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39) ________ growth strategies rely on establishing relationships with third parties, such as
mergers, acquisitions, strategic alliances, joint ventures, licensing, and franchising.
A) Internal
B) Domestic
C) Outside
D) External
E) Peripheral
40) Brian Ramsey owns a firm that develops and sells smartphone accessories. He is currently
trying to grow his firm through strategic alliances and joint ventures. Brian is pursuing a(n)
________ growth strategy.
A) domestic
B) external
C) subsidiary
D) internal
41) Which of the following is an example of an external growth strategy?
A) New product development
B) Mergers and acquisitions
C) Market penetration
D) Product line extension
E) Geographic expansion
42) Rachel Watts owns a chain of office supply stores. Over the past three years, Rachel has
significantly increased her sales through the outright purchase of additional office supply stores.
Rachel is pursuing a(n) ________ strategy.
A) acquisition
B) merger
C) strategic alliance
D) joint venture
E) licensing
43) A(n) ________ is the pooling of interests to combine two or more firms into one. A(n)
________ is the outright purchase of one firm by another.
A) acquisition; merger
B) merger; acquisition
C) licensing agreement; acquisition
D) joint venture; strategic alliance
E) strategic alliance; joint venture
44) In an acquisition, the surviving firm is called the ________, and the firm that is acquired is
called the ________.
A) target; acquirer
B) goal; objective
C) objective; aggressor
D) acquirer; target
E) aggressor; objective
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45) Two years ago, Cameron Jones and Mary Scott each owned a small chain of smoothie
restaurants in New York City. Just recently, they decided to pool their interests and combine
their individual chains of restaurants into one chain. What Cameron and Mary did with their
firms is called a(n) ________.
A) licensing agreement
B) strategic alliance
C) acquisition
D) joint venture
E) merger
46) Which of the following is a disadvantage of growth by means of external growth strategies?
A) Diversification of business risk
B) Economies of scale
C) Getting access to proprietary products or services
D) Reducing competition
E) Loss of organizational flexibility
47) Which of the following is an advantage of growth by means of external growth strategies?
A) Gaining access to new products and markets
B) Increased business complexity
C) Clash of corporate cultures
D) Antitrust implications
E) Loss of organizational flexibility
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48) The two primary steps involved in finding an appropriate acquisition candidate are (1) Make
a “short list” of appropriate acquisition candidates and (2) ________.
A) carefully screen each candidate to determine its suitability for acquisition
B) interview the CEO of each candidate to determine his/her openness to an acquisition
C) determine if acquiring each candidate is financially feasible
D) meet with each candidate’s top management team to discern if they are compatible with your
top management team
E) hire a consulting firm to determine the best acquisition candidate
49) ________ is the granting of permission by one company to another company to use a specific
form of its intellectual property under clearly defined conditions.
A) Verifying
B) Confirming
C) Endorsing
D) Licensing
E) Certifying
50) The ________ is the company that owns the intellectual property. The ________ is the
company purchasing the right to use it.
A) endorsee; endorser
B) licensor; licensee
C) licensor; endorsee
D) endorser; endorsee
E) licensee; licensor
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51) ________ licensing is the licensing of proprietary technology that the licensor typically
controls by virtue of a utility patent.
A) Skill
B) Intellectual property
C) Utility
D) Technology
E) Expertise
52) Qualcomm, a high-tech company headquartered in San Diego, owns the rights to several of
the key components that permit cell phones to work. Instead of selling cell phones itself,
Qualcomm grants permission to many companies to use specific forms of its intellectual property
in exchange for monetary compensation. Qualcomm in engaging in an external growth strategy
referred to as ________.
A) licensing
B) strategic alliances
C) acquisitions
D) new product development
E) joint ventures
53) ________ licensing is the licensing of a recognized trademark or brand that the licensor
typically controls through a registered trademark or copyright.
A) Goods and character
B) Products and trademark
C) Products and brand
D) Merchandise and character
E) Products and services
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54) Merchandise and character licensing is the licensing of a recognized trademark or brand that
the licensor typically controls through a registered ________.
A) trade secret or copyright
B) patent or copyright
C) trademark or patent
D) patent or trade secret
E) trademark or copyright
55) Samantha Jones owns a chain of ice cream stores in New England. To draw attention to her
stores, she adopted a very colorful and distinctive logo several years ago, which depicts a funny-
looking cow churning ice cream. Recently, a dairy company asked Samantha if it could use a
characterization of her funny-looking cow on a line of yogurt it is coming out with, and offered
to pay Samantha’s company 3 cents for every carton of yogurt it sells that has the cow’s image on
the carton. If Samantha accepts this proposal, she will need to enter into a(n) ________
agreement with the dairy.
A) licensing
B) joint venture
C) strategic alliance
D) new product development
E) exporting
56) According to the textbook, the key to effective merchandise and character licensing is
________.
A) get licensing income monthly rather than yearly
B) resist the temptation to license a trademark too widely
C) licensing a trademark very widely
D) restrict licensing agreements to one year
E) restrict licensing to product categories that have no relevance and appeal to a firm’s core
customers
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57) A ________ is a partnership between two or more firms that is developed to achieve a
specific goal and has no joint ownership involved.
A) joint alliance
B) joint venture
C) licensing agreement
D) merger
E) strategic alliance
58) Which of the following was identified in the textbook as an advantage of participating in
strategic alliances and joint ventures?
A) Management complexities
B) Loss of organizational flexibility
C) Partners’ cultures may clash.
D) Risk becoming dependent on a partner
59) Which of the following was identified in the textbook as a disadvantage of participating in
strategic alliances and joint ventures?
A) Risk and cost sharing
B) Economies of scale
C) Partial loss of decision autonomy
D) Gain access to a foreign market
E) Neutralizing or blocking competitors
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60) In the context of strategic alliances, ________ alliances feature cooperation in research and
development, engineering, and manufacturing.
A) administrative
B) directorial
C) marketing
D) organizational
E) technological
61) In the context of strategic alliances, ________ alliances typically match a company with a
distribution system with a company that has a product to sell to increase sales of a product or
service.
A) promotion
B) marketing
C) organizational
D) directional
E) technological
62) The Partnering for Success feature in Chapter 14 is titled “Three Steps to Alliance Success.”
The three steps to alliance success identified in the feature are ________.
A) drafting a licensing agreement, setting up a governance structure, and making it work
B) selecting a partner, cutting the deal, and making it work
C) interviewing potential partners, cutting the deal, and supervising the implementation of the
agreement
D) drafting a licensing agreement, cutting the deal, and setting up a governance structure
E) selecting an alliance “manager,” setting up a governance structure, and making it work
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63) External growth strategies rely on establishing relationships with third parties, such as
64) An acquisition is the pooling of interests to combine two or more firms into one. A merger is
the outright purchase of one firm by another.
65) In an acquisition, the surviving firm is called the acquirer, and the firm that is acquired is
called the target.
66) In regard to acquisitions, many firms have found that the process of assimilating another
company into their current operations is relatively easy and is not disruptive to the current
operations of their firm.
67) Licensing is the granting of permission by one company to another company to use a specific
form of its intellectual property under clearly-defined conditions.
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68) Technology licensing is the licensing of proprietary technology that the licensor typically
controls by virtue of a utility patent.
69) Loss of proprietary information is a disadvantage of participating in strategic alliances and
joint ventures.
70) A joint venture is a partnership between two or more firms that is developed to achieve a
specific goal and has no joint ownership involved.
71) In a link joint venture, the partners collaborate at a single point in the value chain to gain
72) In a scale joint venture, the position of the parties is not symmetrical, and the objectives of
the partners may diverge.
73) A spin-out occurs when a large company divests itself of one of its smaller divisions and the
division becomes an independent company.
74) Describe what licensing is. What type of intellectual property can be licensed? Identify the
two types of licensing pursued by entrepreneurial firms.