Question 1

A company can increase the probability of success of an internal venture by constructing efficient scale production facilities ahead of demand.

Accepted Answer

By constructing efficient scale production facilities ahead of demand, a company can be better prepared to meet the demand for their product, which can increase the probability of success for their internal venture. This approach helps to ensure that the company is able to produce and deliver their product in a timely and cost-effective manner, which can help to establish their brand and build customer loyalty. Additionally, having efficient scale production facilities in place can help the company to manage costs and avoid overproduction, which can be a major risk for any internal venture.

Question 2

To increase the probability of commercial success, a company should foster close links between R&D and marketing personnel.

Accepted Answer

Close links between R&D and marketing personnel can help ensure that products being developed meet the needs and desires of the target market, increasing the likelihood of commercial success. This collaboration can also help identify market trends and inform product development decisions.

Question 3

Internal new ventures involve creating the value-chain functions necessary to start a new business from scratch.

Accepted Answer

Internal new ventures refer to creating a new business or product within an existing organization. This involves establishing the various functions such as marketing, operations, finance, etc. required to start the new venture from scratch.

Question 4

Many acquisitions create value rather than destroy it.

Accepted Answer

The answer of Many acquisitions create value rather than destroy...

Question 5

A company should foster close links between R&D and marketing personnel to ensure that the company has the capability to manufacture any proposed new products.

Accepted Answer

The primary reason for fostering close links between R&D and marketing personnel is to ensure that new products meet customer needs and are viable in the market, not specifically to ensure manufacturing capability.

Question 6

One reason for acquisition failure is management's inadequate attention to preacquisition screening.

Accepted Answer

Preacquisition screening is crucial in identifying potential issues and risks associated with an acquisition. Without adequate attention to this process, management may overlook crucial information and make decisions based on incomplete or inaccurate data, leading to failure.

Question 7

Short-term outsourcing agreements are a type of strategic alliance.

Accepted Answer

Short-term outsourcing agreements can be considered a type of strategic alliance as they involve two companies working together towards a common goal in a mutually beneficial arrangement. However, unlike some long-term strategic alliances, short-term outsourcing agreements are typically focused on a specific project or task and have a defined end date.

Question 8

Research evidence suggests that large-scale entry into a new business is the best way for an internal venture to succeed.

Accepted Answer

Research studies have found that internal ventures that enter into a new market or business domain have a higher chance of success than those that stick to their existing markets or domains. This is because new markets offer greater opportunities for growth and innovation, and can potentially yield higher returns than existing markets. Additionally, entering a new business can help the internal venture to avoid getting disrupted by external competitors or changes in the market. Thus, large-scale entry into a new business is often considered the best strategy for internal ventures looking to succeed.

Question 9

Hamal and Prahalad maintain that identifying current core competencies is the first step a company should take in deciding which business opportunities to pursue.

Accepted Answer

Hamal and Prahalad suggest that identifying current core competencies is indeed the first step in determining which business opportunities to pursue.

Question 10

Evidence suggests that the most important criterion for evaluating a venture during its first four to five years is market share.

Accepted Answer

Market share is a critical factor for evaluating a venture during its initial years because it reflects the company's ability to capture a significant portion of the market demand in comparison to competitors. It also indicates the venture's potential to sustain growth and profitability in the long-run. Other criteria such as revenue, profitability, customer satisfaction, and innovation are also important, but they are influenced by market share.

Question 11

The failure rate for strategic alliances is quite high.

Accepted Answer

Research has shown that the failure rate for strategic alliances is quite high, with estimates ranging from 30% to 70%.

Question 12

An advantage of project teams is that they can significantly reduce the time it takes to develop a new product.

Accepted Answer

Project teams bring together individuals with diverse skills and expertise to work towards a common goal. This can result in increased efficiency and productivity, leading to faster development of new products. Additionally, project teams often have clear timelines, milestones, and deadlines, which helps to keep everyone focused and on track.

Question 13

An advantage of internal ventures over acquisitions as a mode of entering a new business area is that internal ventures involve lower risks.

Accepted Answer

Internal ventures often involve high risks due to uncertainties in market acceptance, the development of new competencies, and the potential for significant resource commitment without guaranteed success, whereas acquisitions can offer immediate market access and established operations.

Question 14

A joint venture involves two companies jointly creating a new separate company to enter a new business area.

Accepted Answer

A joint venture is a business arrangement where two or more companies come together to form a new separate company, with shared ownership and control, to undertake a specific business project, often in a new area of business or geographic location.

Question 15

The parties to an alliance may be actual or potential competitors.

Accepted Answer

It is possible for actual or potential competitors to form an alliance in order to achieve common goals or benefits.

Question 16

Acquisitions take longer to be executed than an internal new venture.

Accepted Answer

The answer of Acquisitions take longer to be executed than...

Question 17

Internal new ventures are the preferred entry mode when the industry to be entered is well-established and incumbent companies enjoy significant protection from barriers to entry.

Accepted Answer

Internal new ventures are preferred entry mode when the industry to be entered is emerging and uncertainty is high. When the industry to be entered is well-established and incumbent companies enjoy significant protection, external entry modes such as acquisitions or alliances may be preferred.

Question 18

After an acquisition, acquired companies experience high management turnover.

Accepted Answer

Acquired companies often experience high management turnover, as the new parent company may have different leadership structures and priorities. This can lead to redundancies and restructuring, which often results in key executives and managers leaving the company.

Question 19

By acquiring an established enterprise, a company can circumvent most entry barriers.

Accepted Answer

Acquiring an established enterprise allows a company to bypass many entry barriers such as brand recognition, access to resources, and customer base.

Question 20

Ample evidence suggests that many acquisitions do add value for the acquiring company, and indeed, often end up increasing value.

Accepted Answer

The answer of Ample evidence suggests that many acquisitions do...

Quiz 8: Strategic Change: Implementing Strategies to Build and Develop a Company