MGMT425 Chapter 9 Exam Questions With
100% Correct Answers
The success of the Pixar-Disney strategic alliance demonstrated that:
A. Disney was in desperate need of Pixar's graphic display systems.
B. the two entities' complementary assets matched.
C. it was easier for the alliance partners to reduce the value gap created.
D. the companies were effectively managing an unrelated diversification strategy.
B. the two entities' complementary assets matched.
Disney became the world's leading media company to a large extent by pursuing a corporate strategy
of _____.
A. related-linked diversification
B. cost-leadership
C. unrelated diversification
D. hostile takeovers
A. related-linked diversification
Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.?
A. GD Inc. purchases VS Inc. for $80 billion despite VS Inc. being against the purchase.
B. GD Inc. and VS Inc. join together to form a third new entity, while they also operate separately.
C. GD Inc. outsources a few of its business activities to VS Inc. for competitive advantage.
D. GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.
D. GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.
When does a merger between companies typically occur?
A. When two firms of comparable size join to form a combined entity
B. When large, incumbent firms buy startup companies
C. When a target firm does not want to be acquired
D. When two or more firms enter a temporary vertical strategic alliance
A. When two firms of comparable size join to form a combined entity
,The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 billion. All the
hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are
known as Mansion hotels. What does this scenario best illustrate?
A. A merger
B. A joint venture
C. An acquisition
D. An equity alliance
C. An acquisition
Which of the following is true of acquisitions?
A. Acquisitions can be friendly or hostile.
B. Acquisitions can occur only when the involved entities are of comparable size.
C. In acquisitions, two independent companies join to form a separate third entity.
D. Acquisitions increase the competitive intensity in an industry.
A. Acquisitions can be friendly or hostile.
When large, incumbent firms buy startup companies, the transaction is generally described as a(n)
_____.
A. joint venture
B. partnership
C. acquisition
D. alliance
C. acquisition
Titan Autos Inc. merged with its competitor, Cadvia Autos Inc. This allowed Titan Autos to use its
technological competencies along with Cadvia Autos's marketing capabilities to capture a larger
market share than what the two entities individually held. What does this scenario best illustrate?
A. Backward integration
B. Forward integration
C. Horizontal integration
D. Vertical integration
C. Horizontal integration
, Which of the following scenarios best illustrates horizontal integration?
A. Regal Autos Inc. enters into a licensing contract with a distributor in a new international market.
B. Regal Autos Inc. acquires a component parts manufacturer who previously supplied to Regal Autos'
competitor.
C. Regal Autos Inc. sets up its own distribution channel and retail stores.
D. Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.
D. Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.
How does horizontal integration within an industry affect the surviving firms?
A. By increasing the threat the surviving firms will face from new entrants
B. By strengthening the rivalry among existing firms
C. By requiring the surviving firms to shift their focus from non-price to price competition
D. By strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
D. By strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
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.
B. There is a reduction of excess capacity in the market.
How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving
carriers?
A. By facilitating excess capacity in the industry
B. By preventing mergers from taking place
C. By lowering competitive intensity in the industry overall
D. By increasing the threat of entry in the industry
C. By lowering competitive intensity in the industry overall
It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the
European Commission to approve any large horizontal integration activity because:
100% Correct Answers
The success of the Pixar-Disney strategic alliance demonstrated that:
A. Disney was in desperate need of Pixar's graphic display systems.
B. the two entities' complementary assets matched.
C. it was easier for the alliance partners to reduce the value gap created.
D. the companies were effectively managing an unrelated diversification strategy.
B. the two entities' complementary assets matched.
Disney became the world's leading media company to a large extent by pursuing a corporate strategy
of _____.
A. related-linked diversification
B. cost-leadership
C. unrelated diversification
D. hostile takeovers
A. related-linked diversification
Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.?
A. GD Inc. purchases VS Inc. for $80 billion despite VS Inc. being against the purchase.
B. GD Inc. and VS Inc. join together to form a third new entity, while they also operate separately.
C. GD Inc. outsources a few of its business activities to VS Inc. for competitive advantage.
D. GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.
D. GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.
When does a merger between companies typically occur?
A. When two firms of comparable size join to form a combined entity
B. When large, incumbent firms buy startup companies
C. When a target firm does not want to be acquired
D. When two or more firms enter a temporary vertical strategic alliance
A. When two firms of comparable size join to form a combined entity
,The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 billion. All the
hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are
known as Mansion hotels. What does this scenario best illustrate?
A. A merger
B. A joint venture
C. An acquisition
D. An equity alliance
C. An acquisition
Which of the following is true of acquisitions?
A. Acquisitions can be friendly or hostile.
B. Acquisitions can occur only when the involved entities are of comparable size.
C. In acquisitions, two independent companies join to form a separate third entity.
D. Acquisitions increase the competitive intensity in an industry.
A. Acquisitions can be friendly or hostile.
When large, incumbent firms buy startup companies, the transaction is generally described as a(n)
_____.
A. joint venture
B. partnership
C. acquisition
D. alliance
C. acquisition
Titan Autos Inc. merged with its competitor, Cadvia Autos Inc. This allowed Titan Autos to use its
technological competencies along with Cadvia Autos's marketing capabilities to capture a larger
market share than what the two entities individually held. What does this scenario best illustrate?
A. Backward integration
B. Forward integration
C. Horizontal integration
D. Vertical integration
C. Horizontal integration
, Which of the following scenarios best illustrates horizontal integration?
A. Regal Autos Inc. enters into a licensing contract with a distributor in a new international market.
B. Regal Autos Inc. acquires a component parts manufacturer who previously supplied to Regal Autos'
competitor.
C. Regal Autos Inc. sets up its own distribution channel and retail stores.
D. Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.
D. Regal Autos Inc. joins with Marcus Motors Inc., one of its direct competitors.
How does horizontal integration within an industry affect the surviving firms?
A. By increasing the threat the surviving firms will face from new entrants
B. By strengthening the rivalry among existing firms
C. By requiring the surviving firms to shift their focus from non-price to price competition
D. By strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
D. By strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
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.
B. There is a reduction of excess capacity in the market.
How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving
carriers?
A. By facilitating excess capacity in the industry
B. By preventing mergers from taking place
C. By lowering competitive intensity in the industry overall
D. By increasing the threat of entry in the industry
C. By lowering competitive intensity in the industry overall
It is necessary for government authorities such as the Federal Trade Commission (FTC) and/or the
European Commission to approve any large horizontal integration activity because:
