Test Bank Answers Ch.9 Corp Strategy, Mergers, Alliances

Student name:__________

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.
1. ______

true
false

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-01 Apply the Build-Borrow-Buy framework to guide corporate strategy.
Topic : The Advantages and Disadvantages of a Global Strategy
Source : Chapter 09 Test Bank > TF Qu. 01 When deciding whether to build, borrow, or b...

In recent years strategic alliances have grown significantly due in part to the speed of technological change and innovation.
1. ______

true
false

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Corporate Strategy
Source : Chapter 09 Test Bank > TF Qu. 02 In recent years strategic alliances have grown...

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.
1. ______

true
false

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : The Advantages and Disadvantages of a Global Strategy
Source : Chapter 09 Test Bank > TF Qu. 03 A company that wants to enter a new geograph...

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.
1. ______

true
false

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > TF Qu. 04 Organizations seeking strategic alliances of...

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.
1. ______

true
false

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-04 Describe the three phases of alliance management and explain how an allian
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > TF Qu. 05 Managers who are eager to forge business all...

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

true
false

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-05 Differentiate between mergers and acquisitions, and explain why firms use
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > TF Qu. 06 Although Disney acquired Pixar through a hos...

If two large movie theater chains decide to merge, the result is likely a vertical integration that creates a more favorable industry structure by decreasing competition.
1. ______

true
false

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > TF Qu. 07 If two large movie theater chains decide to ...

Victoria’s Jewelry Inc. is considering a takeover of its competitor, Ace Diamond LLC. In general, Victoria’s should go ahead with the acquisition as long as Ace Diamond is more valuable as a continued standalone company than it would be inside Victoria’s.
1. ______

true
false

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > TF Qu. 08 Victoria’s Jewelry Inc. is considering...

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

true
false

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-07 Explain why firms engage in acquisitions.
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > TF Qu. 09 In general, it is short-sighted to acquire c...

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.
1. ______

true
false

Firms tend to share only explicit knowledge in a non-equity alliance.
1. ______

true
false

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Issues Affecting Strategic Alliances
Source : Chapter 09 Test Bank > TF Qu. 11 Firms tend to share only explicit knowledge ...

Horizontal integration through M&A can help firms strengthen their competitive position by increasing the differentiation of their product and service offerings.
1. ______

true
false

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > TF Qu. 12 Horizontal integration through M&A can h...

NoRu Inc. is a publicly traded firm that does not wish to be acquired by FRESHPoP Corporation, a much larger publicly traded firm, who is planning an acquisition of NoRu Inc. This is an example of a
1. ______

hostile takeover.

friendly takeover.

joint venture.

strategic alliance.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-05 Differentiate between mergers and acquisitions, and explain why firms use
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 13 NoRu Inc. is a publicly traded firm that doe...

Which of the following is one of the benefits of horizontal integration?
1. ______

gain of a cheaper supplier

increase in competitive intensity

lower costs

decreased differentiation

Which term describes the process of merging with a competitor at the same stage of industry value chain?
1. ______

hostile takeover

merger

acquisition

horizontal integration

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 15 Which term describes the process of...

Tom is the CEO of Endless Possibilities Inc. and proudly boasts his firm’s slogan, We Guarantee Success! However, Tom’s constituents presented him with data on their latest project that suggests they should not move forward. Tom, undeterred with this data, decides that he will still accept the project because he believes that he can’t lose. This is a classic example of
1. ______

CEO dedication.

managerial hubris.

strategic intent.

cost benefit analysis.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 09-08 Evaluate whether mergers and acquisitions lead to competitive advantage.
Topic : How Managers Execute Strategy Successfully
Source : Chapter 09 Test Bank > MC Qu. 16 Tom is the CEO of Endless Possibilities Inc....

Mars Tennis Equipment, Inc. wishes to pursue international markets such as Spain and France. In order to do this, it may wish to consider a possible
1. ______

government partnership that may lead to lobbying.

joint venture with another firm already established in those markets.

hostile takeover with a firm operating in the United States.

marketing strategy that strengthens the international value chain.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > MC Qu. 17 Mars Tennis Equipment, Inc. wishes...

Grace wants to form a voluntary arrangement with another firm in order to gain more flexibility in her supply chain, complement to a few of her support activities via her value chain, and strengthen her firm’s overall competitive position. Grace is looking for a simple and common type of strategic alliance such as
1. ______

a non-equity alliance.

an equity alliance.

a joint venture.

a merger.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > MC Qu. 18 Grace wants to form a voluntary arrangement ...

Luca is the proud owner of American BBQ Eateries LLC. It currently operates in the southeast and has recently entered into a non-equity alliance with Big Bills BBQ Grills Inc., with a promise of sharing codified information via a licensing agreement. Which of the following best represents this level of sharing knowledge?
1. ______

core competency knowledge

strategic alliance knowledge

tacit knowledge

explicit knowledge

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > MC Qu. 19 Luca is the proud owner of American BBQ...

Which of the following statements about equity alliances is true?
1. ______

Equity alliances allow for the sharing of tacit knowledge.

Equity alliances are based on contractual agreements.

Equity alliances are more common than non-equity alliances.

Equity alliances allow for the sharing of explicit knowledge.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > MC Qu. 20 Which of the following statements about...

Laia is the creator and owner of 60MinuteWorkout.com but wants a physical presence to record workout videos and hold regular classes. To accomplish this, Laia formed a joint venture with a local real estate developer who has significant influence in the commercial property sector. This venture will require exchanging more than just codified information; as such, Laia should expect to share
1. ______

her knowledge of weight-loss techniques.

her email list of prospective customers.

both tacit and explicit knowledge.

only explicit knowledge.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > MC Qu. 21 Laia is the creator and owner of 60Minute...

________, which captures the cultural fit between different firms, is one key element needed when selecting an alliance partner.
1. ______

Partner compatibility

Partner commitment

Joint ventures

Partner competency

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-04 Describe the three phases of alliance management and explain how an allian
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > MC Qu. 22 ________, which captures the cultural ...

Several notable firms, including Eli Lilly, HP, Procter & Gamble, and IBM, each wish to become the alliance “partner of choice” for small technology ventures, colleges, and inventors. They each know that________ is a necessary and critical element for an alliance to be a success.
1. ______

sharing explicit knowledge

building interorganizational trust

a hostile takeover

partner implementation

Lupita is the CEO of JustFixIt Inc., a firm that merges technology with commercial hardware. She has been struggling with the decision to allocate her resources for the development of a new system or go to the market and search for an already established system. The board of directors for JustFixIt Inc. suggested that the firm enter a contractual agreement with a partner. This scenario best illustrates the concept of
1. ______

buy-sell-or-trade framework.

the Build-Borrow-Buy framework.

the horizontal and vertical integration frameworks.

the strategic alliance framework.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-01 Apply the Build-Borrow-Buy framework to guide corporate strategy.
Topic : Build-Borrow-or-Buy Framework
Source : Chapter 09 Test Bank > MC Qu. 24 Lupita is the CEO of JustFixIt Inc., a...

Which of the following is the best way for firms to assess whether their internal resources are superior to those of competitors in the targeted area?
1. ______

Firms can apply the VRIO framework.

Firms can implement various financial metrics, such as NPV and IRR.

Firms can employ an external analysis tool such as PESTEL or Porter’s Five Forces.

Firms can use an international framework to determine global relevancy.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 09-01 Apply the Build-Borrow-Buy framework to guide corporate strategy.
Topic : VRIO Framework
Source : Chapter 09 Test Bank > MC Qu. 25 Which of the following is the best way for...

Daniela wishes to strengthen her firm’s marketing department by partnering with a large marketing firm that can complement her existing value chain. However, she fears potential legal repercussions, including potential lawsuits filed by U.S. federal agencies such as the Federal Trade Commission. Which of the following strategic options should Daniela pursue?
1. ______

Daniela should implement green field operations with the marketing firm to strengthen her international reach.

Daniela should consider forming a strategic alliance with the marketing firm.

Daniela should move forward with a hostile takeover of the marketing firm.

Daniela should purchase the marketing firm outright via an acquisition.

Geovax Inc., a biotechnology company, was established to develop an effective vaccine against a deadly virus. As such, a large investment firm formed an equity alliance with Geovax that resulted in a significant financial investment that followed a string of smaller investments so long as Geovax continued to make headway toward its vaccine. This “wait and see approach” can best be described as
1. ______

a strategic bet.

a real-options perspective.

a quick way to generate revenues.

horizontal integration.

None of Your Beeswax dominates the beeswax candle market and wants to expand into beeswax lip balm. How can the firm’s strategic leaders determine whether the company should develop a lip balm division internally, ally with a lip balm manufacturer, or acquire a lip balm manufacturer?
1. ______

To protect themselves, the strategic leaders should choose the option that leads to the largest company with the most managerial positions.

The strategic leaders need to determine whether the skills needed to create candles and lip balm are similar and whether None of Your Beeswax creates better beeswax products than its competitors do.

The strategic leaders must determine whether candle making and lip balm making require substantially different skills. If so, the company should pursue internal development.

Unless the market for lip balm is booming, None of Your Beeswax should stick to what it knows and focus on creating the best beeswax candles in the industry.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 09-01 Apply the Build-Borrow-Buy framework to guide corporate strategy.
Topic : Corporate Strategy
Source : Chapter 09 Test Bank > MC Qu. 28 None of Your Beeswax dominates the....

The acquisition by Disney of such firms as Marvel, Pixar, and Lucasfilm strengthened its competitive position by
1. ______

increasing the differentiation of its product and service offerings.

sharing only tacit knowledge about its existing products.

developing a nonbinding contract.

immediately selling its recent acquisitions to more suitable firms.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 09-01 Apply the Build-Borrow-Buy framework to guide corporate strategy.
Topic : Corporate Strategy
Source : Chapter 09 Test Bank > MC Qu. 29 The acquisition by Disney of such firms...

Dev is a strategist for the firm Stark Industries, which produces high-quality HD movie cameras. His company needs a specific material for a new camera it is developing, which is manufactured in large quantities by a competitor called LENS Inc. However, the material is difficult to trade. Because of this, which of the following is most likely the best strategy for Dev to suggest?
1. ______

Stark Industries should acquire LENS.

Stark Industries should form a short-term agreement with LENS.

Stark Industries should form a long-term agreement with LENS.

Stark Industries should enter into co-opetition with LENS.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 3 Hard
Learning Objective : 09-01 Apply the Build-Borrow-Buy framework to guide corporate strategy.
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 30 Dev is a strategist for the firm Stark...

In terms of the Build-Borrow-Buy framework, a firm’s internal resources are considered to be relevant when they are
1. ______

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.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-01 Apply the Build-Borrow-Buy framework to guide corporate strategy.
Topic : Corporate Strategy
Source : Chapter 09 Test Bank > MC Qu. 31 In terms of the Build-Borrow-Buy framework...

Which of the following best describes a strategic alliance?
1. ______

a conceptual model that aids strategic leaders in deciding whether to pursue internal development, enter a contractual arrangement or strategic alliance, or acquire new resources, capabilities, and competencies

an approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time

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

cooperation by competitors to achieve a strategic objective

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-01 Apply the Build-Borrow-Buy framework to guide corporate strategy.
Topic : Corporate Strategy
Source : Chapter 09 Test Bank > MC Qu. 32 Which of the following best describes a...

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. Which approach could these companies take so that both can serve stockholders well?
1. ______

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.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 33 A microchip company wants a computer company...

Tyrell Corporation, 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 companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Tyrell Corporation and the software company best referred to as in this scenario?
1. ______

an acquisition

a strategic alliance

a leveraged buyout

a proprietorship

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 3 Hard
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 34 Tyrell Corporation, a manufacturer of smartp...

Better Pill LLC is a small, new pharmaceutical company that is developing a valuable new drug. Which of these strategies would it be wise for Better Pill’s owners or managers to take?
1. ______

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.

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

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.

A drawback of using cross-border strategic alliances to enter new foreign markets is that
1. ______

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.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 37 A drawback of using cross-border st...

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

HP and DreamWorks each strengthened their separate markets without impinging on each other’s markets.

Both HP and DreamWorks were able to enter a new market that they would not have been able to pursue alone.

HP was able to enter a new market, and DreamWorks was able to strengthen its old market.

DreamWorks was able to enter a new market, and HP was able to strengthen its old market.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 38 Which of the following summarizes the benefi...

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

to pursue an unrelated-options perspective without disrupting existing market economics

to make small-scale investments in ventures poised to disrupt existing market economics

to invest their excess cash flow in the superior technology of the biotech start-ups

to share their continuously updated research technology with the biotech start-ups

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 39 Why did incumbent pharmaceutical firms enter...

Deluxe Yachts Inc., a large luxury yacht manufacturer, made an initial small investment in a startup company that was developing an ecologically friendly waste-water recycling system. This gave Deluxe Yachts controlling interests in the startup company. However, Deluxe Yachts had no obligations to make continued investments in the experiments of the startup 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, Deluxe Yachts would have the right to buy out the startup company. This approach to strategic alliance is referred to as
1. ______

a break-even analysis.

a real-options perspective.

credible commitment.

transaction cost economics.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 40 Deluxe Yachts Inc., a large luxury yacht...

In 1990, Roche, a Swiss pharmaceutical company, initially invested $2.1 billion to purchase a controlling interest in the biotech startup Genentech. In 2009, after witnessing the success of Genentech’s drug discovery and development projects, Roche spent $47 billion to purchase the remaining minority interest in Genentech, making it a wholly owned subsidiary. In terms of strategic alliances, this scenario best indicates
1. ______

the real-options perspective.

co-opetition.

explicit knowledge.

the stakeholder strategy.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 41 In 1990, Roche, a Swiss pharmaceutical compa...

When Aviato Inc. wanted to sell its cars in the country of Serbia, it lacked access to distribution channels and marketing expertise in the country. Thus, Aviato Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner’s well-established distribution channels. Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario?
1. ______

increasing competitive intensity

accessing critical complementary assets

procuring additional capital investments

reducing differentiation of product and service offerings

When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because
1. ______

the local partner can better protect its proprietary know-how.

building downstream complementary assets can be expensive and time-consuming.

the strategic alliance will reduce the differentiation of its product and service offerings.

the value gap created by the firm can be easily lowered in an alliance.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 43 When entering a foreign market, it is advisa...

Solaramus Inc., Sun Energy Inc., and SkyHigh Solar Inc. are three rival firms who have set up an alliance to conduct research and find a way to run vehicles with solar power. They have made almost equal contributions to the research, and they also share their expertise with one another. However, the three firms will continue to behave as competitors in markets for other solar products. What is this arrangement best referred to as?
1. ______

takeover

buyout

co-opetition

acquisition

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

network effects

economies of scope

learning races

time compression diseconomies

Lana Dubois Inc. is a large skincare company that made an initial small investment in a startup company, Greener Tan, which was developing an organic sunscreen. This gave Lana Dubois controlling interests in the startup company. However, Greener Tan soon began to have financial difficulties because of principal-agent problems. As a result, Lana Dubois did not invest in the next stage of development and pulled out of the company. This approach to strategic alliance is referred to as a
1. ______

break-even analysis.

partial joint venture.

credible commitment.

real-options perspective.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Corporate Strategy
Source : Chapter 09 Test Bank > MC Qu. 46 Lana Dubois Inc. is a large skincare company...

In a non-equity alliance, which of the following types of information would firms most likely share?
1. ______

a manager’s knowledge related to solving nonroutine problems

a top-level manager’s experience related to making strategic decisions

the documented information about the material composition of a product

the employees’ entrepreneurial skills

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 47 In a non-equity alliance, which of the follow...

Which of the following statements is true of explicit knowledge?
1. ______

Explicit knowledge is about knowing how to do a certain task.

Explicit knowledge is knowledge that cannot be codified.

Explicit knowledge is shared in non-equity alliance firms.

Equity knowledge is acquired only through actively participating in a process.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 48 Which of the following statements is true of...

Which of the following statements is true of an equity alliance?
1. ______

An equity alliance is based on contractual agreements rather than partial ownership.

In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible.

In an equity alliance, a standalone organization is created that is jointly owned by two or more parent companies.

An equity alliance creates weaker ties between the alliance partners when compared to a non-equity alliance.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > MC Qu. 49 Which of the following statements is true of...

________ tend to produce stronger ties between partners.
1. ______

Non-equity alliances

Joint ventures

Equity alliances

Manufacturing alliances

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 50 ________ tend to produce stronger ties...

The downside of equity alliances is
1. ______

the weaker ties and reduced trust between partners.

the amount of investment that can be involved.

that the alliances cannot be abandoned if not promising.

that they are not useful stepping stones toward full integration of the partner firms.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > MC Qu. 51 The downside of equity alliances is

Rosa is a senior manager at Veridian Dynamics, a motorcycle manufacturer. Veridian Dynamics has entered an equity alliance with Parker Industries, a moped manufacturer. “Don’t worry, Rosa,” her counterpart at Parker Industries 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 Rosa request from Parker Industries?
1. ______

personnel exchanges to share tacit knowledge

a gradual change from an equity alliance to a non-equity alliance to show greater commitment

nothing, because the information transfer described is complete and appropriate

a licensing agreement so that Veridian Dynamics can exchange codified knowledge with Supremo

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 52 Rosa is a senior manager at Veridian Dynamic...

Because strategic alliances rarely work as well as managers expect they will, why do companies continue to go through with them?
1. ______

Recent advances in management science have greatly improved the success rate of strategic alliances.

Many owners, managers, and business analysts believe they are essential to survive in an industry.

Government entities such as the Federal Trade Commission or the European Union sometimes force companies into strategic alliances.

These alliances have an excellent record of success if managers have enough confidence in the outcome.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 09-04 Describe the three phases of alliance management and explain how an allian
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > MC Qu. 53 Because strategic alliances rarely work as w...

Which type of strategic alliance enables the exchange of both tacit and explicit knowledge?
1. ______

joint ventures

equity alliances

nonbinding contracts

non-equity alliances

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 54 Which type of strategic alliance enables...

Which of the following is a common drawback of a non-equity alliance?
1. ______

lack of trust between partners

difficulty initiating the contract

difficulty terminating the contract

lack of flexibility for the partners

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > MC Qu. 55 Which of the following is a common drawback ...

Which of the following is an example of explicit knowledge?
1. ______

knowing how to create surveys

a research skill

knowing how to assemble semiconductors

a research summary

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 56 Which of the following is an example of expl...

Which of the following corresponds to the use of tacit knowledge?
1. ______

Ema studies a fact sheet about the Amazon rainforest.

Ahmed reads a demographic report about religions in Canada.

Leyla reassembles a small engine from memory.

Antonio uses a book review to defend his thesis about female writers in eighteenth-century England.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 57 Which of the following corresponds to the us...

A video game company called Stratego Inc. forms an agreement with another video game company called Affronted Inc. Through this agreement, Stratego owns 25 percent of Affronted. However, Affronted does not own any part of Stratego. This type of agreement is called a(n)
1. ______

non-equity alliance.

equity alliance.

joint venture.

capital venture.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 58 A video game company called Stratego...

The process of alliance management begins with
1. ______

selecting the best possible partner.

choosing an appropriate governance mechanism.

designing the alliance.

creating resource combinations that obey the VRIO criteria.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 09-04 Describe the three phases of alliance management and explain how an allian
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 59 The process of alliance management begins wi...

Which of the following statements about managing alliance-related tasks is true?
1. ______

Forming an alliance with another firm prohibits that firm from forming other alliances.

Alliance management capability is based on three alliance-related tasks.

A merger is one of the three options for alliance design and governance.

In post-formation alliance management, none of the firms in an alliance is permitted to gain a competitive advantage.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 09-04 Describe the three phases of alliance management and explain how an allian
Topic : Analyzing Industry Competition
Source : Chapter 09 Test Bank > MC Qu. 60 Which of the following statements about mana...

American Snacks Inc., a conglomerate, has a strategic alliance with Très Bien Limité, a French snack-maker. However, Très Bien managers are concerned that the different business units of American Snacks will set up partnerships with direct competitors of Très Bien in France. What can owners and managers at American Snacks do to respond to Très Bien’s concern?
1. ______

Require business units at American Snacks and Très Bien to sign loyalty pledges.

Encourage business units at American Snacks to act independently.

Arrange for the alliance to be managed at the corporate level.

Sever the relationship with Très Bien and find a more trusting corporate partner.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 09-04 Describe the three phases of alliance management and explain how an allian
Topic : Strategies for Global Competition
Source : Chapter 09 Test Bank > MC Qu. 61 American Snacks Inc., a conglomerate, has a ...

Which of the following examples describes the task of an alliance manager?
1. ______

Reem oversaw the agreement between her company and a potential alliance partner and offered support when needed.

Harry used his knowledge of drone technology to help him manage the day-to-day operations of his firm’s alliance.

Nargis reviewed the alliance portfolio to make sure it fit with the corporate strategy of her firm.

Omar trained the employees of his alliance partner in the skills needed to create a display for a wide-screen television.

The alliance________ is responsible for making sure that an alliance fits within the firm’s existing alliance portfolio and corporate-level strategy.
1. ______

champion

leader

liaison

manager

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

coordinating a firm’s portfolio of alliances

establishing knowledge-sharing routines between alliance partners

developing relational capabilities to manage mergers and acquisitions

focusing on developing an alliance management capability in isolation

Which of the following statements is true about managing alliance-related tasks?
1. ______

Forming an alliance with another firm prohibits that firm from forming other alliances.

Alliance management capability is based on three alliance-related tasks.

A merger is one of the three options for alliance design and governance.

In post-formation alliance management, none of the firms in an alliance is permitted to gain a competitive advantage.

Which of the following best illustrates a hostile takeover between the two companies Windfield Inc. and Zyco Inc.?
1. ______

Windfield Inc. purchases Zyco Inc. for $95 billion despite Zyco Inc. being against the purchase.

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

Windfield Inc. outsources a few of its business activities to Zyco Inc. for competitive advantage.

Windfield Inc. and Zyco Inc. join together to form a single new company called WindfieldZyco Inc.

When does a merger between companies typically occur?
1. ______

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

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 09-05 Differentiate between mergers and acquisitions, and explain why firms use
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 67 When does a merger between companies typical...

Johnson is an executive vice president at Conecom Hardware. He researches a proposal by a larger company, Openlane Hardware, to combine the two companies. By analyzing past performance, conducting focus groups, and interviewing Openlane employees, Johnson concludes that Openlane has poor profit margins, sells shoddy merchandise, and treats customers poorly. What actions should Johnson and Conecom Hardware take?
1. ______

Turn down the acquisition offer, and prepare to resist a hostile takeover.

Attempt a friendly merger, and use managerial hubris to improve results at Openlane.

Welcome the acquisition, and use knowledge transfer to impart Conecom Hardware’s management practices.

Do nothing; the two companies cannot combine without Conecom Hardware’s explicit consent.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 3 Hard
Learning Objective : 09-05 Differentiate between mergers and acquisitions, and explain why firms use
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 68 Johnson is an executive vice president at Co...

The Konex Hotel Group purchased Green-Plus Hotels for an estimated value of $120 billion. All the hotels previously owned by Green-Plus Hotels are now managed by the Konex Hotel Group and are known as Konex hotels. What does this scenario best illustrate?
1. ______

a merger

a joint venture

an acquisition

an equity alliance

Which of the following is true of acquisitions?
1. ______

They can be friendly or hostile.

They occur only when the involved entities are of comparable size.

An acquisition occurs when two independent companies join to form a separate third entity.

Acquisitions increase the competitive intensity in an industry.

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

joint venture.

partnership.

acquisition.

alliance.

Which of the following accurately describes a common difference between a merger and an acquisition?
1. ______

A merger tends to include mostly small firms; an acquisition can often involve large firms.

A merger involves the combination of three or more firms; an acquisition involved the combination of two firms.

A merger involves firms of different size; an acquisition involved firms of the same size.

A merger tends to be friendly; an acquisition can be friendly or hostile.

DalTech Inc., a publicly traded company, designs and manufactures wearable technology. What approach should DalTech take after a long period of horizontal integration in its industry? Assume that the industry is now stable and competitors have not made any major changes in price or marketing recently.
1. ______

Compete based on price in order to drive out remaining competitors and create a monopoly.

Focus on research and development as a form of non-price competition.

Encourage new competitors to enter the market to improve competition.

Prepare to resist a hostile takeover by buying back as much stock as possible.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > MC Qu. 73 DalTech Inc., a publicly traded company, des...

What is the term for the process of merging with a competitor at the same stage of the industry value chain?
1. ______

hierarchical integration

horizontal integration

cross integration

vertical integration

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > MC Qu. 74 What is the term for the process of merging...

Condax Autos Inc. merged with its competitor NOW Autos Inc. This allowed Condax Autos to use its technological competencies along with NOW Autos’ marketing capabilities to capture a larger market share than what the two entities individually held. What type of integration does this scenario best illustrate?
1. ______

supply chain

technological

horizontal

perfect

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > MC Qu. 75 Condax Autos Inc. merged with its competitor...

Which of the following scenarios best illustrates horizontal integration?
1. ______

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

Silis Inc. acquires a component parts manufacturer that previously supplied to Silis’ competitor.

Silis Inc. sets up its own distribution channel and retail stores.

Silis Inc. joins with Cancity Inc., one of its direct competitors.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > MC Qu. 76 Which of the following scenarios best illust...

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

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

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > MC Qu. 77 How does horizontal integration within an in...

Which of the following is a result of horizontal integration in terms of Porter’s five forces model?
1. ______

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.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > MC Qu. 78 Which of the following is a result of horizo...

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

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

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > MC Qu. 79 How did the recent horizontal integration in...

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
1. ______

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.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > MC Qu. 80 It is necessary for government authorities s...

Northeast Insurance Group is one of the largest property and casualty insurance firms in the United States. It wants to acquire Sylvestri Mutual, a smaller rival. After the merger, Northeast Insurance Group will be one of the two largest property and casualty insurance firms in the U.S. market. What should Northeast Insurance Group include in its acquisition plans?
1. ______

Northeast Insurance Group should refocus its attention from the national to the international market.

In addition to acquiring Sylvestri Mutual, Northeast Insurance Group should determine the best way to drive independent “mom and pop” tax preparers out of business.

Northeast Insurance Group will need to explain to the Federal Trade Commission (FTC) how the acquisition will not result in an increase in prices for consumers.

Northeast Insurance Group should enter a price-based competition with its other major competitor to force it out of business and become a monopoly.

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

It will lower its costs through economies of scale.

It will diminish its economic value creation.

Konmatfix will increase its cost of distribution.

Konmatfix will reduce the size of its product line.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 3 Hard
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Economies and Diseconomies of Scale
Source : Chapter 09 Test Bank > MC Qu. 82 Konmatfix Inc. recently acquired Finhigh Pha...

Horizontal integration through mergers and acquisitions can help firms strengthen their competitive positions by increasing
1. ______

perfect competition.

differentiation.

oligarchy.

natural monopoly.

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

It increases competitive intensity within an industry.

It increases the potential for integration failure.

It increases the potential for flexibility.

It increases the threat of new entrants in an industry.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > MC Qu. 84 Which of the following is a disadvantage of ...

Codehow Inc. is a large firm involved in the highly competitive market of high-tech medical equipment. In this market, promising startups that focus on research are constantly entering the market with new technological developments. Which of the following approaches would best serve the needs of Codehow?
1. ______

mergers

serial mergers

acquisitions

strategic preemption

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 2 Medium
Learning Objective : 09-07 Explain why firms engage in acquisitions.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 85 Codehow Inc. is a large firm involved in the...

How has Kraft Foods benefited from its hostile takeover of Cadbury PLC?
1. ______

Its main strategic focus is now on the domestic market.

It has opened a market that is growing slowly but has high profit margins.

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

It gained a monopoly in the chocolate-manufacturing industry.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-07 Explain why firms engage in acquisitions.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 86 How has Kraft Foods benefited from its hosti...

The Hershey Company, the largest U.S. chocolate manufacturer, decided to enter the Chinese market because
1. ______

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.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-07 Explain why firms engage in acquisitions.
Topic : The Advantages and Disadvantages of a Global Strategy
Source : Chapter 09 Test Bank > MC Qu. 87 The Hershey Company, the largest U.S. chocol...

Alphabet’s Google made a string of acquisitions of new ventures, such as DeepMind, in order to
1. ______

imitate the actions of its competitors such as Apple and Facebook.

solve its principal-agent problems.

preempt rivals.

expand through unrelated diversification.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 09-07 Explain why firms engage in acquisitions.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 88 Alphabet’s Google made a string of acquisitions...

Iselectrics, 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 Iselectrics’s European sales?
1. ______

Alert the European Union that conditions in the European medical technology market are approaching oligopoly.

Initiate a hostile takeover of a European rival.

Acquire a company that has a successful medical technology sales force in Europe so that Iselectrics can gain access to new distribution channels.

Contact its congressional representative to request higher tariffs on European technology products.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 09-07 Explain why firms engage in acquisitions.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 89 Iselectrics, a medium-sized medical technolo...

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

the desire to preempt rivals

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

The main reason behind Google’s decision to acquire the Israeli start-up company Waze for $1 billion was probably to
1. ______

gain access to a new capability.

share its capabilities with Waze.

close down a major rival.

acquire it to immediately sell it to a competitor.

The managers at Statholdings Mobile Inc. want to diversify the business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Statholdings Mobile Inc. is most likely a result of
1. ______

time compression diseconomies.

experience-curve effects.

principal-agent problems.

resource ambiguity.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 3 Hard
Learning Objective : 09-08 Evaluate whether mergers and acquisitions lead to competitive advantage.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 92 The managers at Statholdings Mobile Inc. wan...

Warephase Airway’s decision to acquire Konex Fuels Inc. proved to be ill-fated because the Warephase managers overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers’ capabilities were restricted to the airline industry. What does this scenario best illustrate?
1. ______

knowledge race

competitive feasibility

managerial hubris

unfettered free market

Overall, was the Adidas acquisition of Reebok for $3.8 billion in 2006 a success?
1. ______

No. Adidas sold Reebok to a private equity firm for a mere $100 million in 2017.

Yes. By acquiring Reebok, Adidas improved its market share and made sure that Nike could not acquire it.

The acquisition was a success for Reebok but not for Adidas.

The acquisition was a success for Adidas but not for Reebok.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-08 Evaluate whether mergers and acquisitions lead to competitive advantage.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 94 Overall, was the Adidas acquisition of...

Adidas acquired Reebok primarily to
1. ______

overcome its competitive disadvantage against Nike.

get access to the superior technology of Reebok.

overcome its principal-agent problems.

pursue an unrelated diversification strategy.

What causes the winner’s curse?
1. ______

buying a firm with principal-agent problems

overpaying for an acquisition

buying a firm with a competitive disadvantage

underpaying for an acquisition

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 09-08 Evaluate whether mergers and acquisitions lead to competitive advantage.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 96 What causes the winner’s curse?

A software firm is interested in acquiring an app development company that is small but highly profitable. The app developer also has a widely admired management structure and much lower attrition rates than are common in the industry. Which of these problems should the software firm anticipate?
1. ______

A rival software firm may imitate this approach by acquiring a similar app developer.

The software firm may overpay for the app developer, poorly serving the software firm’s shareholders.

Because most acquisitions are profitable, there is little to worry about in this scenario.

The software firm may underpay for the app developer, cheating the app developer’s shareholders of profit.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 09-08 Evaluate whether mergers and acquisitions lead to competitive advantage.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > MC Qu. 97 A software firm is interested in acquiring a...

Donware Inc. is a leader in producing winter sports equipment, including skis and skates. Recently, the firm decided to expand into the bobsled market and acquired Sleds by Gogozoom LLC This company produced bobsleds, but its sales had slowed. The managers of Donware convinced themselves that they were able to manage the business of Sleds by Gogozoom LLC more effectively even though they had no experience in the bobsled market. However, this move backfired, and the sale of Sleds by Gogozoom LLC’s bobsleds plummeted. Which of the following terms is often used to describe this scenario?
1. ______

winner’s curse

managerial hubris

winner’s disadvantage

interdepartmental apathy

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-08 Evaluate whether mergers and acquisitions lead to competitive advantage.
Topic : How Managers Execute Strategy Successfully
Source : Chapter 09 Test Bank > MC Qu. 98 Donware Inc. is a leader in producing winter...

Judging from the Disney-Pixar merger, which of these is an effective way to create shareholder value from a merger?
1. ______

Integrate the acquired company as fully as possible, merging staffs and locations, so that all employees have as similar an on-the-job experience as possible.

If the acquired company creates high-quality products or services, don’t force it to mirror the management style of the acquiring company.

Cut prices at the acquired company but not the acquiring company so that the acquisition covers all consumer price points.

Raise consumer prices at the acquiring company and the acquired company to reflect the fact that the market is now less competitive.

Which of the following best explains why Disney showed superior post-merger integration capabilities?
1. ______

Disney pursued a combination of horizontal and vertical integration through its acquisitions.

Disney did a thorough job in eliminating principal-agent problems in the firms it acquired.

Disney managed its new subsidiaries more like alliances than attempting full integration.

Disney used a corporate strategy based on a Build-Borrow-Buy framework for its acquisitions.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-08 Evaluate whether mergers and acquisitions lead to competitive advantage.
Topic : Challenges of Post-Merger Integration
Source : Chapter 09 Test Bank > MC Qu. 100 Which of the following best explains why Dis...

Why did Quaker Oats Company’s acquisition of Snapple fail?
1. ______

intercompany competitiveness

managerial hubris

stockholder revolt

unstable market conditions

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 09-08 Evaluate whether mergers and acquisitions lead to competitive advantage.
Topic : How Managers Execute Strategy Successfully
Source : Chapter 09 Test Bank > MC Qu. 101 Why did Quaker Oats Company’s acquisit...

What is the main reason that most mergers and acquisitions negatively affect shareholder value?
1. ______

The entire market becomes an oligopoly or a monopoly.

Promised synergies never take place.

Market conditions change too quickly.

Companies that resist acquisitions are subject to the “winner’s curse.”

How can strategists decide between borrowing and buying the resource in question?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-01 Apply the Build-Borrow-Buy framework to guide corporate strategy.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > SA Qu. 103 How can strategists decide between borrowing...

What does the relational view of competitive advantage propose?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > SA Qu. 104 What does the relational view of competitive...

How have strategic alliances helped big pharmaceutical firms hedge against uncertainty?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > SA Qu. 105 How have strategic alliances helped big phar...

Explain how firms use strategic alliances to change the industry structure in their favor.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > SA Qu. 106 Explain how firms use strategic alliances to...

Elaborate on the real-options perspective.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Corporate Strategy
Source : Chapter 09 Test Bank > SA Qu. 107 Elaborate on the real-options perspective.

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

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > SA Qu. 108 How do strategic alliances help firms gain a...

Describe an equity alliance with the help of an example.

Question Details
AACSB : Knowledge Application
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 09-03 Describe three alliance governance mechanisms and evaluate their pros and
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > SA Qu. 109 Describe an equity alliance with the help of...

What are the necessary conditions for selecting a partner for successful alliance formation?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-04 Describe the three phases of alliance management and explain how an allian
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > SA Qu. 110 What are the necessary conditions for select...

Describe the two dimensions that help explain the distinction between mergers and acquisitions. Then give a real-life example of one merger and one acquisition.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 09-05 Differentiate between mergers and acquisitions, and explain why firms use
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > SA Qu. 111 Describe the two dimensions that help explai...

Define horizontal integration and provide a successful or unsuccessful example.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > SA Qu. 112 Define horizontal integration and provide a ...

Provide a real-world example of how recent horizontal integration has brought about reduction in competitive intensity.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Apply
Difficulty : 3 Hard
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > SA Qu. 113 Provide a real-world example of how recent h...

How does horizontal integration favorably affect several of Porter’s five forces for the surviving firms??

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-06 Define horizontal integration and evaluate the advantages and disadvantage
Topic : Horizontal Integration
Source : Chapter 09 Test Bank > SA Qu. 114 How does horizontal integration favorably...

What are the three main reasons firms make acquisitions? Provide an example of how a successful acquisition increased or protected shareholder value.

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 3 Hard
Learning Objective : 09-07 Explain why firms engage in acquisitions.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > SA Qu. 115 What are the three main reasons firms make...

Despite the fact that mergers and acquisitions, on average, destroy rather than create shareholder value, why do we see so many mergers?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 09-08 Evaluate whether mergers and acquisitions lead to competitive advantage.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > SA Qu. 116 Despite the fact that mergers and acquisitions...

What is meant by managerial hubris? In what forms does it appear?

Question Details
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-08 Evaluate whether mergers and acquisitions lead to competitive advantage.
Topic : Acquisitions and Mergers
Source : Chapter 09 Test Bank > SA Qu. 117 What is meant by managerial hubris? In what ...

Explain and describe the distinctions between a merger and an acquisition.

Question Details
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-05 Differentiate between mergers and acquisitions, and explain why firms use
Topic : Mergers and Acquisitions
Source : Chapter 09 Test Bank > SA Qu. 118 Explain and describe the distinctions betwee...

Define and describe what a strategic alliance is and provide two reasons why a firm would enter into one.

Question Details
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Define strategic alliances, explain why firms enter into them, and summari
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > SA Qu. 119 Define and describe what a strategic allianc...

What are the two necessary conditions for a successful alliance partner?

Question Details
Accessibility : Keyboard Navigation
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-04 Describe the three phases of alliance management and explain how an allian
Topic : Strategic Alliances
Source : Chapter 09 Test Bank > SA Qu. 120 What are the two necessary conditions...

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Aug 21, 2025

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Chapter 9 Corp Strategy, Mergers, Alliances

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Frank Rothaermel

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