Corporate Strategy: Strategic Alliances, Mergers, And Acquisitions

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Questions Bank

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
Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions
Global Strategy: Competing Around the World
Organizational Design: Structure, Culture, and Control
Corporate Governance and Business Ethics

All Questions

Question 1

Free

True/False

When deciding whether to build, borrow, or buy as a means of growth, firms no longer need to consider the need for physical closeness to their resource partners.

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True

False

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Question 2

Free

True/False

In recent years strategic alliances have declined because of increasing government regulation.

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True

False

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Question 3

Free

True/False

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.

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True

False

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Question 4

Free

True/False

Organizations seeking strategic alliances often pursue non-equity alliances because they are the easiest to create and to sever. However, the short duration of these alliances often means there is little trust or commitment on either side.

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False

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Question 5

Free

True/False

Managers who are eager to forge business alliances often forget that the expected benefits of the partnership must represent only a small percentage of its monetary and time-related costs.

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Question 6

True/False

Although Disney acquired Pixar through a hostile takeover, the merger has proven extremely profitable for both entities.

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True

False

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Question 7

True/False

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.

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True

False

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Question 8

True/False

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.

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True

False

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Question 9

True/False

In general, it is shortsighted to acquire companies as a defensive move to prevent rival organizations from gaining access to certain patents, technology, or customer bases.

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True

False

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Question 10

True/False

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.

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True

False

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Question 11

Multiple Choice

Showstopper Inc. dominates the ladies' wig market and wants to expand into men's toupees. How can Showstopper's managers determine whether the company should develop a toupee division internally, ally with a toupee maker, or acquire a toupee-making firm?

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To protect themselves, Showstopper's managers should choose the option that leads to the largest company with the most managerial positions.

The managers need to determine whether the skills needed to create wigs and toupees are similar and whether Showstopper creates better hairpieces than its competitors do.

The managers must determine whether wig making and toupee making require substantially different skills. If so, the company should pursue internal development.

Unless the market for toupees is booming, Showstopper should stick to what it knows and focus on creating the best ladies' wigs in the industry.

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Question 12

Multiple Choice

Disney became the world's leading media company to a large extent by pursuing a corporate strategy of

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related-linked diversification.

cost-leadership.

unrelated diversification.

hostile takeovers.

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Question 13

Multiple Choice

Ayesha is a strategist for the firm Optiks 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 Expert Technology Inc. However, this material is difficult to trade. Because of this, which of the following is most likely the best strategy for Ayesha to suggest?

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Optiks should acquire Expert Technology.

Optiks should form a short-term agreement with Expert Technology.

Optiks should form a long-term agreement with Expert Technology.

Optiks should enter into co-opetition with Expert Technology.

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Question 14

Multiple Choice

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

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similar to those that need to be developed and superior to those of competitors in the targeted area.

similar to those that need to be developed and inferior to those of competitors in the targeted area.

different from those that need to be developed and superior to those of competitors in the targeted area.

different from those that need to be developed and inferior to those of competitors in the targeted area.

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Question 15

Multiple Choice

A voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services is best described as a

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proprietorship.

cooperative.

strategic alliance.

leveraged buyout.

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Question 16

Multiple Choice

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?

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Both companies should reduce prices to force out competitors and make entering the market less appealing to potential rivals

Whichever company is larger should acquire the smaller one and impose its management system on the acquired company.

The two companies should enter a strategic alliance to bring about a win-win situation for them and to limit their rivals' power.

For data security reasons, both companies should remain separate and refrain from sharing information.

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Question 17

Multiple Choice

Braintree 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 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 Braintree and the software company best referred to as in this scenario?

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an acquisition

a strategic alliance

a leveraged buyout

a proprietorship

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Question 18

Multiple Choice

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?

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Quickly build downstream complementary assets.

Enter multiple learning races within strategic alliances.

Seek an alliance with a company or companies that will complete the value chain.

Pursue managerial hubris at all levels of development.

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Question 19

Multiple Choice

How did the strategic alliance between HP and DreamWorks Animation SKG affect HP?

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It helped HP pursue a taper integration strategy.

It enabled HP to compete head on with Cisco's videoconferencing solution.

It resulted in depreciation of HP's shareholder value.

It failed because HP lacked the expertise in selecting and integrating technology acquisitions.

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Question 20

Multiple Choice

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

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the foreign firm will need to make larger investments when compared to entering the new market on its own.

some of the firm's proprietary know-how may be appropriated by the foreign partner.

all potential business risks in the new market will have to be faced alone by the foreign firm.

the shareholder value of the foreign partner will decline drastically.

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