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

Multiple Choice

The success of the Pixar-Disney strategic alliance demonstrated that:

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Disney was in desperate need of Pixar's graphic display systems.

the two entities' complementary assets matched.

it was easier for the alliance partners to reduce the value gap created.

the companies were effectively managing an unrelated diversification strategy.

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Question 2

Free

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 3

Free

Multiple Choice

Which of the following best illustrates a merger between the two companies GD Inc.and VS Inc.?

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GD Inc. purchases VS Inc. for $80 billion despite VS Inc. being against the purchase.

GD Inc. and VS Inc. join together to form a third new entity, while they also operate separately.

GD Inc. outsources a few of its business activities to VS Inc. for competitive advantage.

GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.

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Question 4

Free

Multiple Choice

When does a merger between companies typically occur?

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When two firms of comparable size join to form a combined entity

When large, incumbent firms buy startup companies

When a target firm does not want to be acquired

When two or more firms enter a temporary vertical strategic alliance

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Question 5

Free

Multiple Choice

The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 billion.All the hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are known as Mansion hotels.What does this scenario best illustrate?

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A merger

A joint venture

An acquisition

An equity alliance

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Question 6

Multiple Choice

Which of the following is true of acquisitions?

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Acquisitions can be friendly or hostile.

Acquisitions can occur only when the involved entities are of comparable size.

In acquisitions, two independent companies join to form a separate third entity.

Acquisitions increase the competitive intensity in an industry.

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Question 7

Multiple Choice

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

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joint venture

partnership

acquisition

alliance

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Question 8

Multiple Choice

Titan Autos Inc.merged with its competitor, Cadvia Autos Inc.This allowed Titan Autos to use its technological competencies along with Cadvia Autos's marketing capabilities to capture a larger market share than what the two entities individually held.What does this scenario best illustrate?

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Backward integration

Forward integration

Horizontal integration

Vertical integration

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Question 9

Multiple Choice

Which of the following scenarios best illustrates horizontal integration?

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Regal Autos Inc. enters into a licensing contract with a distributor in a new international market.

Regal Autos Inc. acquires a component parts manufacturer who previously supplied to Regal Autos' competitor.

Regal Autos Inc. sets up its own distribution channel and retail stores.

Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.

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Question 10

Multiple Choice

How does horizontal integration within an industry affect the surviving firms?

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By increasing the threat the surviving firms will face from new entrants

By strengthening the rivalry among existing firms

By requiring the surviving firms to shift their focus from non-price to price competition

By strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers

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Question 11

Multiple Choice

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

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The industry structure becomes less consolidated.

There is a reduction of excess capacity in the market.

The industry structure becomes potentially less profitable.

There is an increase in rivalry among existing firms.

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Question 12

Multiple Choice

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

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By facilitating excess capacity in the industry

By preventing mergers from taking place

By lowering competitive intensity in the industry overall

By increasing the threat of entry in the industry

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Question 13

Multiple Choice

It is necessary for government authorities such as the Federal Trade Commission (FTC)and/or the European Commission to approve any large horizontal integration activity because:

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the horizontal integration activity changes the industry structure from oligopolistic to monopolistically competitive.

the surviving firms will need to be protected against the increasing bargaining power of the suppliers.

the horizontal integration activity has the potential to reduce competitive intensity in an industry.

the surviving firms will need protection against the relaxed entry barriers.

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Question 14

Multiple Choice

PureSource Pharma Inc.recently acquired BioChem Pharmaceuticals Inc.It now sells its own products along with the products originally sold by BioChem Pharmaceuticals.As a result, PureSource Pharma's sales force will also be marketing the acquired company's products.How will this horizontal integration most likely affect PureSource Pharma?

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PureSource Pharma will lower its costs through economies of scale.

PureSource Pharma will diminish its economic value creation.

PureSource Pharma will increase its cost of distribution.

PureSource Pharma will reduce the size of its sales force.

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Question 15

Multiple Choice

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

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It increases competitive intensity within an industry.

It increases the potential for legal repercussions.

It increases the costs associated with increasing value.

It increases the threat of new entrants in an industry.

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Question 16

Multiple Choice

How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010?

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Its main strategic focus is now on the domestic market.

It opens a market for it that is growing slowly but has high profit margins.

It has access to convenience stores and a new distribution channel.

It automatically gains monopoly in the chocolate-manufacturing industry.

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Question 17

Multiple Choice

The Hershey Company, the largest U.S.chocolate manufacturer, decided to enter the Chinese market in 2013 because:

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the U.S. population was growing slowly and becoming more health conscious.

its strategic position in the U.S. market was well protected through high entry barriers.

this would help the company gain access to large cocoa plantations in China.

Hershey's main strategic focus was on product and market diversification and not on the domestic market.

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Question 18

Multiple Choice

Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures.It did this in order to:

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imitate the actions of its competitors like Apple and Facebook.

solve its principal-agent problems.

fill gaps in its competency lineup.

expand through unrelated diversification.

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Question 19

Multiple Choice

Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion in 2012?

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The desire to gain a new capability

The need to enter a new geographical market

The need to reduce its level of horizontal integration

The desire to pursue an unrelated diversification strategy

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Question 20

Multiple Choice

The main reason behind Google's decision to acquire the Israeli startup company Waze for $1 billion was to:

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preempt its competitors from buying Waze.

share its capabilities with Waze.

support startup companies with venture capital.

gain access to technology that is alien to it.

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