SEVI 3013 (CH 6-7) EXAM 3 FINAL
QUESTIONS AND ANSWERS
goals of corporate governance - Answer--strengthening the effectiveness of a
company's board of directors
-verifying the transparency of a firm's operations
-enhancing accountability to shareholders
-incentivizing executives
-maximizing value-creation for stake holders and shareholders
agency relationship problems - Answer--principals (shareholders) and agents
(managers) may have different interests or goals
-principals lack direct control of large, publicly traded corporation
-an agent may pursue goals that conflict with those of the principals
-it is difficult or expensive for the principal to verify that the agent has behaved
inappropriately
-principal may fall prey to managerial opportunism
compelementary assets, complete - Answer-strategic alliances can provide access to
_______ or _______ the value chain
ex: sony, samsung: S-LCD
competitors - Answer-firms can learn from their alliance partners even from partners
who may be _________
ex: General motors, toyota: NUMMI
governing strategic alliances - Answer--non-equity alliances
-equity alliances
-joint ventures
non-equity alliance - Answer--partnership based on contracts between firms
-supply agreements, distibrution agreements, licensing agreements, and franchises
equity alliances - Answer-one partner takes a partial equity stake in other
ex: GM/lyft
joint ventures - Answer-standalone organization, created and jointly owned by two or
more parent companies
ex: hulu
, alliance management capability - Answer--partner selection and alliance formation
-alliance design and governance
-post-formation alliance management
30-70% of alliances - Answer-how many allainces fail to deliver expected benefit due to
lack of effective alliance management?
partner selection - Answer--costs vs. benefits
-alliance goals
-partner commitment, compatability
governance mechanisms - Answer-formal and informal mechanisms
formal mechanisms - Answer--non-equity contractural agreement
-equity allainces
-joint venture
informal mechanisms - Answer-requires inter-organization trust
creating VRIO resource combinations - Answer--make relation-specific investments
-establish knowledge-sharing routines
-build interfirm trust
making alliances work - Answer-build alliance management capability through repeated
experiences over time and create VRIO resource combinations
merger - Answer-the joining of two independent companies to form a combined entity
acquisition - Answer-purchase of one company by another, can be friendly or unfriendly
(hostile)
hostile takeover - Answer-the target company does not wish to be acquired
horizontal integration - Answer-merger with a competitor which leads to industry
consolidation
benefits of a horizontal merger - Answer--reduction in competitive intensity, changes
industry structure
-lower costs, economy of scale
-increased differentiation, fills product gaps
reasons for acquisitions - Answer--to access new markets, new distribution channels
-to overcome entry barriers
-to access new capabilities and competencies
-to pre-empt rivals
QUESTIONS AND ANSWERS
goals of corporate governance - Answer--strengthening the effectiveness of a
company's board of directors
-verifying the transparency of a firm's operations
-enhancing accountability to shareholders
-incentivizing executives
-maximizing value-creation for stake holders and shareholders
agency relationship problems - Answer--principals (shareholders) and agents
(managers) may have different interests or goals
-principals lack direct control of large, publicly traded corporation
-an agent may pursue goals that conflict with those of the principals
-it is difficult or expensive for the principal to verify that the agent has behaved
inappropriately
-principal may fall prey to managerial opportunism
compelementary assets, complete - Answer-strategic alliances can provide access to
_______ or _______ the value chain
ex: sony, samsung: S-LCD
competitors - Answer-firms can learn from their alliance partners even from partners
who may be _________
ex: General motors, toyota: NUMMI
governing strategic alliances - Answer--non-equity alliances
-equity alliances
-joint ventures
non-equity alliance - Answer--partnership based on contracts between firms
-supply agreements, distibrution agreements, licensing agreements, and franchises
equity alliances - Answer-one partner takes a partial equity stake in other
ex: GM/lyft
joint ventures - Answer-standalone organization, created and jointly owned by two or
more parent companies
ex: hulu
, alliance management capability - Answer--partner selection and alliance formation
-alliance design and governance
-post-formation alliance management
30-70% of alliances - Answer-how many allainces fail to deliver expected benefit due to
lack of effective alliance management?
partner selection - Answer--costs vs. benefits
-alliance goals
-partner commitment, compatability
governance mechanisms - Answer-formal and informal mechanisms
formal mechanisms - Answer--non-equity contractural agreement
-equity allainces
-joint venture
informal mechanisms - Answer-requires inter-organization trust
creating VRIO resource combinations - Answer--make relation-specific investments
-establish knowledge-sharing routines
-build interfirm trust
making alliances work - Answer-build alliance management capability through repeated
experiences over time and create VRIO resource combinations
merger - Answer-the joining of two independent companies to form a combined entity
acquisition - Answer-purchase of one company by another, can be friendly or unfriendly
(hostile)
hostile takeover - Answer-the target company does not wish to be acquired
horizontal integration - Answer-merger with a competitor which leads to industry
consolidation
benefits of a horizontal merger - Answer--reduction in competitive intensity, changes
industry structure
-lower costs, economy of scale
-increased differentiation, fills product gaps
reasons for acquisitions - Answer--to access new markets, new distribution channels
-to overcome entry barriers
-to access new capabilities and competencies
-to pre-empt rivals
