GLOBAL 2nd Edition by Mike Peng – Test Bank

Chapter 11—Making Alliances & Acquisitions Work

TRUE/FALSE

1. Equity-based alliances include co-marketing, research and development, contracts, turnkey products, strategic suppliers, strategic distributors, and licensing/franchising.

ANS: F PTS: 1 DIF: Easy REF: p. 157
OBJ: 11.1 NAT: AACSB: Tier 1 Analytic | Tier 2 Creation of Value

2. A joint venture (JV) is a form of equity-based alliance.

ANS: T PTS: 1 DIF: Moderate REF: p. 157
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Strategy

3. Strategic investments in an equity-based alliance involve one partner investing in another, while cross-shareholding involves both partners investing in each other.

ANS: T PTS: 1 DIF: Easy REF: p. 157
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Strategy

4. Acquisitions are more common than mergers.

ANS: T PTS: 1 DIF: Easy REF: p. 158
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Strategy

5. Many firms establish alliances with competitors.

ANS: T PTS: 1 DIF: Easy REF: p. 158
OBJ: 11.1 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Strategy

6. Since integration within alliances is usually not as tight as acquisitions, antitrust authorities have a higher likelihood of approving alliances.

ANS: T PTS: 1 DIF: Moderate REF: pp. 158-160
OBJ: 11.2 NAT: AACSB: Tier 1 Analytic | Tier 2 Legal Responsibilities

7. Formal government policies regarding entry mode requirements for new firms are generally becoming more conservative.

ANS: F PTS: 1 DIF: Moderate REF: p. 158
OBJ: 11.2 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Legal Responsibilities

8. Overall, alliances have emerged as great instruments of real options because of their flexibility to sequentially scale up or scale down the investment.

ANS: T PTS: 1 DIF: Moderate REF: p. 159
OBJ: 11.2 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Creation of Value

9. It is important for managers to have collaborative relationship skills since alliances are more about collaboration than pure competition.

ANS: T PTS: 1 DIF: Easy REF: p. 160
OBJ: 11.2 NAT: AACSB: Tier 1 Diversity | Tier 2 HRM

10. The “limitability” of an alliance is based on the trust and understanding between the partners.

ANS: T PTS: 1 DIF: Moderate REF: p. 160
OBJ: 11.2 NAT: AACSB: Tier 1 Diversity | Tier 2 HRM

11. Limitability between alliance partners has much more to do with integration, and limitability between acquisition members has to do with trust.

ANS: F PTS: 1 DIF: Moderate REF: p. 160
OBJ: 11.2 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Strategy

12. The main decision made during the first stage of alliance formation is whether growth can be achieved strictly through market transactions, acquisitions, or cooperative alliances.

ANS: T PTS: 1 DIF: Difficult REF: pp. 161-162
OBJ: 11.3 NAT: AACSB: Tier 1 Analytic | Tier 2 Leadership Principles