Deck 9: Corporate Strategy: Acquisitions, Alliances, and Networks

Question 1

Biotech firm Genentech licensed its newly developed drug Humulin to the pharmaceutical firm Eli Lilly for manufacturing and distribution.This is an example of a horizontal strategic alliance.

Answer 1

False
Explanation: This is an example of a vertical strategic alliance.

Question 2

Strategic alliance partners often exchange personnel to make the acquisition of tacit knowledge possible,because tacit knowledge can ONLY be acquired through actively participating in the process.

Answer 2

True
Explanation: Tacit knowledge can not be written down and must be shared via active participation.

Question 3

A merger describes the purchase or takeover of one company by another.

Answer 3

False
Explanation: This is the definition of an acquisition.

Question 4

Low-degree centrality improves firm performance.

Question 5

Acquisitions,alliances,and networks help firms pursue common interests,enhance competitiveness,and increase revenues.

Question 6

A governance mechanism that falls under the category of non-equity alliances is Corporate Venture Capital (CVC)investments.

Question 7

Learning races describe situations in which both partners are motivated to form an alliance for learning,but the firm that learns faster and thus accomplishes its goal more quickly has an incentive to exit the alliance or reduce its knowledge sharing.

Question 8

The alliance manager has the technical expertise and knowledge needed for the specific technical area and is responsible for the day-to-day management of alliance.

Question 9

A(n)______________ is the purchase or takeover of one company by another.

A) Joint venture
B) Equity alliance
C) Consortium
D) Acquisition

Question 10

A(n)_________ describes the joining of two independent companies to form a combined entity.

A) Acquisition
B) Merger
C) Joint venture
D) Equity alliance

Question 11

Managerial hubris is a form of self-delusion,in which managers convince themselves of their superior skills in the face of clear evidence to the contrary.

Question 12

When large,incumbent firms buy up startup companies,the transaction is generally described as a(n)_____.

A) Non-equity alliance
B) Equity alliance
C) Acquisition
D) Merger

Question 13

Disney's purchase of Pixar is an example of _____,in which both teams believed that joining the two companies was a good idea.

A) A friendly joint venture
B) A hostile takeover
C) A friendly merger
D) A friendly acquisition

Question 14

The combining of two firms of comparable size is often described as a(n)_____.

A) Acquisition
B) Joint venture
C) Equity alliance
D) Merger

Question 15

Horizontal integration can help firms enhance differentiation.

Question 16

In an equity alliance,firms tend to share mostly explicit knowledge.

Question 17

Weak ties usually allow for the transfer of tacit knowledge ONLY.

Question 18

Strategic alliances are volunteer arrangements between firms that involve the sharing of knowledge,resources,and capabilities with the intent of developing processes,products,or services.

Question 19

An acquisition describes the joining of two independent companies to form a combined entity.

Question 20

Apple formed strategic alliances to challenge Amazon because it wanted to access critical complementary assets.

Question 21

Which of the following is NOT related to horizontal integration?

A) It concerns the number of activities a firm participates in up and down the industry value chain.
B) A type of strategy that improves a firm's strategic position in a single industry.
C) The process of acquiring and merging with competitors.
D) HP acquiring Compaq in 2002 is an example.

Question 22

The mergers between Delta and Northwest Airlines,United Airlines and Continental,and Southwest and AirTran _____ in the industry overall.

A) Increased system capacity
B) Increased differentiation
C) Helped them gain access to new markets and distribution channels
D) Decreased competitive intensity

Question 23

The main value of Oracle's acquisition of PeopleSoft is _____.

A) Tapping into new distribution channels in international markets
B) Reducing their sales forces and lowering the overall cost of distribution
C) Optimizing their entire vertical and horizontal value chains
D) Lowering competitive intensity in the industry overall

Question 24

Horizontal integration can affect several of Porter's five forces for the surviving firms.Which of the following would this include?

A) Increasing the threat of entry
B) Increasing rivalry among existing firms
C) Strengthening bargaining power vis-à-vis supplier and buyers
D) Increasing the threat of substitute products

Question 25

Based on Strategy Highlight 9.1,Kraft's hostile takeover of Cadbury was mainly motivated by Kraft's desire for _____.

A) Increased differentiation
B) Access to new markets and distribution channels
C) Reduction in competitive intensity
D) Lower costs

Question 26

Looking through the lens of the structure-conduct-performance (SCP)model,_____ changes in the underlying industry structure favor the surviving firms.

A) Horizontal integration
B) Vertical integration
C) Alliance
D) Joint venture

Question 27

The following characteristics are all related to acquisitions EXCEPT _____.

A) It can be friendly or unfriendly
B) Sometimes, it can be hostile
C) The combining of firms only of comparable size
D) Large firms buying up startup companies

Question 28

_____ is NOT one of the drawbacks in horizontal integration.

A) Integration failure
B) Reduced flexibility
C) The increased potential for legal repercussions
D) Higher costs

Question 29

_____ is a voluntary arrangement between firms that involves the sharing of knowledge,resources,and capabilities with the intent of developing processes,products,or services to lead to a competitive advantage.

A) A merger
B) An acquisition
C) A strategic alliance
D) A consortium

Question 30

A ______ describes an acquisition in which the target company does not wish to be acquired.

A) Horizontal integration
B) Merger
C) Joint venture
D) Hostile takeover

Question 31

The reasons firms enter into alliances include all of the following EXCEPT _____.

A) To enter new markets
B) To increase competitive intensity
C) To hedge against uncertainty
D) To learn new capabilities

Question 32

According to _____,critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries.

A) Interorganizational competitive advantage
B) The relational view of competitive advantage
C) Comparative advantage
D) Absolute advantage

Question 33

Firms would use strategic alliances to _____ in countries such as Saudi Arabia or China.

A) Hedge against uncertainty
B) Strengthen competitive position
C) Learn new capabilities
D) Enter new markets

Question 34

Apple orchestrated a web of strategic alliances with publishing houses to challenge Amazon's early lead in the delivery of e-content.This was due to which of the following reasons listed?

A) To hedge against uncertainty
B) To access critical complementary assets
C) To learn new capabilities
D) To strengthen competitive advantage

Question 35

Adidas acquired Reebok because _____.

A) Adidas and Reebok wanted to overcome its competitive disadvantage
B) Adidas embarked on an acquisitions-led growth strategy
C) There were principal-agent problems
D) Adidas and Reebok wanted to pursue unrelated diversification

Question 36

Firms use _____ to lower costs through economies of scale,and thus enhance their economic value creation and,in turn,their performance.

A) Joint ventures
B) Mergers
C) Vertical integration
D) Horizontal integration

Question 37

Despite M&A generally destroying rather than creating shareholder value,reasons for mergers include the following EXCEPT _____.

A) The desire to overcome competitive disadvantage
B) Superior acquisition and integration capability
C) Access to new markets and distribution channels
D) Principal-agent problems

Question 38

Which of the following is NOT considered as the benefit of horizontal integration?

A) reduction competitive intensity
B) increased differentiation
C) improvement of supply chain coordination
D) access to new markets and distribution channels

Question 39

_____ is the process of acquiring and merging with competitors,leading to industry consolidation.

A) Vertical integration
B) Hostile takeover
C) Joint venture
D) Horizontal integration

Question 40

_____ is a form of self-delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary.

A) Managerial pride
B) Managerial ego
C) Managerial arrogance
D) Managerial hubris

Question 41

A non-equity alliance has a major drawback which is that it has _____.

A) A slower pace of execution
B) A lack of trust and commitment
C) Strong ties between the firms
D) Only a long-term solution

Question 42

The Microsoft-IBM (non-exclusive)licensing agreement for MS-DOS is an example of a(n)______.

A) Joint venture
B) Acquisition
C) Equity alliance
D) Non-equity alliance

Question 43

A distinctive characteristic of equity alliances is _____.

A) A focus on short-term contracts
B) Creation of new entity by two or more parent firms
C) Partners taking an ownership position
D) A focus on long-term contracts

Question 44

_______ describes equity investments by established firms in entrepreneurial ventures.

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

Question 45

Which of the following is NOT one of the pros in equity alliance?

A) It's easy to initiate and terminate.
B) It's a strong tie.
C) Trust and commitment can emerge.
D) It's a window into new technologies.

Question 46

Joint venture alliances are where ___________ knowledge is exchanged.

A) Explicit
B) Tacit
C) Implicit
D) Tacit and explicit

Question 47

The most common type of alliance is a(n)______,which is based on contracts between firms.

A) Non-equity alliance
B) Equity alliance
C) Joint venture
D) Merger

Question 48

Which of the following is NOT one of the cons in equity alliance?

A) Lack of trust and commitment.
B) It's less flexible.
C) It's slower.
D) It can entail significant investments.

Question 49

NUMMI,formed between GM and Toyota,was the first ______ in the U.S.automobile industry.

A) Joint venture
B) Non-equity alliance
C) Acquisition
D) Equity alliance

Question 50

Alliances can be governed by all of the following mechanisms EXCEPT _______.

A) Contractual agreements for non-equity alliances
B) Acquisitions
C) Equity alliances
D) Joint ventures

Question 51

_______ are contractual alliances in which the participants regularly exchange codified knowledge.

A) Licensing agreements
B) Distribution agreements
C) Joint venture agreements
D) Equity alliances

Question 52

Which alliance type is the Renault-Nissan alliance,where Nissan owns 15 percent of Renault?

A) Equity alliance
B) Integration
C) Consortium
D) Joint venture

Question 53

Which of the following is NOT one of the pros in a Joint Venture?

A) It's the strongest tie.
B) Trust and commitment is likely to emerge.
C) It's flexible.
D) It may be required by an institutional setting.

Question 54

Which type of alliance is most commonly used?

A) A non-equity alliance
B) An equity alliance
C) A joint venture alliance
D) A merger

Question 55

Which of the following is one of the benefits of an equity alliance?

A) It's flexible.
B) It's fast.
C) Trust and commitment.
D) It may be acquired by an institutional setting.

Question 56

Hulu,owned by NBC,Fox,and ABC is an example of a(n)_______.

A) Joint venture
B) Acquisition
C) Equity alliance
D) Non-equity alliance

Question 57

Which of the following is NOT one of the pros of a non-equity alliance?

A) It's fast.
B) Trust and commitment.
C) It's flexible.
D) It's easy to initiate and terminate.

Question 58

The most frequent forms of non-equity alliance include the following EXCEPT _______.

A) Supply agreements
B) Distribution agreements
C) Licensing agreements
D) Partnership agreements

Question 59

In a joint venture,all the following is true EXCEPT _____.

A) It can entail long negotiations and significant investments
B) It is a long-term solution
C) It is mostly weak ties
D) Managers have double reporting lines

Question 60

In a non-equity alliance,firms tend to share _____________ that can be codified.

A) Explicit knowledge
B) Implicit knowledge
C) Tacit knowledge
D) Corporate venture capital

Question 61

Large firms frequently have dedicated ______ units,such as Johnson & Johnson Development Corporation.

A) Corporate venture capital
B) Merger
C) Alliance management
D) Acquisition

Question 62

Corporate venture capital (CVC)investments are _____ investments by established firms in entrepreneurial ventures.

A) Merger and acquisition
B) Joint venture
C) Equity
D) Non-equity

Question 63

Partner commitment concerns the willingness to make available necessary resources and to accept _____ sacrifices to ensure _____ rewards.

A) Short-term; short-term
B) Short-term; long-term
C) Long-term; long-term
D) Long-term; short-term

Question 64

Toyota is using a(n)________ with Tesla Motors,a designer and developer of electric cars,to learn new knowledge and gain a window into new technology.

A) Non-equity alliance
B) Merger
C) Joint venture
D) Equity alliance

Question 65

In the first phase of alliance management,_____ captures aspects of cultural fit between different firms.

A) Cultural capacity
B) Partner compatibility
C) Cultural tolerance
D) Partner capability

Question 66

________,in which one partner takes partial ownership in the other partner,are less common than contractual,non-equity alliances because they often require larger investments.

A) Equity alliances
B) Consortia
C) Mergers
D) Joint ventures

Question 67

Which of the following is a key characteristic of weak ties?

A) A trusting relationship buildup through interaction.
B) The transfer of explicit knowledge only.
C) It may contain an equity-sharing element.
D) Rapid decision making.

Question 68

_________ alliances tend to produce stronger ties and greater trust between partners than ________ alliances do.

A) Non-equity; joint venture
B) Equity; joint venture
C) Joint venture; equity
D) Equity; non-equity

Question 69

The third phase in a firm's alliance management capability concerns _____.

A) The choice of an appropriate governance mechanism
B) Alliance design
C) The ongoing management of the alliance
D) Partner selection

Question 70

______ has the technical expertise and knowledge needed for the specific technical area.

A) An alliance champion
B) An alliance leader
C) An alliance manager
D) An alliance technician

Question 71

_____ and ______ are frequently stepping stones toward full integration of the partner firms either through a merger or acquisition.

A) Equity alliances; joint ventures
B) Non-equity alliances; joint ventures
C) Equity alliances; non-equity alliances
D) Equity alliances; acquisition

Question 72

_____ serves as an alliance process resource and business integrator between the two alliance partners.

A) An alliance partner
B) An alliance manager
C) An alliance leader
D) An alliance champion

Question 73

Which of the following is NOT related to strong ties?

A) A trusting relationship buildup through interaction.
B) Rapid decision making.
C) It may contain an equity-sharing element.
D) The transfer of explicit knowledge only.

Question 74

_____ is a senior,corporate-level executive responsible for high-level support and oversight.

A) An alliance manager
B) An alliance leader
C) An alliance champion
D) An alliance planning supervisor

Question 75

Which of the following is NOT included in the phase of post-formation alliance management?

A) Identify partner compatibility
B) Relation-specific investments
C) Interfirm trust
D) Knowledge-sharing routines

Question 76

Equity alliances allow for the sharing of ______ that cannot be codified.

A) Tacit knowledge
B) Explicit knowledge
C) Implicit knowledge
D) Corporate venture capital

Question 77

Pharmaceutical company Eli Lilly is a knowledge leader in alliance management,and the alliances are managed by a three-person team.Which of the following is NOT included in the team?

A) An alliance planning supervisor
B) An alliance manager
C) An alliance leader
D) An alliance champion

Question 78

To accomplish effective alliance management,it is suggested that firms create a(n)_____,endowed with its own resources and support staff.

A) Partner compatibility
B) Dedicated alliance function
C) Structure-conduct-performance (SCP) model
D) Alliance network

Question 79

Hewlett-Packard is known as having made _____ to create long-term partnerships with several smaller technology firms co-located in Silicon Valley.

A) Knowledge-sharing routines
B) Relation-specific investments
C) Inter-firm trust
D) Identify partner compatibility

Question 80

A(n)_____ is a social structure composed of multiple organizations and the links among the nodes.

A) Alliance network
B) Joint venture network
C) Strategic network
D) Social network