Q&A Hero

Q: Discuss when strategic alliances may be costly to directly duplicate.

Q: (p. 263) Which of the following is NOT a strategic approach suggested by the industry attractiveness-business strength matrix? A. Outsource management B. Invest to grow C. Invest selectively and manage for earnings D. Harvest or divest for resources

Q: Identify the conditions under which a strategic alliance can be rare and discuss the role that complementary resources can play in the rarity of strategic alliances.

Q: (p. 262) In the industry attractiveness-business strength matrix, the position of a business is calculated by _______ its rating along the two dimensions of the matrix. A. Subjectively qualifying B. Objectively qualifying C. Subjectively quantifying D. Objectively quantifying

Q: Define the three fundamental forms of cheating in strategic alliances and discuss the short- and long-term implications of cheating in a strategic alliance.

Q: (p. 263) Which matrix makes fine distinctions among business portfolio positions with the inclusion of high/medium/low axes? A. Industry strength matrix B. Growth-share matrix C. Strategic environments matrix D. Industry attractiveness-business strength matrix

Q: (p. 263) How many cells are in the industry attractiveness-business strength matrix? A. 4 B. 9 C. 12 D. 16

Q: Discuss the concept of a learning race and identify three reasons why firms in an alliance may differ in the rate they learn from each other.

Q: (p. 263) Corporate strategists found the growth-share matrix's singular axes A. Limiting in their ability to reflect the complexity of a business's situation B. A good way to simplify the complexity of a business's situation C. A good reflection of the simplistic nature of most corporate-level decisions D. To difficult to manipulate

Q: Identify and discuss the three ways alliances can create economic value by helping firms improve the performance of their current operations.

Q: Define a strategic alliance and identify and differentiate between three broad categories of strategic alliances.

Q: (p. 263) How many strategic approaches are suggested by the Industry Attractiveness-Business Strength matrix? A. 2 B. 4 C. 3 D. 5

Q: Which of the following reasons helps explain why eBay may have preferred to enter into an alliance to enter the Korean online auction industry rather than going it alone? A) eBay's Korean partner possesses capabilities that are valuable and rare but not costly to imitate. B) The level of transaction-specific investments required to enter the Korean online auction industry is low. C) There is little uncertainty about the future of the Korean online auction industry. D) The level of transaction-specific investments required to enter the Korean online auction industry is moderate.

Q: (p. 262) The Industry Attractiveness-Business Strength matrix has ____ cells, while the BCG matrix has ___ cells. A. 6,4 B. 4,6 C. 9,4 D. 4,9

Q: eBay, the online auction company, has an impressive portfolio of cooperative agreements. This portfolio includes an agreement with the U.S. Postal Service to facilitate the shipping of goods purchased through eBay auctions, an agreement to allow MBNA to use eBay's name on a credit card, and an agreement in an online auction company in Korea that is supplemented with an investment by eBay in the Korean partner. In addition, at one time eBay had formed an independent firm, called eBay Australia and New Zealand, with an Australian company known as ecorp.eBay's agreement with ________ is the most likely to be susceptible to holdup.A) the Australian partnerB) the Korean partnerC) MBNAD) the U.S. Postal Service

Q: (p. 262) The _________ matrix was developed by McKinsey & Company at General Electric. A. Industry awareness B. Growth-share C. Industry attractiveness-business strength D. Strategic environments

Q: (p. 262) As per the BCG matrix, which of these should be selectively divested? A. Cash cows B. Stars C. Question marks D. Dogs

Q: (p. 262) _______ are businesses whose high growth rate gives them considerable appeal, but whose low market share makes their profit potential uncertain. A. Dogs B. Stars C. Question marks D. Cash cows

Q: (p. 262) Crabtree Soup has been facing intense competition and suffering low profit margins for a year now. The market for their specialty soups has matured and the firm is being managed for short-term cash flow to supplement SwissCo's corporate-level resource needs. Which type of firm is Crabtree Soup? A. Star B. Dog C. Cash cow D. Question mark

Q: (p. 262) Low market share businesses in low market growth industries are called: A. Stars B. Cash cows C. Dogs D. Question marks

Q: (p. 262) As per the BCG matrix, which of these businesses should be divested or liquidated? A. Cash cows B. Guzzlers C. Dogs D. Stars

Q: (p. 262) As per the BCG matrix, which of these are cash guzzlers because of their uncertain profit potential? A. Cash cows B. Stars C. Question marks D. Dogs

Q: (p. 262) In the BCG matrix, which of these are managed for short-term cash flow? A. Cash cows B. Question marks C. Dogs D. Stars

Q: (p. 261) Cash cows are yesterdays A. Problem children B. Question marks C. Stars D. Dogs

Q: ________ collusion exists when firms directly communicate with each other to coordinate their levels of production, their prices, and so forth. A) Tacit B) Virtual C) Real D) Explicit

Q: (p. 262) In the BCG matrix, which of these businesses often generate cash in excess of their needs? A. Stars B. Question marks C. Cash cows D. Dogs

Q: ________ collusion exists when firms coordinate their production and pricing decisions not by directly communicating with each other but by exchanging signals with other firms about their intent to cooperate. A) Explicit B) Tacit C) Real D) Virtual

Q: (p. 262) ________ is the current foundation of corporate portfoliosthey sustain corporate overhead, dividends and provide debt capacity. A. Cash cows B. Dogs C. Stars D. Question marks

Q: While it is often the case that there will be important information asymmetries between firms in an alliance, these asymmetries are likely to be ________ when alliances partners come from different countries. A) much less B) about the same as C) much greater D) marginally greater

Q: (p. 262) When using the BCG growth-share matrix, the dividing point for the growth rate of an industry in constant dollars is typically: A. The market's growth rate B. The consumer price index C. The growth rate of the gross domestic product (GDP) D. The growth rate of the gross national product (GNP)

Q: ________ may enable partners to explore exchange opportunities that they could not explore if only legal and economic organizing mechanisms were in place. A) Trust B) Joint ventures C) Reputational effects D) Equity investments

Q: (p. 261) Zeon Plus Company requires substantial investment to maintain and expand their dominant position in the growing electronic zeonites market. In fact, this investment is often in excess of the funds that the firm can generate internally. However, Zeon Plus does have a very large market share. What type of company is this, according to the BCG growth-share matrix? A. Cash cow B. Dog C. Question mark D. Star

Q: When the probability of cheating in a cooperative relationship is greatest, a(n) ________ is the preferred form of cooperation. A) equity agreement B) licensing agreement C) joint venture D) distribution agreement

Q: (p. 261) For the ABC Company, the Theta business is in a low market share position in a slow growing market. As per the BCG matrix, Theta is a A. Cash cow B. Question mark C. Dog D. Star

Q: (p. 261) For the ABC Company, the Delta business has a lowmarket share position in a fast growing market. As per the BCG matrix, Delta is a A. Cash cow B. Star C. Question mark D. Dog

Q: Which of the following is a limitation of the reputational control of cheating in a strategic alliance? A) Subtle cheating in an alliance is likely to become public knowledge. B) Even if one firm is clearly cheating in an alliance, the other firm may not be sufficiently tied into a network of firms to make this information public. C) The effect of a tarnished reputation forecloses future opportunities for a firm and it helps reduce the current losses of the firm that was cheated. D) The reputation of the firm that was impacted by the cheating may be impacted as significantly as the firm that committed the cheating.

Q: All of the following are methods firms can use to reduce the threat of cheating in strategic alliances except A) contracts. B) equity investments. C) joint ventures. D) tacit collusion.

Q: (p. 261) For the ABC Company, the Alpha business is in a dominant market share position in a mature market. As per the BCG matrix, Alpha is a A. Star B. Question mark C. Cash cow D. Dog

Q: An example of a contractual clause that deals with operating issues would be a A) noncompete clause. B) minority protection clause. C) put options clause. D) termination clause.

Q: (p. 262) Businesses with high market share in low-growth industries are called: A. Stars B. Cash cows C. Question marks D. Dogs

Q: Alliances will be preferred to acquisitions when A) alliances limit a firm's flexibility under conditions of high uncertainty. B) there is minimal unwanted organizational "baggage" in an acquired firm. C) there are legal constraints on acquisitions. D) the value of a firm's resources and capabilities does not depend on its independence.

Q: (p. 261) For the ABC Company, the Omega business is in a dominant market share position in a fast growing market. As per the BCG matrix, Omega is a A. Cash cow B. Question mark C. Star D. Dog

Q: ________ theory suggests that under conditions of high uncertainty, firms may be unwilling to commit to a particular course of action by engaging in an exchange with a firm and will choose, instead, the strategic flexibility associated with alliances. A) Capabilities B) Real options C) Transaction cost economics D) Resource-based

Q: (p. 261) In the BCG growth-share matrix, the ________ are businesses in rapidly growing markets with large market shares. A. Cash cows B. Question marks C. Stars D. Dogs

Q: Alliances will be preferred to going it alone when A) the level of transaction-specific investments required to complete an exchange is low. B) there are no transaction-specific investments required to complete an exchange is low. C) when there is low uncertainty about the future value of an exchange. D) the level of transaction-specific investments required to complete an exchange is moderate.

Q: (p. 261) __________ provides a basis for comparing the relative strengths of the businesses in the firms portfolio in terms of their positions in their respective markets. A. Relative competitive position B. Relative market share C. Market growth rate D. Growth-share rate

Q: Firms ________ when they attempt to develop all the resources and capabilities they need to exploit market opportunities and neutralize market threats by themselves. A) engage in tacit collusion B) form joint ventures C) go it alone D) engage in explicit collusion

Q: (p. 261) __________ usually is expressed as market share of a business divided by the market share of its largest competitor. A. Relative competitive position B. Relative market share C. Market growth rate D. Growth-share rate

Q: Two possible substitutes for strategic alliances include A) going it alone and tacit collision. B) going it alone and acquisitions. C) acquisitions and explicit collusion. D) explicit collusion and tacit collusion.

Q: (p. 261) The ______ serves as an indicator of the relative attractiveness of the markets served by each business in the firms portfolio of businesses. A. Market share B. Market projection C. Market growth rate D. Relative competitive position

Q: To the extent that a strategic alliance is based on ________ relations, it will make the alliances costly to imitate. A) socially complex B) tacit collusion C) explicit collusion D) moral hazard

Q: (p. 261) The ________ is the projected rate of sales growth for the market being served by a particular business. A. Market share B. Market projection C. Market growth rate D. Relative competitive position

Q: Research indicates that the most common reason that alliances fail to meet the expectations of partner firms is A) the lack of financial resources. B) the necessity of transaction-specific investments. C) the lack of transaction-specific investments. D) the partners' inability to trust one another.

Q: (p. 261) ________ attempt to help managers "balance" the flow of cash resources among their various businesses while also identifying the overall strategic purpose within the group of businesses. A. Growth techniques B. Market share techniques C. Portfolio techniques D. Environment techniques

Q: One of the reasons why the benefits that accrue from a particular strategic alliance may be rare is that A) relatively few firms may have the complementary resources and abilities needed to form an alliance. B) there is a relatively large number of alliance partners available. C) relatively many firms may have the complementary resources and abilities needed to form an alliance D) there may be a relatively low amount of transaction-specific assets to enter into similar alliances.

Q: (p. 261) What was the key challenge as companies jumped on the diversification bandwagon? A. Making the business profitable B. Finding businesses to buy C. Managing the resource needs of diverse businesses D. Financing acquisitions

Q: The rarity of strategic alliances A) depends solely on the number of competing firms that have already implemented an alliance. B) depends solely on whether or not the benefits that firms obtain from their alliances are not common across firms in the industry. C) depends not only on the number of competing firms that have already implemented an alliance but also on whether or not the benefits that firms obtain from their alliances are not common across competing firms in the industry. D) depends solely on the number of substitutes available for alliances.

Q: Research suggests that ________ are the type of alliance where existence of transaction-specific investments often leads to holdup problems. A) licensing agreements B) equity alliances C) joint ventures D) distribution agreements

Q: (p. 261) Which of the following firms pioneered the portfolio approach to strategic analysis and choice? A. Bain Consulting B. Boston Consulting Group C. Booz Allen Hamilton D. McKinsey & Company

Q: (p. 261) Which of the following is NOT a reason for the emergence of multi-business companies? A. Companies can enter businesses with greater growth potential B. Companies can enter businesses with different cyclical considerations C. Companies can diversify inherent risks D. Companies can slow their internal growth

Q: When one firm makes more transaction-specific investments in a strategic alliance than partner firms make, that firm may be subject to a form of cheating called ________ that occurs when a firm that has not made significant transaction-specific investments demands returns from an alliance that are higher than what the partners agreed to when they created the alliance. A) adverse selection B) holdup C) moral hazard D) noncompliance

Q: (p. 261) In the past ________ years, we have seen a virtual explosion in the extent to which single-business companies seek to acquire other businesses to grow and diversify. A. 5 B. 50 C. 30 D. 100

Q: Often both parties in a failed alliance accuse each other of A) adverse selection. B) tacit collusion. C) moral hazard. D) holdup.

Q: (p. 261) The _______ approach was one of the early approaches for charting strategy and allocating resources in multi-business companies. It was particularly popular in the 1960s and 1970s. A. Case B. Matrix-management C. Portfolio D. Patching

Q: ________ occurs when partners in an alliance possess high-quality resources and capabilities of significant value in an alliance but fail to make those resources and capabilities available to alliance partners. A) Moral hazard B) Adverse selection C) Holdup D) Explicit collusion

Q: (p. 247) Slow growth or a decline in demand for an industry could be caused by A. technological substitution B. strong branding C. significant differentiation D. Integration

Q: In general, the ________ tangible the resources and capabilities that are to be brought to a strategy alliance, the ________ costly it will be to estimate their value before an alliance is created, and the ________ likely it is that adverse selection will occur. A) more; more; more B) less; more; less C) less; more; more D) more; more; less

Q: (p. 247) Business strategies in maturing industries should avoid all of these pitfalls EXCEPT which one? A. Avoid sacrificing market share too quickly B. Make a clear choice among three generic strategies and avoid the middle-ground approach C. Avoid waiting too long to respond to price reductions D. Avoid horizontal integration to acquire rival firms

Q: Adverse selection in a strategic alliance is likely only when A) it is difficult or costly to observe the resources or capabilities that a partner brings to an alliance. B) a potential partner can easily see the resources and capabilities that a firm is bringing to an alliance. C) it is difficult or costly to know how competitors will react to the strategic alliance. D) there are significant transaction-specific assets devoted to the alliance.

Q: (p. 247) Business strategies require all of these features EXCEPT which one for success in mature industries? A. Harvest the business B. Emphasis on cost reduction C. Product line pruning D. Horizontal integration

Q: If TeleCo were to enter into a strategic alliance with a partner that promised it could deliver a high quality wireless infrastructure when in fact the potential partner had neither the skills nor abilities to provide this infrastructure, TeleCo could be said to be impacted by A) moral hazard. B) adverse selection. C) holdup. D) tacit collusion.

Q: (p. 246) For success in mature industries, business strategies require which of these features? A. Ability to rapidly improve product qualities and performance features B. Ability to differentiate the firm's products from competitors entering the market C. Emphasis on process innovation that permits low-cost product design, manufacturing methods and distribution synergy D. Gradually harvest the business

Q: Research shows that as many as ________ of all strategic alliances do not meet the expectations of at least one alliance partner. A) one-third B) five-eighths C) one-half D) two-thirds

Q: (p. 246) As an industry evolves, its rate of growth eventually A. declines B. stabilizes C. increases D. plateaus

Q: Consistent with a real options perspective, firms in new and uncertain environments are likely to A) avoid using strategic alliances. B) develop numerous strategic alliances. C) develop few strategic alliances. D) engage in vertical integration.

Q: (p. 246) Strategies used by firms competing in markets where the growth rate of that market from year to year had reached or is close to zero are called ________ industry strategies. A. Mature B. Growth C. Emerging D. Declining

Q: As long as the cost of ________ to enter a new industry is less than the cost of ________, an alliance can be a valuable strategic opportunity. A) vertically integrating; learning new skills and capabilities B) learning new skills and capabilities; using an alliance C) using an alliance; learning new skills and capabilities D) learning new skills and capabilities; vertically integrating

Q: (p. 244) Business strategies require all of these EXCEPT which feature for success in growing industries? A. Establish strong brand recognition B. Scale up to meet increasing demand C. Differentiate the firm's products D. Horizontal integration

Q: Although joint ventures between firms in the same industry ________ collusive implications, research has shown that these kinds of joint ventures are ________. A) may have; relatively rare B) are not likely to have; relatively rare C) may have; relatively common D) are not likely to have; relatively common

Q: (p. 244) For success in growth industries, business strategies require which of these features? A. Ability to rapidly improve product qualities and performance features B. Ability to differentiate the firm's products from competitors entering the market C. Emphasis on process innovation that permits low-cost product design, manufacturing methods and distribution synergy D. Gradually harvest the business