Podcast
Questions and Answers
Which of the following best describes the central strategic challenge in a competitive collaboration, such as a strategic alliance?
Which of the following best describes the central strategic challenge in a competitive collaboration, such as a strategic alliance?
What is a significant risk associated with the "learning race" dynamic in strategic alliances?
What is a significant risk associated with the "learning race" dynamic in strategic alliances?
How does the mobility of a firm-specific advantage (FSA) affect its potential diffusion within a strategic alliance?
How does the mobility of a firm-specific advantage (FSA) affect its potential diffusion within a strategic alliance?
According to the content, what is a primary reason why mergers and acquisitions (M&As) are undertaken despite their known difficulties?
According to the content, what is a primary reason why mergers and acquisitions (M&As) are undertaken despite their known difficulties?
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What does 'grooved thinking' refer to in the context of M&A decision-making?
What does 'grooved thinking' refer to in the context of M&A decision-making?
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Which of the following conditions would favor a strategic alliance over a merger or acquisition?
Which of the following conditions would favor a strategic alliance over a merger or acquisition?
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According to Ghemawat and Ghadar, what is the key challenge in international mega-mergers?
According to Ghemawat and Ghadar, what is the key challenge in international mega-mergers?
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Which of the following 'alternatives to international M&A deals' involves taking actions to impede or slow down competitors?
Which of the following 'alternatives to international M&A deals' involves taking actions to impede or slow down competitors?
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How do location-bound firm-specific advantages (FSAs) pose a challenge in mergers and acquisitions?
How do location-bound firm-specific advantages (FSAs) pose a challenge in mergers and acquisitions?
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What does the phrase 'Pick Up the Scraps' refer to as an alternative to pursuing international M&A deals?
What does the phrase 'Pick Up the Scraps' refer to as an alternative to pursuing international M&A deals?
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Flashcards
Strategic Alliance
Strategic Alliance
A partnership where competitors collaborate to share resources and knowledge.
Learning Race
Learning Race
The competition between partners to gain more knowledge than they share.
Dysfunctional Knowledge Sharing
Dysfunctional Knowledge Sharing
Ineffective collaboration due to trust issues or miscommunication.
FSAs (Firm-Specific Advantages)
FSAs (Firm-Specific Advantages)
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Mergers and Acquisitions (M&A)
Mergers and Acquisitions (M&A)
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Cognitive Bias in M&A
Cognitive Bias in M&A
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Purchase Price Premium
Purchase Price Premium
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Alliance Over M&A
Alliance Over M&A
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Key Challenge in M&A
Key Challenge in M&A
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Location-Bound FSAs
Location-Bound FSAs
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Study Notes
Entry Mode Dynamics 2: Strategic Alliances
- Strategic alliances are collaborative partnerships with a potential rival
- The key benefit is sharing risks and costs (like R&D) and learning from complementary resources
- Challenges include the partner potentially appropriating the alliance partner's FSAs (firm-specific assets)
- Learning race is risky; potentially dysfunctional knowledge sharing and managers losing sight of the alliance's initial goals.
- Managing multiple alliances can reduce coherence and complicate management.
- The mobility of a firm's FSA (firm-specific asset) affects how easily it can be transferred or copied.
Entry Mode Dynamics 3: Mergers and Acquisitions
- Mergers and acquisitions (M&A) span a commitment range, from foreign distributors to full mergers.
- M&As aim to create larger firms capable of operating effectively in global markets.
- Challenges in M&As include integration difficulties (especially with geographically dispersed FSAs which may not be easily integrated), and "purchase price premiums" due to competition.
- Cognitive biases like topline obsession (focusing on sales growth over profits) and stock price exploitation (overvaluing stock prices) can influence M&A decisions..
- M&As are not always the best strategy; sometimes existing FSAs can be exploited effectively by prioritizing the development and operation of unique competencies.
- Preferences for alliances are when each firm requires only a subset of the partner's FSAs and/or the MNE only wants a portion of the partner's FSA.
Alternatives to M&A
- Focus on developing and profitably exploiting firm-specific assets (FSAs) instead of large-scale mergers and acquisitions.
- Strategies like "Pick Up the Scraps," "Stay Home," keeping an eye on the ball (FSAs), making friends, appealing to the referee (slowing competitors), stalking your target, and selling out are alternative options to large-scale M&A.
- Ghemawat and Ghadar propose that prioritizing FSA development is a better approach than immediate growth via large scale acquisitions.
Challenges of International Mega-Mergers
- FSAs are often location-bound, making integration challenging.
- Combining the FSAs of two multinational enterprises (MNEs) can be complex and requires significant effort.
- A single unified approach to doing business within the merged entity may not be desirable or possible.
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Description
Explore strategic alliances as collaborations with potential rivals, focusing on risk sharing, cost reduction, and mutual learning. Mergers and Acquisitions aim to create larger global firms. Challenges in M&As include integration difficulties of geographically dispersed assets.
