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Exam 9: Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions

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Question 31

Multiple Choice

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In Eli Lilly's Office of Alliance Management, the alliance champion is primarily responsible for

A) making sure that an alliance fits within the firm's existing alliance portfolio and corporate-level strategy.
B) providing technical expertise and knowledge needed for the specific technical area in an alliance.
C) providing alliance training and development, as well as diagnostic tools.
D) serving as an alliance process resource and business integrator between the two alliance partners.

E) C) and D)
F) B) and C)

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Question 32

Multiple Choice

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Adidas acquired Reebok primarily to

A) overcome its competitive disadvantage against Nike.
B) get access to the superior technology of Reebok.
C) overcome its principal-agent problems.
D) pursue an unrelated diversification strategy.

E) A) and B)
F) B) and C)

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Question 33

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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.

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

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

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

RHC Pharmaceuticals Inc., Lawrence Pharma Inc., and Quincy Pharma Inc. are three rival firms who have set up an alliance to conduct research and find a cure for cancer. 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 drugs and vaccines. What is this arrangement best referred to as?

Which of the following statements is true of explicit knowledge?

Ayesha is a strategist for the firm Optiks Inc., which produces high-quality HD movie cameras. This company needs a specific material for a new camera they are developing, which is manufactured in large quantities by a competitor called Expert Technology Inc. However, this material is difficult to trade. Because of this, which of the following is most likely the best strategy for Ayesha to suggest?

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

Which of the following statements is true of joint ventures?

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

When Turbo Autos Inc. wanted to sell its cars in the country of Sylvanistan, it lacked access to distribution channels and marketing expertise in the country. Thus, Turbo 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?

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?

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

Future Clothes Inc., a publicly traded company, designs and manufactures wearable technology. What approach should Future Clothes 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.

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

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

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.

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