry in the industry 
A)  by facilitating excess capacity in the industry 
B)  by preventing mergers from taking place 
C)  by lowering competitive intensity in the industry overall 
D)  by increasing the threat of entry in the industry

Question 10

A drawback involved in using cross-border strategic alliances to enter new foreign markets is that

Accepted Answer

A)  the foreign firm will need to make larger investments when compared to entering the new market on its own. 
B)  some of the firm's proprietary know-how may be appropriated by the foreign partner. 
C)  all potential business risks in the new market will have to be faced alone by the foreign firm. 
D)  the shareholder value of the foreign partner will decline drastically. 
A)  the foreign firm will need to make larger investments when compared to entering the new market on its own. 
B)  some of the firm's proprietary know-how may be appropriated by the foreign partner. 
C)  all potential business risks in the new market will have to be faced alone by the foreign firm. 
D)  the shareholder value of the foreign partner will decline drastically.

Question 11

Solaris 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 Solaris Autos controlling interests in the start-up company. However, Solaris Autos had no obligations to make continued investments in the experiments of the start-up company. It could invest small amounts depending on the new product's success at each stage of its development. If the product proved to be successful, Solaris Autos would have the right to buy out the start-up company. This approach to strategic alliance is referred to as

Accepted Answer

A)  a break-even analysis. 
B)  a real-options perspective. 
C)  credible commitment. 
D)  transaction cost economics. 
A)  a break-even analysis. 
B)  a real-options perspective. 
C)  credible commitment. 
D)  transaction cost economics.

Question 12

Mediflow, a medium-sized medical technology company, has been successful in its research and development but needs improvement in its European sales. Which of these actions would most likely lead to long-term success for Mediflow's European sales?

Accepted Answer

A)  Alert the European Union that conditions in the European medical technology market are approaching oligopoly. 
B)  Initiate a hostile takeover of a European rival. 
C)  Acquire a company that has a successful medical technology sales force in Europe so that Mediflow can gain access to new distribution channels. 
D)  Contact its congressional representative to request higher tariffs on European technology products. 
A)  Alert the European Union that conditions in the European medical technology market are approaching oligopoly. 
B)  Initiate a hostile takeover of a European rival. 
C)  Acquire a company that has a successful medical technology sales force in Europe so that Mediflow can gain access to new distribution channels. 
D)  Contact its congressional representative to request higher tariffs on European technology products.

Question 13

Which of the following is an advantage of equity alliances when compared to non-equity alliances?

Accepted Answer

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 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.

Question 14

How do strategic alliances help firms gain access to complementary assets?

Accepted Answer

The successful commercialization of a ne

Question 15

Even if a merger may not increase shareholder value as planned, it is often a wise idea to champion it so that managers will have the greater opportunities of working at an expanding company.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is an ineffective practice in alliance management?

Accepted Answer

A)  coordinating a firm's portfolio of alliances 
B)  establishing knowledge-sharing routines between alliance partners 
C)  developing relational capabilities to manage mergers and acquisitions 
D)  focusing on developing an alliance-management capability in isolation 
A)  coordinating a firm's portfolio of alliances 
B)  establishing knowledge-sharing routines between alliance partners 
C)  developing relational capabilities to manage mergers and acquisitions 
D)  focusing on developing an alliance-management capability in isolation

Question 17

What is the main reason that most mergers and acquisitions negatively effect shareholder value?

Accepted Answer

A)  The entire market becomes an oligopoly or a monopoly. 
B)  Promised synergies never take place. 
C)  Market conditions change too quickly. 
D)  Companies that resist acquisitions are subject to the "winner's curse." 
A)  The entire market becomes an oligopoly or a monopoly. 
B)  Promised synergies never take place. 
C)  Market conditions change too quickly. 
D)  Companies that resist acquisitions are subject to the "winner's curse."

Question 18

Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion?

Accepted Answer

A)  the desire to gain a new capability 
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 
A)  the desire to gain a new capability 
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

Question 19

Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups?

Accepted Answer

A)  to pursue an unrelated-options perspective without disrupting existing market economics 
B)  to make small-scale investments in ventures poised to disrupt existing market economics 
C)  to invest their excess cash flow in the superior technology of the biotech start-ups 
D)  to share their continuously updated research technology with the biotech start-ups 
A)  to pursue an unrelated-options perspective without disrupting existing market economics 
B)  to make small-scale investments in ventures poised to disrupt existing market economics 
C)  to invest their excess cash flow in the superior technology of the biotech start-ups 
D)  to share their continuously updated research technology with the biotech start-ups

Question 20

A candy company called Hearts Aflame Inc. forms an agreement with another candy company called Dreamcatcher Inc. Through this agreement, Hearts Aflame owns 30 percent of Dreamcatcher. However, Dreamcatcher does not own any part of Hearts Aflame. This type of agreement is called a(n)

Accepted Answer

A)  non-equity alliance. 
B)  equity alliance. 
C)  joint venture. 
D)  capital venture. 
A)  non-equity alliance. 
B)  equity alliance. 
C)  joint venture. 
D)  capital venture.

Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks?

Which of the following is a disadvantage of a horizontal integration corporate strategy?

When does a merger between companies typically occur?

A microchip company wants a computer company to produce more powerful tablets and therefore use more of its chips. That same computer company wants the microchip maker to create chips with faster processing power. What approach could these companies take so that both can serve stockholders well?

Elaborate on the real-options perspective.

What is horizontal integration?

How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers?

A drawback involved in using cross-border strategic alliances to enter new foreign markets is that

Mediflow, a medium-sized medical technology company, has been successful in its research and development but needs improvement in its European sales. Which of these actions would most likely lead to long-term success for Mediflow's European sales?

Which of the following is an advantage of equity alliances when compared to non-equity alliances?

How do strategic alliances help firms gain access to complementary assets?

Even if a merger may not increase shareholder value as planned, it is often a wise idea to champion it so that managers will have the greater opportunities of working at an expanding company.

Which of the following is an ineffective practice in alliance management?

What is the main reason that most mergers and acquisitions negatively effect shareholder value?

Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion?

Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups?

A candy company called Hearts Aflame Inc. forms an agreement with another candy company called Dreamcatcher Inc. Through this agreement, Hearts Aflame owns 30 percent of Dreamcatcher. However, Dreamcatcher does not own any part of Hearts Aflame. This type of agreement is called a(n)

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

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

Which of the following summarizes the benefit of the strategic alliance between HP and DreamWorks?

Which of the following is a disadvantage of a horizontal integration corporate strategy?

When does a merger between companies typically occur?

A microchip company wants a computer company to produce more powerful tablets and therefore use more of its chips. That same computer company wants the microchip maker to create chips with faster processing power. What approach could these companies take so that both can serve stockholders well?

Elaborate on the real-options perspective.

What is horizontal integration?

How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers?

A drawback involved in using cross-border strategic alliances to enter new foreign markets is that

Mediflow, a medium-sized medical technology company, has been successful in its research and development but needs improvement in its European sales. Which of these actions would most likely lead to long-term success for Mediflow's European sales?

Which of the following is an advantage of equity alliances when compared to non-equity alliances?

How do strategic alliances help firms gain access to complementary assets?

Even if a merger may not increase shareholder value as planned, it is often a wise idea to champion it so that managers will have the greater opportunities of working at an expanding company.

Which of the following is an ineffective practice in alliance management?

What is the main reason that most mergers and acquisitions negatively effect shareholder value?

Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion?

Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups?

A candy company called Hearts Aflame Inc. forms an agreement with another candy company called Dreamcatcher Inc. Through this agreement, Hearts Aflame owns 30 percent of Dreamcatcher. However, Dreamcatcher does not own any part of Hearts Aflame. This type of agreement is called a(n)

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