Strategic MGMT Exam Questions With Complete Solutions | Graded A+
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1. Strategic Alliance: cooperative strategy in which firms combine resources and capabilities to create a
competitive advantage
2. three major types of strategic alliances firms: Joint Venture, Equity Strategic Alliance, Non-Eq-
uity Strategic Alliance
3. Joint Venture: two or more firms create a legally independent company to share resources and capabilities to
develop a competitive advantage
4. Equity Strategic Alliance: an alliance in which two or more firms own different percentages of the
company they have formed by combining some of their resources and capabilities to create a competitive advantage
5. Non-Equity Strategic Alliance: two or more firms develop a contractual relationship to share some of
their unique resources and capabilities to create a competitive advantage
6. Joint Venture example: 1999 - Germany's Siemens AG and Japan's Fujitsu Ltd. each owned 50 percent
of the joint venture Fujitsu Siemens Computers B.V., later to become Fujitsu Technology Solutions when Fujitsu bought
Siemens' share of the joint venture
7. Equity Strategic Alliance example: Japanese telecom operator NTT DOCOMO Inc. and Chinese
Internet search operator Baidu Inc. established an equity strategic alliance in China to distribute games and other
mobile-phone content
8. Non-Equity Strategic Alliance example: Licensing agreements, distribution agreements, and
supply contracts. Hewlett-Packard (HP) actively uses this type of cooperative strategy to license some of its intellectual
property
9. the four business-level cooperative strategies?: 1) Complimentary Strategic Alliance, 2)
Competition Response Strategy, 3) Uncertainty Reducing Strategy, 4) Competition Reducing Strategy (see notes)
10. three corporate-level cooperative strategies?: 1) Diversifying Strategic Alliance, 2) Synergis-
tic Strategic Alliance, 3) Franchising
11. What risks are firms likely to experience as they use cooperative strategies?: •
Partners may choose to act opportunistically.
• Partner competencies may be misrepresented.
• Partner may fail to make available the complementary resources and capabilities that were committed.
• One partner may make investments specific to the alliance while the other partner may not.
12. All of the following are consequences of the Sarbanes-Oxley Act: ÏDecrease in
foreign firms listing on U.S. stock exchanges at the same time as listing on foreign exchanges increased
ÏInternal auditing scrutiny has improved and there is greater trust in financial reporting
ÏSection 404 creates excessive costs for firms
, Strategic MGMT Exam Questions With Complete Solutions | Graded A+
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(Determining governance practices that strike a balance between protecting stakeholders' interests and allowing firms
to implement strategies with some degree of risk is difficult)
13. What is corporate governance?: a set of mechanisms used to manage the relationships (and
conflicting interests) among stakeholders, and to determine and control the strategic direction and performance of
organizations (aligning strategic decisions with company values)
14. What factors account for the considerable amount of attention corporate
governance receives from several parties, including shareholder activists, busi-
ness press writers, and academic scholars?: When CEOs are motivated to act in the best interests
of the firm—particularly, the shareholders—the company's value should increase.
15. Why is governance necessary to control managers' decisions?: Successfully dealing
with this challenge is important, as evidence suggests that corporate governance is critical to firms' success.
16. The 2 reasons for Corporate Governance Emphasis: ÏApparent failure of corporate gov-
ernance mechanisms to adequately monitor and control top-level managers' decisions during recent times
ÏEvidence that a well-functioning corporate governance and control system can create a competitive advantage for an
individual firm
17. What is an agency relationship?: Risk Bearing specialist (principal) paying compensation to a
managerial decision making specialist (agent).
18. What is managerial opportunism?: seeking self-interest with guile (i.e., cunning or deceit)
19. What assumptions do owners of corporations make about managers as
agents?: • Opportunism: an attitude and set of behaviors
• Decisions in managers' best interests, contrary to shareholders' best interests
• Decisions such as these prevent maximizing shareholder wealth
• Principals establish governance and control mechanisms to prevent agents from acting opportunistically.
20. What are the three internal governance mechanisms?: ownership concentration, boards
of directors, and executive compensation
21. Ownership Concentration: Relative amount of stock owned by individual shareholders and institution-
al investors.
22. Board of Directors: Board of Directors have a fiduciary duty to shareholders to monitor top-level manage-
ment strategic decisions.
23. Executive Compensation: Use of salary, bonuses, and long-term incentives to align managers' interests
with shareholders' interest.
Study online at https://quizlet.com/_i5c6er
1. Strategic Alliance: cooperative strategy in which firms combine resources and capabilities to create a
competitive advantage
2. three major types of strategic alliances firms: Joint Venture, Equity Strategic Alliance, Non-Eq-
uity Strategic Alliance
3. Joint Venture: two or more firms create a legally independent company to share resources and capabilities to
develop a competitive advantage
4. Equity Strategic Alliance: an alliance in which two or more firms own different percentages of the
company they have formed by combining some of their resources and capabilities to create a competitive advantage
5. Non-Equity Strategic Alliance: two or more firms develop a contractual relationship to share some of
their unique resources and capabilities to create a competitive advantage
6. Joint Venture example: 1999 - Germany's Siemens AG and Japan's Fujitsu Ltd. each owned 50 percent
of the joint venture Fujitsu Siemens Computers B.V., later to become Fujitsu Technology Solutions when Fujitsu bought
Siemens' share of the joint venture
7. Equity Strategic Alliance example: Japanese telecom operator NTT DOCOMO Inc. and Chinese
Internet search operator Baidu Inc. established an equity strategic alliance in China to distribute games and other
mobile-phone content
8. Non-Equity Strategic Alliance example: Licensing agreements, distribution agreements, and
supply contracts. Hewlett-Packard (HP) actively uses this type of cooperative strategy to license some of its intellectual
property
9. the four business-level cooperative strategies?: 1) Complimentary Strategic Alliance, 2)
Competition Response Strategy, 3) Uncertainty Reducing Strategy, 4) Competition Reducing Strategy (see notes)
10. three corporate-level cooperative strategies?: 1) Diversifying Strategic Alliance, 2) Synergis-
tic Strategic Alliance, 3) Franchising
11. What risks are firms likely to experience as they use cooperative strategies?: •
Partners may choose to act opportunistically.
• Partner competencies may be misrepresented.
• Partner may fail to make available the complementary resources and capabilities that were committed.
• One partner may make investments specific to the alliance while the other partner may not.
12. All of the following are consequences of the Sarbanes-Oxley Act: ÏDecrease in
foreign firms listing on U.S. stock exchanges at the same time as listing on foreign exchanges increased
ÏInternal auditing scrutiny has improved and there is greater trust in financial reporting
ÏSection 404 creates excessive costs for firms
, Strategic MGMT Exam Questions With Complete Solutions | Graded A+
Study online at https://quizlet.com/_i5c6er
(Determining governance practices that strike a balance between protecting stakeholders' interests and allowing firms
to implement strategies with some degree of risk is difficult)
13. What is corporate governance?: a set of mechanisms used to manage the relationships (and
conflicting interests) among stakeholders, and to determine and control the strategic direction and performance of
organizations (aligning strategic decisions with company values)
14. What factors account for the considerable amount of attention corporate
governance receives from several parties, including shareholder activists, busi-
ness press writers, and academic scholars?: When CEOs are motivated to act in the best interests
of the firm—particularly, the shareholders—the company's value should increase.
15. Why is governance necessary to control managers' decisions?: Successfully dealing
with this challenge is important, as evidence suggests that corporate governance is critical to firms' success.
16. The 2 reasons for Corporate Governance Emphasis: ÏApparent failure of corporate gov-
ernance mechanisms to adequately monitor and control top-level managers' decisions during recent times
ÏEvidence that a well-functioning corporate governance and control system can create a competitive advantage for an
individual firm
17. What is an agency relationship?: Risk Bearing specialist (principal) paying compensation to a
managerial decision making specialist (agent).
18. What is managerial opportunism?: seeking self-interest with guile (i.e., cunning or deceit)
19. What assumptions do owners of corporations make about managers as
agents?: • Opportunism: an attitude and set of behaviors
• Decisions in managers' best interests, contrary to shareholders' best interests
• Decisions such as these prevent maximizing shareholder wealth
• Principals establish governance and control mechanisms to prevent agents from acting opportunistically.
20. What are the three internal governance mechanisms?: ownership concentration, boards
of directors, and executive compensation
21. Ownership Concentration: Relative amount of stock owned by individual shareholders and institution-
al investors.
22. Board of Directors: Board of Directors have a fiduciary duty to shareholders to monitor top-level manage-
ment strategic decisions.
23. Executive Compensation: Use of salary, bonuses, and long-term incentives to align managers' interests
with shareholders' interest.
