1
Q
Strategic alliance
A
Independent firms cooperate to achieve competitive advantage
2
Q
Strategic alliance is most applicable when (9)
A
- Transaction costs of integrating is high compared to expected synergies
- In turbulent environments
- With high strategic uncertainty
- High disperson of knowledge
- If complementary resources are only short-term
- If it’s easy to protect competitive advantages from a partner
- Firms are financially weaker
- Firms have high absorptive capacity
- Firms have high social capital
3
Q
Acquisition
A
Taking control of a company by acquiring shares or property
4
Q
Acquisition is most attractive when (8)
A
- Danger of opportunistic behaviour is high
- High need for control
- In more predictable environments
- In case of high specifity
- High behavioural uncertainty
- High persistence of economic synergies
- If you can only protect competitive damage by high transaction costs
- When firms are financially stronger
5
Q
Greenfield investment
A
Setting up new ventures
6
Q
Greenfield investment most attractive when/because (6)
A
- Firm-specific advantages are deeply embedded into the firm’s labor force
- It is difficult to integrate a new unit into the acquirer’s business
- Cheaper to finance through debt or retained earnings
- Scale of US operation is relatively small
- Company produces a product it already produces in their homeland
- Greenfields are the most efficient way to transfer technological advantages
7
Q
Acquisition (vs Greenfield is most attractive when (
A
- Firm-specific advantages can be succesfully combined with going concern
- The targret firm represents a bargain for the acquirer
- The investor can leverage its firm-specific advantages more effectively
- If there is a maximum rate at which short of personnel is likely to be constrained in its ability to make greenfield investments
- When industries are characterized by very high of very low growth
- Followers are more likely to enter throug acquisitions than through greenfields
8
Q
Resource based view
A
Explains firms as bundles of resources and shifts the focus from cost- to value-consuderations
9
Q
Transaction cost view of firm
A
Minimizing transaction costs
