CBA 469 - Chapter 9 - Corporate Strategy - Alliances, Mergers, and Acquisitions

CBA 469 - JSU - Chapter 9 - Corporate Strategy - Alliances, Mergers, and Acquisitions

It gives GM access to the market of the future, in which private car ownership model is likely to shift in favor of fleet ownership and management.

In what way does the strategic alliance between GM and Lyft allow GM to hedge against uncertainty?

Multiple choice question.

It allows GM to learn how to manage large fleets of cars.

It gives GM access to the market of the future, in which private car ownership model is likely to shift in favor of fleet ownership and management.

It gives GM access to the as-yet-untapped insurance market.

It provides GM with the funds needed to acquire Uber, the market leader.

alliances

organic growth

acquisitions

What are three options used by executives to drive firm growth?

Multiple select question.

alliances

organic growth

downsizing

acquisitions

Build-Borrow-Buy

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 "Blank______ framework."

Multiple choice question.

Internal-versus-External growth

Build-Borrow-Buy

organic growth

capability development

strategic

In order for an alliance to qualify as Blank______, it must have the potential to alter a company's competitive advantage.

Multiple choice question.

tradable

a partnership

strategic

a merger

hedge against uncertainty

One reason why a firm might enter into a strategic alliance is to Blank______.

Multiple choice question.

weaken competitive position

increase the number of entrants in the market

hedge against uncertainty

exit markets

It allows Lyft to strengthen its competitive position against Uber.

How does Lyft benefit from its strategic alliances with GM and Waymo?

Multiple choice question.

It allows Lyft to strengthen its competitive position against Uber.

It gives Lyft access to new markets that Uber is unaware of.

It provides Lyft with shares of GM and unlimited funds.

It gives Lyft a winner-take-all advantage.

True 

Firms can use strategic alliances to strengthen their competitive advantage when competing in battles to control industry standards.

True false question.

True

False

acquisitions

Strategists can grow their firms by growing organically through internal development or externally through alliances and Blank______.

Multiple choice question.

PESTEL analysis

acquisitions

divesting businesses

capabilities

to adhere to local law

to access local expertise

to access local contacts

Why might a firm create a joint venture when entering a new geographic market?

Multiple select question.

to adhere to domestic law

to adhere to local law

to access local expertise

to access local contacts

acquisition of new resources

internal development

strategic alliances

Which of the following are the three choices in the Build-Borrow-Buy framework?

Multiple select question.

acquisition of new resources

internal development

strategic alliances

elimination of product costs

a real-options perspective

Which approach to strategic decision making takes a larger investment decision and divides it into multiple smaller decisions that happen over time?

Multiple choice question.

a staged-options perspective

a net present value perspective

a one-to-many approach

a real-options perspective

strategic alliance

A voluntary arrangement between firms to share knowledge, resources, and capabilities to develop products, processes, or services is known as a Blank______.

Multiple choice question.

merger

strategic alliance

wholly owned subsidiary

hostile takeover

non-equity alliances

joint ventures

equity alliances

What are the three mechanisms that alliances can be governed by?

Multiple select question.

downstream alliance

non-equity alliances

joint ventures

equity alliances

upstream alliance

to learn new capabilities

to strengthen their competitive position

to enter new markets

Which of the following are reasons why firms enter into strategic alliances?

Multiple select question.

to learn new capabilities

to strengthen their competitive position

to increase outsourcing

to decrease economies of scale

to enter new markets

non-equity alliance

A partnership that is based on contracts between companies is referred to as a(n) Blank______.

Multiple choice question.

wholly owned subsidiary

diversification

allowance alliance

non-equity alliance

change the industry structure

A firm might want to use a strategic alliance to Blank______.

Multiple choice question.

release proprietary information to rival firms

increase the threat of rivalry

lower Internet discounted prices in the primary market

change the industry structure

flexibility and ease of initiation

An advantage of using a non-equity alliance to govern a strategic alliance is its Blank______.

Multiple choice question.

long-term planning period

ability to distract new entrants to the industry

use of tacit knowledge

flexibility and ease of initiation

Governments may require that foreign firms have a local joint venture partner in order to conduct business within the country's borders.

How do foreign governments typically influence a firm's use of strategic alliances to enter new markets?

Multiple choice question.

Governments may require financial and commercial transparency from political officials.

Governments may require the Securities and Exchange Commission and the Internal Revenue Service to review transactions.

Governments typically do not allow a foreign firm to enter if a domestic company already provides the same products or services.

Governments may require that foreign firms have a local joint venture partner in order to conduct business within the country's borders.

They require larger investments than non-equity alliances.

Which of the following statements about equity alliances is true?

Multiple choice question.

They are based on full ownership.

They require larger investments than non-equity alliances.

They result in weak ties between the partners.

They are more common than contractual, non-equity alliances.

real-options perspective

When a company makes incremental investments as part of a larger investment and takes the time to analyze the information gained following each incremental investment, the company is taking a Blank______.

Multiple choice question.

non-equity approach

tradable position

co-opetition perspective

real-options perspective

tacit knowledge

Which type of knowledge cannot be codified and can only be gained through active participation in the task?

Multiple choice question.

tacit knowledge

strategic knowledge

explicit knowledge

perceptual knowledge

non-equity alliance

matches

Choicepartnership based on contracts between firms

equity alliance

matches

Choicepartnership in which at least one partner takes partial ownership in the other

joint venture

matches

Choicestandalone organization created and owned by two or more parent companies

to create real options in terms of gaining access to new technologies

What is the main goal of corporate venture capital investments?

Multiple choice question.

to create real options in terms of gaining access to new technologies

to reduce product costs

to make financial gains by selling more products in fewer markets

to increase market share

non-equity alliance

The most common type of alliance is a(n) Blank______.

Multiple choice question.

acquisition

joint venture

equity alliance

non-equity alliance

The amount of investment involved

The time and effort for assembling the partnership

What are downsides of equity alliances?

Multiple select question.

The amount of investment involved

The time and effort for assembling the partnership

Their resulting relatively weak ties

Low levels of trust

temporary

The partners in non-equity alliances can have weak ties because such alliances are often Blank______ in nature, which can cause lack of trust and commitment.

Multiple choice question.

permanent

sufficient

intangible

temporary

They are the least common of the three types of strategic alliances.

They involve the sharing of both explicit and tacit knowledge.

Which statements about joint ventures are true?

Multiple select question.

They are primarily used in short-term commitments.

They are the least common of the three types of strategic alliances.

Only one partner contributes equity.

They involve the sharing of both explicit and tacit knowledge.

equity alliance

A partnership in which at least one partner takes partial ownership in the other is a(n) Blank______.

Multiple choice question.

equity alliance

tacit cooperation

non-equity alliance

joint venture

They have a high failure rate.

What is a true statement about strategic alliances?

Multiple choice question.

They rarely, if ever, fail.

They have an average failure rate.

They have a low failure rate.

They have a high failure rate.

It can only be acquired through actively participating in the process.

Which of the following is true of tacit knowledge?

Multiple choice question.

It is nonspecific knowledge.

It can only be acquired through actively participating in the process.

It is exchanged only during non-equity alliances.

It cannot be acquired.

corporate venture capital

When an established firm makes an equity investment in an entrepreneurial venture it is known as a(n) Blank______ investment.

Multiple choice question.

Einstein-type

incumbent

limited entrepreneurial

corporate venture capital

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

partner alliance design

alliance management capability

alliance governance

stronger ties

possible emergence of trust and commitment

a window into new technology (option value)

What are three advantages of equity alliances?

Multiple select question.

easy initiation and termination

an institutional setting requirement

stronger ties

possible emergence of trust and commitment

a window into new technology (option value)

partner selection and alliance formation

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.

strategic network manipulation

partner selection and alliance formation

alliance design and governance

post-formation alliance management

joint venture

A standalone organization that two or more parent companies create and own together is a Blank______.

Multiple choice question.

licensing agreement

franchise

joint venture

non-equity alliance

commitment

How willing the firms in an alliance are to share necessary resources and make sacrifices in the name of long-term rewards is referred to as partner Blank______.

Multiple choice question.

commitment

compatibility

design

capability

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

What is a major problem for between 30% and 70% of all strategic alliances?

Multiple choice question.

The government forces the alliance to shut down due to monopoly concerns.

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.

One partner buys the other partner out at a major discount.

trust each other 

If an alliance between two firms succeeds, it is likely that the firms in the alliance Blank______.

Multiple choice question.

distrust each other

trust each other

express misgivings about joining together in an alliance before the alliance occurs

compete against each other

tacit knowledge 

Which type of knowledge cannot be codified and can only be gained through active participation in the task?

Multiple choice question.

perceptual knowledge

tacit knowledge

explicit knowledge

strategic knowledge

Build inter-firm trust.

Make relation-specific investments.

Establish knowledge-sharing routines.

What are the components of post-formation alliance management?

Multiple select question.

Build inter-firm trust.

Develop perceptual and virtual teams.

Make relation-specific investments.

Create communities of practice.

Establish knowledge-sharing routines.

post-formation alliance management

partner selection and alliance formation

alliance design and governance

A firm with alliance management capability is able to effectively manage which of the following tasks?

Multiple select question.

post-formation alliance management

partner selection and alliance formation

alliance design and governance

purchase of the alliance partner

acquisition

Which of the following terms refers to when one firm purchases or takes over another firm?

Multiple choice question.

merger

strategic alliance

acquisition

wholly owned subsidiary

alliance design and governance

post-formation alliance management

partner selection and alliance formation

What are the phases of alliance management?

Multiple select question.

alliance design and governance

strategic network manipulation

tacit and explicit knowledge collaboration

post-formation alliance management

partner selection and alliance formation

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

Horizontal integration is a good option if Blank______.

Multiple choice question.

the target firm is more valuable as a continued standalone company

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

the target firm is in a different industry than the acquiring firm

the acquiring firm is new to the industry and has no competitors

partner commitment

partner compatibility

What are the two necessary conditions for successful alliance formation?

Multiple select question.

partner selection

partner commitment

partner globalization

partner compatibility

Inter-organizational trust

What is an important aspect of alliance success?

Multiple choice question.

Principal-agent problems

Inter-organizational trust

Managerial hubris

Partner incompatibility

True

A horizontal integration strategy leads to industry consolidation.

True false question.

True

False

establishing knowledge-sharing routines

What is a component of post-formation alliance management?

Multiple choice question.

governing alliances

establishing knowledge-sharing routines

designing alliances

selecting appropriate alliance partners

merger; acquisition

A(n) Blank______ is when two firms agree to join and create a combined entity, and a(n) Blank______ is when one firm buys or takes over another firm.

Multiple choice question.

non-equity alliance; joint venture

merger; acquisition

acquisition; merger

joint venture; non-equity alliance

reduced flexibility

increased potential for legal repercussions

Horizontal integration through mergers and acquisitions can create costs. Which of the following are sources of such costs?

Multiple select question.

reduction in competitive intensity

increased differentiation

reduced flexibility

increased potential for legal repercussions

horizontal integration

When two competitors merge, leading to industry consolidation, they are engaging in Blank______.

Multiple choice question.

horizontal integration

vertical integration

forward diversification

backward integration

It reduces rivalry among existing firms.

It reduces the threat of entry.

How does horizontal integration affect Porter's Five Forces for the surviving firms?

Multiple select question.

It reduces rivalry among existing firms.

It increases the threat of entry.

It reduces the threat of entry.

It weakens bargaining power vis-à-vis buyers.

It increases rivalry among existing firms.

commitment

How willing the firms in an alliance are to share necessary resources and make sacrifices in the name of long-term rewards is referred to as partner Blank______.

Multiple choice question.

compatibility

capability

commitment

design

increased differentiation

a reduction in competitive intensity

lower costs

What three of the following are the primary benefits of horizontal integration?

Multiple select question.

increased differentiation

a reduction in competitive intensity

lower costs

increased activity in all levels of the value chain

Large horizontal integration activity typically needs to be approved by government authorities.

Which of the following is true regarding the government and horizontal integration?

Multiple choice question.

Horizontal integration must always be approved by governmental authorities.

Governments typically help facilitate horizontal integration because it helps the economy.

Large horizontal integration activity typically needs to be approved by government authorities.

Governments pay a great deal of attention to vertical integration but very little to horizontal integration.

competitors, a single

Since horizontal integration is the process of acquiring and merging with ________Blank, it is the type of corporate strategy that can improve a firm's strategic position in ________Blank industry/industries.

Multiple Choice

competitors, a single

suppliers, multiple

buyers, multiple

suppliers, a single

competitors, multiple

a source of value creation in horizontal integration.

Pharmaceutical companies maintain large sales forces, which often number 10,000 or more, to call on doctors and hospitals to promote their products. Horizontal integration of pharmaceutical companies leads to larger drug portfolios, enabling them to have a smaller sales force when they are horizontally integrated than when they are not. This is an example of

Multiple Choice

a source of value creation in vertical integration.

a source of cost in horizontal integration.

co-opetition.

a source of value creation in horizontal integration.

a learning race.

consolidation, potential to reduce competitive intensity

An industry-wide trend toward horizontal integration leads to industry ________Blank. Large horizontal integrations must usually be approved by the FTC or the European Commission because of the ________Blank.

Multiple Choice

consolidation, potential to reduce competitive intensity

consolidation, potential to increase competitive intensity

rivalry, potential to increase competitive intensity

rivalry, potential to reduce competitive intensity

maturation, intellectual property involved

the relevancy of internal resources

What is the first thing that must be determined for the Build-Borrow-Buy framework?

Multiple Choice

the relevancy of internal resources

the tradability of the resource

the resource gap

the acquisition target

contractual alliance

If the resource is easily traded, what type of alliance should a firm pursue?

Multiple Choice

joint venture

internal development

contractual alliance

equity alliance

acquiring another firm

Which is the most expensive way to fill a resource gap?

Multiple Choice

licensing deal

acquiring another firm

contractual alliance

equity alliance

Restart the Build-Borrow-Buy process.

What should a company do if it doesn’t believe they can successfully integrate a potential acquisition?

Multiple Choice

None of these choices are correct.

Form a joint venture instead.

Create an integration team.

Restart the Build-Borrow-Buy process.

Apple: 3
Roche: 2
Pixar: 4
GM: 1

Apple's web of strategic alliances with major publishing houses

Roche - Genentech

Pixar - Disney

GM - Toyota

1: Learn new capabilities
2: Hedge against uncertainty
3: Strengthen competitive position
4: Access critical complementary assets 

obeys the VRIO principles.

An alliance qualifies as strategic only if it has the potential to affect a firm’s competitive advantage—in other words, when it joins together resources and knowledge in a combination that

is organized properly.

obeys the VRIO principles.

is not costly to imitate.

is valuable.

is rare.

strengthen a competitive position.

Firms can use strategic alliances to change the industry structure in their favor. For example, firms frequently use strategic alliances when competing in so-called battles for industry standards. This is an example of entering an alliance to

Multiple Choice

access critical complementary assets.

enter new markets.

strengthen a competitive position.

hedge against uncertainty.

learn new capabilities.

access critical complementary assets.

New firms that are in need of skills and resources to complete the value chain from upstream innovation to downstream commercialization might enter strategic alliances to

Multiple Choice

access critical complementary assets.

strengthen a competitive position.

learn new capabilities.

hedge against uncertainty.

enter new markets.

marketing and distribution of a variety of products

Starbucks has been in business for over 40 years and for most of that period has been quite successful. They have a portfolio of alliances and partnerships that supports and extends their premium coffee business. In the preceding case, which area of business is most impacted by these alliances?

Multiple Choice

expansion into hot teas for growth in India and China

supply and production operations in support of roasting beans

sustainable farming of arabica coffee beans around the world

marketing and distribution of a variety of products

music industry growth through in-store and digital sales

interorganizational trust

Starbucks has used both formal and informal alliance arrangements. The firm is well aware that contracts can never cover all situations. As described in the text, Starbucks is therefore using an informal ________Blank as an element of their success.

Multiple Choice

interorganizational trust

equity alliance governance

threat of a hostile takeover

joint venture strategy

dedicated alliance function

Between 30 percent and 70 percent of alliances yield disappointing results for at least one partner.

Alliance management capability is the ability for the firm to manage three tasks concurrently. Why is this capability critically important?

Multiple Choice

Between 30 percent and 70 percent of alliances yield disappointing results for at least one partner.

Alliance management capability decreases the need to partner with other firms.

The number of alliances is decreasing, making each one more important.

Working on the three elements together is easier than working on each item separately.

Alliance management capability will make it easier to focus on just a single business portfolio at a time.