Final 2019 Flashcards
What is NOT a reason for picking an alliance over an M&A for a firm?
Low failure rate
Which alliance governance mode supports the greatest level of interfirm learning?
Joint venture
Bear Inc. currently has 100 shares outstanding at a current stock price of € 20. Bear Inc. has an arrangement whereby if any third party reaches 30% ownership of the company, other shareholders can buy shares at 50% market value with one such right per share. In November 2019, Bird Inc. buys 50 shares. As a result, the remaining investors are offered to buy additional shares against a reduced price, resulting in a dilution of the ownership share of Bird Inc. in Bear Inc. This M&A takeover defense is called:
Poison pill
Firms engage in strategic alliances for a variety of reasons. One reason is to improve the performance of their current operations. Which of the following reasons does NOT fall under the umbrella reason of improving the performance of current operations?
Facilitating the development of technology standards
Vision Inc. is on the hunt for a new acquisition target. After a diligent search, it stumbles on Mondial Inc. The market value of Vision Inc. before the acquisition is estimated to be € 300 mln, while the market value of Mondial Inc. equals € 75 mln. An independent firm is hired to provide an estimate what the combined market value of Vision Inc. with Mondial Inc. would be. This independent firm estimates that there is a chance of 50% the combined value will equal € 400 mln and a chance of 50% the combined value will equal € 500 mln. How much would Vision Inc. be willing to pay for Mondial Inc.?
Price > 140 mln
A food manufacturer earns 60% of its revenues through chocolate, 20% through dog food and 20% through cat food. The three businesses all share the same production technology and distribution channel. How should you characterize this kind of diversification according to the measure of Rumelt/Wrigley?
Related-constrained diversification
Imagine a firm in which the headquarter decentralized the decision making power to the business units and the headquarter only uses financial tools to incentivize and measure the performance of the units. In what type of control-situation is this firm?
Competitive control
When elaborating on their international strategies, firms constantly evaluate how much local responsiveness is suitable. What is NOT an advantage of a firm maximizing local responsiveness?
Full exploitation of economies of scale across all markets a firm operates in
If Microsoft, the software developer, manages to develop valuable activities in the electric car industry, what would be the LEAST logical explanation of that corporate value creation?
Maximizing management compensation
During the course, various measures of Corporate-Level Strategy were explained. How is the measurement called that typically suffers from subjective estimation of the analyst?
Categorical measurement
Some acquisitions can simultaneously be classified as two different corporate level strategy types. Which of the following examples is NOT an example of overlap between two different corporate level strategy types?
A pizza take-out store buys a flour and cheese producer and all products that the company produces will be used by the pizza take-out store
