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Which of the following is a result of horizontal integration in terms of Porter's five forces model?


A) The industry structure becomes less consolidated.
B) There is a reduction of excess capacity in the market.
C) The industry structure becomes potentially less profitable.
D) There is an increase in rivalry among existing firms.

E) B) and C)
F) A) and D)

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Dow Corning is a company owned by Dow Chemical and Corning.This is most likely an example of a(n)


A) equity alliance.
B) sole proprietorship.
C) non-equity alliance.
D) joint venture.

E) B) and C)
F) B) and D)

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What does the relational view of competitive advantage propose?


A) A strategic alliance has the potential to help a firm gain a competitive advantage when it joins together resources that are common, inexpensive, and easy to imitate.
B) The locus of competitive advantage is often not found within the individual firm but within a strategic partnership.
C) Strategic alliances fail to provide competitive advantage when they involve joining different parts of a firm's value chain, such as R&D and marketing.
D) A firm has a competitive advantage over its rivals when it can provide goods or services similar to the competitors' at a higher price.

E) C) and D)
F) A) and B)

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PureSource Pharma Inc.recently acquired BioChem Pharmaceuticals Inc.It now sells its own products along with the products originally sold by BioChem Pharmaceuticals.As a result,PureSource Pharma's sales force will also be marketing the acquired company's products.How will this horizontal integration most likely affect PureSource Pharma?


A) PureSource Pharma will lower its costs through economies of scale.
B) PureSource Pharma will diminish its economic value creation.
C) PureSource Pharma will increase its cost of distribution.
D) PureSource Pharma will reduce the size of its sales force.

E) A) and C)
F) None of the above

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Medetect Inc.is a large firm involved in the highly competitive market of high-tech medical equipment.In this market,smaller firms that focus on research are constantly making new technological developments.Which of the following approaches would best serve the needs of Medetect?


A) mergers
B) serial mergers
C) acquisitions
D) serial acquisitions

E) A) and C)
F) A) and D)

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Vibgyor Inc.,a manufacturer of smartphones,has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its cell phones.This would mean that both the companies will have to mutually share their resources,knowledge,and capabilities to develop a superior product.What is the relationship between Vibgyor and the software company best referred to as in this scenario?


A) an acquisition
B) a strategic alliance
C) a leveraged buyout
D) a proprietorship

E) A) and D)
F) B) and D)

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Which of the following best illustrates a non-equity alliance?


A) a contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc.
B) an alliance between RedGate Systems Inc. and DB Computers Inc. that results in DB Gate Inc., an independent third company
C) a collusion between two competitors, RP Pharma Inc. and Vital Pharma Inc., to fix prices
D) an alliance that allows Virtue Insurance Inc. to claim 49 percent ownership in Mercury Finance Inc.

E) A) and B)
F) None of the above

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A _____ is best described as a voluntary arrangement between firms that involves the sharing of knowledge,resources,and capabilities with the intent of developing processes,products,or services.


A) proprietorship
B) cooperative
C) strategic alliance
D) leveraged buyout

E) B) and C)
F) A) and D)

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The Hershey Company,the largest U.S.chocolate manufacturer,decided to enter the Chinese market in 2013 because


A) the U.S. population was growing slowly and becoming more health conscious.
B) its strategic position in the U.S. market was well protected through high entry barriers.
C) this would help the company gain access to large cocoa plantations in China.
D) Hershey's main strategic focus was on product and market diversification and not on the domestic market.

E) B) and C)
F) A) and D)

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The partnership between Toyota and Tesla Motors,in which Toyota has made a $50 million investment in the California startup company to learn new knowledge and gain a window into new technology,is an example of a(n)


A) acquisition.
B) joint venture.
C) non-equity alliance.
D) equity alliance.

E) None of the above
F) All of the above

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What is horizontal integration?


A) the process of merging with a competitor at a different stage of the value chain
B) the process of merging with a competitor at the same stage of the value chain
C) the process of acquiring a competitor at a higher stage of the value chain
D) the process of acquiring a competitor at a lower stage of the value chain

E) C) and D)
F) B) and D)

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Which of the following statements is true of an equity alliance?


A) An equity alliance is based on contractual agreements rather than partial ownership.
B) In an equity alliance, the partners frequently exchange personnel to make the acquisition of tacit knowledge possible.
C) In an equity alliance, a standalone organization is created that is jointly owned by two or more parent companies.
D) An equity alliance creates weaker ties between the alliance partners when compared to a non-equity alliance.

E) B) and C)
F) A) and B)

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In Eli Lilly's Office of Alliance Management,who is responsible for providing the technical expertise and knowledge needed for the specific technical area and the day-to-day management of the alliance?


A) the alliance champion
B) the alliance leader
C) the alliance manager
D) the alliance boss

E) B) and C)
F) B) and D)

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Why did Pixar enter into a strategic alliance with Disney?


A) to develop into a live-action feature film company
B) to finance and distribute high-end graphic display systems for theaters
C) to develop into a computer hardware company
D) to finance and distribute its newly created computer-animated movies

E) A) and D)
F) A) and C)

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_____ is best described as cooperation by competitors to achieve a strategic objective.


A) Limited liability
B) Proprietorship
C) Co-opetition
D) Commerce

E) All of the above
F) C) and D)

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In Eli Lilly's Office of Alliance Management,the _____ is a senior,corporate-level executive responsible for high-level support and oversight.


A) alliance manager
B) alliance leader
C) alliance regulator
D) alliance champion

E) All of the above
F) B) and C)

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The main reason behind Google's decision to acquire the Israeli start-up company Waze for $1 billion was to


A) preempt its competitors from buying Waze.
B) share its capabilities with Waze.
C) support start-up companies with venture capital.
D) gain access to technology that is alien to it.

E) A) and B)
F) C) and D)

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In Eli Lilly's Office of Alliance Management,the alliance champion is primarily responsible for


A) making sure that an alliance fits within the firm's existing alliance portfolio and corporate-level strategy.
B) providing technical expertise and knowledge needed for the specific technical area in an alliance.
C) providing alliance training and development, as well as diagnostic tools.
D) serving as an alliance process resource and business integrator between the two alliance partners.

E) A) and C)
F) B) and C)

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A candy company called SweetThings Inc.forms an agreement with another candy company called Reverie Inc.Through this agreement,SweetThings owns 30 percent of Reverie.However,Reverie does not own any part of SweetThings.This type of agreement is called a(n)


A) non-equity alliance.
B) equity alliance.
C) joint venture.
D) capital venture.

E) B) and C)
F) A) and C)

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Toyota's President,Akio Toyoda,hopes that a transfer of tacit knowledge will take place through its equity alliance with Tesla Motors.He is referring to


A) the lean manufacturing process pioneered by Tesla.
B) the entrepreneurial spirit in Tesla.
C) the safety measures followed in Tesla, recorded in its user manuals.
D) the product information documented in Tesla's database.

E) A) and D)
F) B) and C)

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