Test Bank Strategic Management 5th Edition by Frank
Rothaermel Chapter 1-12| 9781260261288 | All Chapters with
Answers and Rationals
What three options do corporate executives have at their disposal to drive firm growth? - ANSWER: 1.
Organic Growth (through strategic development)
2. External Growth: through alliances
3. External Growth: through acquisitions
What is the build-borrow-buy framework? - ANSWER: A conceptual model that aids firms in deciding
whether to pursue internal development (build). Enter a contractual agreement or strategic
framework (borrow), or acquire new resources, capabilities, and competencies (buy).
What is the strategic resource gap and why is it the starting point in the build-borrow-buy
framework? - ANSWER: A barrier to entry that could either prevent (or protect) a company from
implementing a Build strategy. If the firm's resources are highly relevant to closing the gap, the firm
should build. If the resources are not relevant the firm should borrow or buy.
Relating to the build-borrow-buy framework, which 4 sequential questions enable an organization to
determine the best course of action to close the strategic resource gap - ANSWER: 1. Relevancy: How
relevant are the firm's existing internal resources to solving the resource gap?
2. Tradability: How tradable are the targeted resources that may be available externally?
3. Closeness: How close do you need to be to your external resource partner?
4. Integration: How well can you integrate the targeted firm, should you determine you need to
acquire the resource partner?
Using which two criteria do strategic leaders evaluate the relevance of internal resources? - ANSWER:
1. Are they similar to those the firm needs to develop?
2. Are they superior to those of competitors in the targeted area?
Under what conditions are the firm's internal resources relevant to pursue internal development? -
ANSWER: If both of the above conditions are met.
What does the term tradable imply? - ANSWER: That a firm is able to source a resource externally
through a contract that allows for the transfer of ownership or use of the resource.
What are examples of ways to "borrow" resources from other companies? - ANSWER: Contracts that
allow for long or short term Licensing or Franchising
Why would it sometimes be preferable to obtain resources through strategic alliances, rather than
outright acquisition? - ANSWER: Mergers and Acquisitions are more costly, more complex and more
difficult to unwind/reverse than a simple strategic alliance. M&A should only be considered if there
need to be extreme closeness to the resource partner.
When does an alliance qualify as strategic? - ANSWER: When it has the potential to affect the firm's
competitive advantage.
What is a strategic alliance? - ANSWER: A voluntary arrangement between firms that involve the
sharing of knowledge, resources, and capabilities with the intent of developing processes, products,
or services.
Are strategic alliances they rare or common? - ANSWER: Common. Thousands are formed each year,
as globalization and telecommunications have made them easier to occur.
, Why are strategic alliances attractive in comparison to "going it alone"? - ANSWER: They enable firms
to achieve goals faster and at a lower costs than going it alone
What is the relational view of competitive advantage? - ANSWER: Strategic management framework
that proposes that critical resources and capabilities frequently are embedded in strategic alliances
that spam firm boundaries.
What percentage of Fortune 1000 CEOs indicated more than one-quarter of their firm's revenues
were derived from strategic alliances? - ANSWER: Over 80%
What are five common reasons firms enter strategic alliances? - ANSWER: o Strengthen competitive
position
o Enter new markets
o Hedge against uncertainty
o Access critical complementary assets
o Learn new capabilities
How did the strategic alliance between HP and DreamWorks Animation SKG affect HP? - ANSWER:
The alliance allowed it to still pursue related diversification. It also allowed HP to compete against
Cisco's high end Telepresence teleconferencing solution. It allowed HP to enter a new market in terms
of products & services that it could not have entered alone.
Relating to hedging against uncertainty, what is a real-options perspective? - ANSWER: An approach
to strategic decision-making that breaks down a larger investment decision into a set of smaller
decisions that are staged sequentially over time.
Relating to learning new capabilities, what is co-opetition? - ANSWER: Cooperation by competitors to
achieve a strategic objective.
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 the firms learn may vary
Why did Toyota enter into the NUMMI joint venture with GM? - ANSWER: To learn how to implement
its lean manufacturing program with an American workforce. It was a test run for Toyota before
building fully owned manufacturing facilities in Alabama, Indiana, Kentucky, Mississippi, Texas, and
West Virginia.
With which three mechanisms can alliances be governed? - ANSWER: 1. Non-Equity Alliance (i.e.
Microsoft-IBM nonexclusive licensing agreement for MS-DOS)
2. Equity Alliance (i.e. GM's equity investment in Lyft)
3. Joint Venture (i.e. Hulu, owned by Disney (67%) and Comcast (33%) )
What is a non-equity alliance? - ANSWER: A partnership based on contracts between firms
What are the most frequent forms of non-equity alliances? - ANSWER: 1. Supply Agreements
2. Distribution Agreements
3. Licensing Agreements
What is explicit knowledge? - ANSWER: Knowledge that can be arranged into groups that concern the
notion of knowing about a certain process or product. Patents, User Manuals & Scientific Publications
are examples.
What is a licensing agreement? - ANSWER: Are contractual alliances in which the participants
regularly exchange codified knowledge.
Rothaermel Chapter 1-12| 9781260261288 | All Chapters with
Answers and Rationals
What three options do corporate executives have at their disposal to drive firm growth? - ANSWER: 1.
Organic Growth (through strategic development)
2. External Growth: through alliances
3. External Growth: through acquisitions
What is the build-borrow-buy framework? - ANSWER: A conceptual model that aids firms in deciding
whether to pursue internal development (build). Enter a contractual agreement or strategic
framework (borrow), or acquire new resources, capabilities, and competencies (buy).
What is the strategic resource gap and why is it the starting point in the build-borrow-buy
framework? - ANSWER: A barrier to entry that could either prevent (or protect) a company from
implementing a Build strategy. If the firm's resources are highly relevant to closing the gap, the firm
should build. If the resources are not relevant the firm should borrow or buy.
Relating to the build-borrow-buy framework, which 4 sequential questions enable an organization to
determine the best course of action to close the strategic resource gap - ANSWER: 1. Relevancy: How
relevant are the firm's existing internal resources to solving the resource gap?
2. Tradability: How tradable are the targeted resources that may be available externally?
3. Closeness: How close do you need to be to your external resource partner?
4. Integration: How well can you integrate the targeted firm, should you determine you need to
acquire the resource partner?
Using which two criteria do strategic leaders evaluate the relevance of internal resources? - ANSWER:
1. Are they similar to those the firm needs to develop?
2. Are they superior to those of competitors in the targeted area?
Under what conditions are the firm's internal resources relevant to pursue internal development? -
ANSWER: If both of the above conditions are met.
What does the term tradable imply? - ANSWER: That a firm is able to source a resource externally
through a contract that allows for the transfer of ownership or use of the resource.
What are examples of ways to "borrow" resources from other companies? - ANSWER: Contracts that
allow for long or short term Licensing or Franchising
Why would it sometimes be preferable to obtain resources through strategic alliances, rather than
outright acquisition? - ANSWER: Mergers and Acquisitions are more costly, more complex and more
difficult to unwind/reverse than a simple strategic alliance. M&A should only be considered if there
need to be extreme closeness to the resource partner.
When does an alliance qualify as strategic? - ANSWER: When it has the potential to affect the firm's
competitive advantage.
What is a strategic alliance? - ANSWER: A voluntary arrangement between firms that involve the
sharing of knowledge, resources, and capabilities with the intent of developing processes, products,
or services.
Are strategic alliances they rare or common? - ANSWER: Common. Thousands are formed each year,
as globalization and telecommunications have made them easier to occur.
, Why are strategic alliances attractive in comparison to "going it alone"? - ANSWER: They enable firms
to achieve goals faster and at a lower costs than going it alone
What is the relational view of competitive advantage? - ANSWER: Strategic management framework
that proposes that critical resources and capabilities frequently are embedded in strategic alliances
that spam firm boundaries.
What percentage of Fortune 1000 CEOs indicated more than one-quarter of their firm's revenues
were derived from strategic alliances? - ANSWER: Over 80%
What are five common reasons firms enter strategic alliances? - ANSWER: o Strengthen competitive
position
o Enter new markets
o Hedge against uncertainty
o Access critical complementary assets
o Learn new capabilities
How did the strategic alliance between HP and DreamWorks Animation SKG affect HP? - ANSWER:
The alliance allowed it to still pursue related diversification. It also allowed HP to compete against
Cisco's high end Telepresence teleconferencing solution. It allowed HP to enter a new market in terms
of products & services that it could not have entered alone.
Relating to hedging against uncertainty, what is a real-options perspective? - ANSWER: An approach
to strategic decision-making that breaks down a larger investment decision into a set of smaller
decisions that are staged sequentially over time.
Relating to learning new capabilities, what is co-opetition? - ANSWER: Cooperation by competitors to
achieve a strategic objective.
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 the firms learn may vary
Why did Toyota enter into the NUMMI joint venture with GM? - ANSWER: To learn how to implement
its lean manufacturing program with an American workforce. It was a test run for Toyota before
building fully owned manufacturing facilities in Alabama, Indiana, Kentucky, Mississippi, Texas, and
West Virginia.
With which three mechanisms can alliances be governed? - ANSWER: 1. Non-Equity Alliance (i.e.
Microsoft-IBM nonexclusive licensing agreement for MS-DOS)
2. Equity Alliance (i.e. GM's equity investment in Lyft)
3. Joint Venture (i.e. Hulu, owned by Disney (67%) and Comcast (33%) )
What is a non-equity alliance? - ANSWER: A partnership based on contracts between firms
What are the most frequent forms of non-equity alliances? - ANSWER: 1. Supply Agreements
2. Distribution Agreements
3. Licensing Agreements
What is explicit knowledge? - ANSWER: Knowledge that can be arranged into groups that concern the
notion of knowing about a certain process or product. Patents, User Manuals & Scientific Publications
are examples.
What is a licensing agreement? - ANSWER: Are contractual alliances in which the participants
regularly exchange codified knowledge.
