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15 Cards in this Set
- Front
- Back
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Differentiate between a merger and an acquisition |
Merger is the joining of two independent companies, an acquisition is the purchase or takeover of one company by another. |
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Why would a firm use M&A as a vehicle for corporate strategy? |
Creates competitive advantage when they possess a superior relational capability |
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Define horizontal integration |
Horizontal integration is the process of acquiring and merging with competitors, leading to industry consolidation |
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What are the advantages of the corporate-level strategy of horizontal integration? |
Reduce competitive intensity, lower costs, increase differentiation, access new markets and distribution channels |
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Do mergers and acquisitions lead to competitive advantage? |
Most destroy shareholder value, but sometimes the shareholders of the acquiree create value due to the acquirer paying a premium |
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Why are M&A's a popular corporate level strategy? |
Desire to overcome competitive disadvantage, quest for superior acquisition and integration capability, principal-agent problems |
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Define strategic alliances |
An agreement between two firms to share knowledge, resources, and/or capabilities in order to develop processes, products and/or services |
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When is an alliance strategic? |
An alliance is strategic when it has the potential to affect a firm's competitive advantage by increasing value and/or lowering cost |
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Why do firms enter strategic alliances? |
Strengthen competitive position, enter a new market, hedge against uncertainty, access critical complementary resources, and learn new capabilities |
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Name three alliance governing mechanisms |
Contractual agreements for non-equity alliances, equity alliances, and joint ventures |
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What is the most common type of alliance? |
Non-equity contractual agreement |
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Describe the three phases of alliance management |
Partner selection/alliance formation, alliance design/governance, post-formation alliance management |
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How can an alliance management capability lead to a competitive advantage? |
Firms build superior alliance management capability through learning by doing and by establishing a dedicated alliance function |
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Define strategic networks |
A strategic network is an alliance of several firms to pursue a common purpose. It is a social structure of multiple organizations and the links among them |
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Where do firms want to be in a strategic network? |
The closer to the center the better off |
