1. Multiple Answer - Select All That Apply

   HAL Industries has an idea for a new quantum supercomputer, but for it to work effectively, it needs specialized software. HAL lacks strong software development capabilities, so it decides to enter an R&D alliance with a very capable software developer, AI-Software Inc. Why would an alliance with AI-Software be preferable to acquiring AI-Software?

   	A.	The company cultures are very different, especially in respect to operations, marketing, and sales
   	B.	With the exception of this software development project, AI-Software and HAL would share no resources
   	C.	HAL and AI-Software have very different organizational structures and business models, which increases the expected cost of integration and the risk that integration will fail
   	D.	Communication can flow better in an alliance than in an integrated company
   	E.	HAL can easily assess the quality of the software produced by AI-Software
   	F.	Alliances are riskier than licensing

3 points

QUESTION 12

1. A multi-divisional firm makes products in many industries. It has strong process innovations and focuses on quality control. Which best explains its failure to profit from radical new product innovations?

   	A.	Pricing new products is difficult and the firm priced the product too low
   	B.	It believes rivals will be able to copy its innovations by the decline stage of the industry cycle and effectively wipe out its ability to profit in this stage
   	C.	Exploring new ideas can conflict with its focus on exploiting its process and quality capabilities
   	D.	This industry has a highly variable business cycle and the firm needs to time its radical innovations with the business cycle if it wants to make large profits
   	E.	It is having trouble generating significant economies of scope in its current business

3 points

QUESTION 13

1. A firm has two divisions, potato chips and wind turbines. The CEO is reviewing the scope of the firm. The potato chip division increased revenue 10% in 2017 and had a return on assets of 13%. Wind turbines increased revenue 5% in 2017 and had a ROA of 3%. Which of the following would best support the CEOs decision to divest of the potato chip division?

   	A.	The potato chip division has strong growth and stakeholders are worried about its negative spillover on the wind turbine division
   	B.	The potato chip division president does not want the CEO to allocate capital to wind turbines as it will slow down the growth of the potato chip division
   	C.	Barriers to entry into the potato chip industry have declined extensively and the CEO expects many highly capable firms to enter the industry
   	D.	Wind turbines produce energy that is as clean as hydroelectric plants
   	E.	A marketing alliance among potato farmers has fallen apart and has reduced their ability to raise prices

3 points

QUESTION 14

1. A medium sized chemical firm produces aldehyde-based coatings for sealing particle board that is used in furniture products. The government recently issued a report that labels these coatings as known human carcinogens. Many influential stakeholders have spoken out against the use of toxic products in furniture. The firm believes it could lose support of these stakeholders. Unfortunately, all alternative particle board coating chemicals are also toxic and the firm knows that no solution can be developed. The firms expertise is only in aldehyde-based chemical technology. What corporate strategy could the firm use to alleviate the pressure from these angry stakeholders?

   	A.	Forward integrate into particle board furniture production so that it ensures it has a market for aldehyde-based coatings
   	B.	Backward integrate into the market for carboxylic acid, which is an important ingredient in aldehyde-based coatings
   	C.	Forward integrate into the furniture retail so that it ensures there is a market for its particle board furniture that uses its coatings
   	D.	Horizontally diversify into the production of non-aldehyde-based chemical coatings
   	E.	Horizontally diversify into making aldehyde-based coatings for non-furniture products