CBA 469 - Test 3 With Complete
Solution
-Alliances
-Acquisitions - ANSWER In addition internal organic growth, firms have two critical
strategic options to execute corporate strategy:
Build-Borrow-or-Buy Framework - ANSWER Provides a conceptual model that aids firms
in deciding whether to pursue internal development, enter a contractual arrangement or
strategic alliance, or acquire new resources, capabilities, and competencies
Resources - ANSWER In the build-borrow-or-buy framework, this term is defined
broadly to include capabilities and competencies
Identification of a strategic resource gap that will impede future growth - ANSWER The
starting point of the build-borrow-or-buy framework is the firm's:
Closing the gap is likely to lead to a competitive advantage - ANSWER Why is the
resource gap strategic?
-Build
-Borrow
-Buy - ANSWER Three options to close the strategic resource gap:
Internal Development - ANSWER What does the term "build" refer to in the
build-borrow-or-buy framework?
The use of strategic alliances - ANSWER What does the term "borrow" refer to in the
build-borrow-or-buy framework?
Acquiring a Firm - ANSWER What does the term "buy" refer to in the
build-borrow-or-buy framework?
Tradable - ANSWER This term implies that the firm is able to source the resource
externally through a contract that allows for the transfer of ownership or use of the
resource
-Low Relevancy
-Low Tradability
-High Need for Closeness - ANSWER A firm's strategic leaders should only consider
,mergers and acquisitions if the following three conditions are met:
Has the potential to affect a firm's competitive advantage - ANSWER An alliance
qualifies as strategic only if it:
Strategic Alliances - ANSWER Voluntary arrangements between firms that involve the
sharing of knowledge, resources, and capabilities with the intent of developing
processes, products, or services
-Enable firms to achieve goals faster and at lower costs than going in alone
-Allow firms to circumvent potential legal repercussions
-Has the potential to help a firm gain and sustain a competitive advantage - ANSWER
Strategic alliances are attractive for three reasons:
-Strengthen Competitive Position
-Enter New Markets
-Hedge Against Uncertainty
-Access Critical Complementary Assets
-Learn New Capabilities - ANSWER Firms enter into strategic alliances for five reasons:
Real-Options Perspective - ANSWER Breaks down a larger investment decision into a
set of smaller decisions that are staged sequentially over time
Co-Opetition - ANSWER Cooperation by competitors to achieve a strategic advantage
Learning Races - ANSWER Situations in which both partners in a strategic alliance are
motivated to form an alliance for learning, but the rate at which firms learn may vary
-Non-Equity Alliances
-Equity Alliances
-Joint Ventures - ANSWER Alliances can be governed by three mechanisms:
Non-Equity Alliances - ANSWER The most common type of alliance; It's a partnership
based on contracts between firms
-Supply Agreements
-Distribution Agreements
-Licensing Agreements - ANSWER Three most frequent forms of non-equity alliances:
Licensing Agreements - ANSWER Contractual alliances in which the participants
regularly exchange codified knowledge
, Explicit Knowledge - ANSWER Knowledge that can be codified; Concerns the notion of
knowing about a certain process or product
Flexible and easy to terminate - ANSWER Because non-equity alliances have a
contractual nature, they are:
Equity Alliances - ANSWER At least one partner takes partial ownership in the other
partner
Investments - ANSWER Because equity alliances often require larger _________, they are
less common than non-equity alliances
Tacit Knowledge - ANSWER Equity alliances allow for the sharing of ____________, which
is knowledge that cannot be codified
Corporate Venture Capital (CVC) - ANSWER Equity investments by established firms in
entrepreneurial ventures
-Amount of investment that can be involved
-Possible lack of flexibility and speed in putting together and reaping the benefits from
the partnership - ANSWER Two downsides to equity alliances:
Joint Ventures - ANSWER A standalone organization created and jointly owned by two
or more parent companies; The least common type of strategic alliances
Strong ties, trust, and commitment that can result between the partners - ANSWER
Advantage of joint ventures:
-Can entail long negotiations and significant investments
-If the alliance doesn't work out, undoing it can take time and involve considerable cost
-Knowledge shared with the new partner could be misappropriated by opportunistic
behavior
-Any rewards from the collaboration must be shared between the partners - ANSWER
Four disadvantages of joint ventures:
Alliance Management Capability - ANSWER A firm's ability to effectively manage three
alliance-related tasks concurrently, often across a portfolio of many different alliances
Partner Compatibility - ANSWER Captures aspects of cultural fit between different firms
Partner Commitment - ANSWER Concerns the willingness to make available necessary
resources and to accept short-term sacrifices to ensure long-term rewards
Learning-by-Doing Approach - ANSWER Has value for small ventures in which a few key
people coordinate most of the firms' activities
Alliance Champion - ANSWER A senior, corporate-level executive responsible for
Solution
-Alliances
-Acquisitions - ANSWER In addition internal organic growth, firms have two critical
strategic options to execute corporate strategy:
Build-Borrow-or-Buy Framework - ANSWER Provides a conceptual model that aids firms
in deciding whether to pursue internal development, enter a contractual arrangement or
strategic alliance, or acquire new resources, capabilities, and competencies
Resources - ANSWER In the build-borrow-or-buy framework, this term is defined
broadly to include capabilities and competencies
Identification of a strategic resource gap that will impede future growth - ANSWER The
starting point of the build-borrow-or-buy framework is the firm's:
Closing the gap is likely to lead to a competitive advantage - ANSWER Why is the
resource gap strategic?
-Build
-Borrow
-Buy - ANSWER Three options to close the strategic resource gap:
Internal Development - ANSWER What does the term "build" refer to in the
build-borrow-or-buy framework?
The use of strategic alliances - ANSWER What does the term "borrow" refer to in the
build-borrow-or-buy framework?
Acquiring a Firm - ANSWER What does the term "buy" refer to in the
build-borrow-or-buy framework?
Tradable - ANSWER This term implies that the firm is able to source the resource
externally through a contract that allows for the transfer of ownership or use of the
resource
-Low Relevancy
-Low Tradability
-High Need for Closeness - ANSWER A firm's strategic leaders should only consider
,mergers and acquisitions if the following three conditions are met:
Has the potential to affect a firm's competitive advantage - ANSWER An alliance
qualifies as strategic only if it:
Strategic Alliances - ANSWER Voluntary arrangements between firms that involve the
sharing of knowledge, resources, and capabilities with the intent of developing
processes, products, or services
-Enable firms to achieve goals faster and at lower costs than going in alone
-Allow firms to circumvent potential legal repercussions
-Has the potential to help a firm gain and sustain a competitive advantage - ANSWER
Strategic alliances are attractive for three reasons:
-Strengthen Competitive Position
-Enter New Markets
-Hedge Against Uncertainty
-Access Critical Complementary Assets
-Learn New Capabilities - ANSWER Firms enter into strategic alliances for five reasons:
Real-Options Perspective - ANSWER Breaks down a larger investment decision into a
set of smaller decisions that are staged sequentially over time
Co-Opetition - ANSWER Cooperation by competitors to achieve a strategic advantage
Learning Races - ANSWER Situations in which both partners in a strategic alliance are
motivated to form an alliance for learning, but the rate at which firms learn may vary
-Non-Equity Alliances
-Equity Alliances
-Joint Ventures - ANSWER Alliances can be governed by three mechanisms:
Non-Equity Alliances - ANSWER The most common type of alliance; It's a partnership
based on contracts between firms
-Supply Agreements
-Distribution Agreements
-Licensing Agreements - ANSWER Three most frequent forms of non-equity alliances:
Licensing Agreements - ANSWER Contractual alliances in which the participants
regularly exchange codified knowledge
, Explicit Knowledge - ANSWER Knowledge that can be codified; Concerns the notion of
knowing about a certain process or product
Flexible and easy to terminate - ANSWER Because non-equity alliances have a
contractual nature, they are:
Equity Alliances - ANSWER At least one partner takes partial ownership in the other
partner
Investments - ANSWER Because equity alliances often require larger _________, they are
less common than non-equity alliances
Tacit Knowledge - ANSWER Equity alliances allow for the sharing of ____________, which
is knowledge that cannot be codified
Corporate Venture Capital (CVC) - ANSWER Equity investments by established firms in
entrepreneurial ventures
-Amount of investment that can be involved
-Possible lack of flexibility and speed in putting together and reaping the benefits from
the partnership - ANSWER Two downsides to equity alliances:
Joint Ventures - ANSWER A standalone organization created and jointly owned by two
or more parent companies; The least common type of strategic alliances
Strong ties, trust, and commitment that can result between the partners - ANSWER
Advantage of joint ventures:
-Can entail long negotiations and significant investments
-If the alliance doesn't work out, undoing it can take time and involve considerable cost
-Knowledge shared with the new partner could be misappropriated by opportunistic
behavior
-Any rewards from the collaboration must be shared between the partners - ANSWER
Four disadvantages of joint ventures:
Alliance Management Capability - ANSWER A firm's ability to effectively manage three
alliance-related tasks concurrently, often across a portfolio of many different alliances
Partner Compatibility - ANSWER Captures aspects of cultural fit between different firms
Partner Commitment - ANSWER Concerns the willingness to make available necessary
resources and to accept short-term sacrifices to ensure long-term rewards
Learning-by-Doing Approach - ANSWER Has value for small ventures in which a few key
people coordinate most of the firms' activities
Alliance Champion - ANSWER A senior, corporate-level executive responsible for
