1 | Page
Strategic MGMT Exam 3 Questions With
Complete Solutions
Strategic Alliance Ans: cooperative strategy in which firms
combine resources and capabilities to create a competitive
advantage
three major types of strategic alliances firms Ans: Joint Venture,
Equity Strategic Alliance, Non-Equity Strategic Alliance
Joint Venture Ans: two or more firms create a legally independent
company to share resources and capabilities to develop a
competitive advantage
Equity Strategic Alliance Ans: 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
Non-Equity Strategic Alliance Ans: two or more firms develop a
contractual relationship to share some of their unique resources
and capabilities to create a competitive advantage
Joint Venture example Ans: 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
Equity Strategic Alliance example Ans: 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
Non-Equity Strategic Alliance example Ans: Licensing agreements,
distribution agreements, and supply contracts. Hewlett-Packard
(HP) actively uses this type of cooperative strategy to license some
of its intellectual property
the four business-level cooperative strategies? Ans: 1)
Complimentary Strategic Alliance, 2) Competition Response
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Strategy, 3) Uncertainty Reducing Strategy, 4) Competition
Reducing Strategy (see notes)
three corporate-level cooperative strategies? Ans: 1) Diversifying
Strategic Alliance, 2) Synergistic Strategic Alliance, 3) Franchising
What risks are firms likely to experience as they use cooperative
strategies? Ans: • 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.
All of the following are consequences of the Sarbanes-Oxley Act
Ans: ●Decrease in foreign firms listing on U.S. stock exchanges at
the same time as listing on foreign exchanges increased
● Internal auditing scrutiny has improved and there is greater
trust in financial reporting
● Section 404 creates excessive costs for firms
(Determining governance practices that strike a balance between
protecting stakeholders' interests and allowing firms to implement
strategies with some degree of risk is difficult)
What is corporate governance? Ans: 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)
What factors account for the considerable amount of attention
corporate governance receives from several parties, including
shareholder activists, business press writers, and academic
scholars? Ans: When CEOs are motivated to act in the best
interests of the firm—particularly, the shareholders—the
company's value should increase.
© 2025 All rights reserved
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Why is governance necessary to control managers' decisions? Ans:
Successfully dealing with this challenge is important, as evidence
suggests that corporate governance is critical to firms' success.
The 2 reasons for Corporate Governance Emphasis Ans: ●Apparent
failure of corporate governance mechanisms to adequately
monitor and control top-level managers' decisions during recent
times
●Evidence that a well-functioning corporate governance and
control system can create a competitive advantage for an
individual firm
What is an agency relationship? Ans: Risk Bearing specialist
(principal) paying compensation to a managerial decision making
specialist (agent).
What is managerial opportunism? Ans: seeking self-interest with
guile (i.e., cunning or deceit)
What assumptions do owners of corporations make about
managers as agents? Ans: • 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.
What are the three internal governance mechanisms? Ans:
ownership concentration, boards of directors, and executive
compensation
Ownership Concentration Ans: Relative amount of stock owned by
individual shareholders and institutional investors.
Board of Directors Ans: Board of Directors have a fiduciary duty to
shareholders to monitor top-level management strategic decisions.
© 2025 All rights reserved
Strategic MGMT Exam 3 Questions With
Complete Solutions
Strategic Alliance Ans: cooperative strategy in which firms
combine resources and capabilities to create a competitive
advantage
three major types of strategic alliances firms Ans: Joint Venture,
Equity Strategic Alliance, Non-Equity Strategic Alliance
Joint Venture Ans: two or more firms create a legally independent
company to share resources and capabilities to develop a
competitive advantage
Equity Strategic Alliance Ans: 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
Non-Equity Strategic Alliance Ans: two or more firms develop a
contractual relationship to share some of their unique resources
and capabilities to create a competitive advantage
Joint Venture example Ans: 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
Equity Strategic Alliance example Ans: 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
Non-Equity Strategic Alliance example Ans: Licensing agreements,
distribution agreements, and supply contracts. Hewlett-Packard
(HP) actively uses this type of cooperative strategy to license some
of its intellectual property
the four business-level cooperative strategies? Ans: 1)
Complimentary Strategic Alliance, 2) Competition Response
© 2025 All rights reserved
, 2 | Page
Strategy, 3) Uncertainty Reducing Strategy, 4) Competition
Reducing Strategy (see notes)
three corporate-level cooperative strategies? Ans: 1) Diversifying
Strategic Alliance, 2) Synergistic Strategic Alliance, 3) Franchising
What risks are firms likely to experience as they use cooperative
strategies? Ans: • 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.
All of the following are consequences of the Sarbanes-Oxley Act
Ans: ●Decrease in foreign firms listing on U.S. stock exchanges at
the same time as listing on foreign exchanges increased
● Internal auditing scrutiny has improved and there is greater
trust in financial reporting
● Section 404 creates excessive costs for firms
(Determining governance practices that strike a balance between
protecting stakeholders' interests and allowing firms to implement
strategies with some degree of risk is difficult)
What is corporate governance? Ans: 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)
What factors account for the considerable amount of attention
corporate governance receives from several parties, including
shareholder activists, business press writers, and academic
scholars? Ans: When CEOs are motivated to act in the best
interests of the firm—particularly, the shareholders—the
company's value should increase.
© 2025 All rights reserved
, 3 | Page
Why is governance necessary to control managers' decisions? Ans:
Successfully dealing with this challenge is important, as evidence
suggests that corporate governance is critical to firms' success.
The 2 reasons for Corporate Governance Emphasis Ans: ●Apparent
failure of corporate governance mechanisms to adequately
monitor and control top-level managers' decisions during recent
times
●Evidence that a well-functioning corporate governance and
control system can create a competitive advantage for an
individual firm
What is an agency relationship? Ans: Risk Bearing specialist
(principal) paying compensation to a managerial decision making
specialist (agent).
What is managerial opportunism? Ans: seeking self-interest with
guile (i.e., cunning or deceit)
What assumptions do owners of corporations make about
managers as agents? Ans: • 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.
What are the three internal governance mechanisms? Ans:
ownership concentration, boards of directors, and executive
compensation
Ownership Concentration Ans: Relative amount of stock owned by
individual shareholders and institutional investors.
Board of Directors Ans: Board of Directors have a fiduciary duty to
shareholders to monitor top-level management strategic decisions.
© 2025 All rights reserved
