Q1 / Strategic alliances have the potential to affect a firms competitive advantage by increasing value and lowering costs. List and describe the primary reason why Disney formed a strategic alliance with Pixar.

In your opinion, was the strategic alliance a success? Why or why not?

Did one partner benefit more from the alliance? Explain your reasoning.

Q2. Many mergers and acquisitions (M&As) actually destroy shareholder value. Name and describe two ways that M&As destroy shareholder value.

Many firms choose to pursue M&As even though they know that these strategic actions often lead to a reduction in shareholder value. Name and describe two reasons why firms pursue M&As despite evidence suggesting they are harmful.

Q3. Most of the costs and risks involved in expanding beyond the domestic market are created by distance. The CAGE distance framework determines the relative distance between home and foreign target country along four dimensions: cultural distance, administrative and political distance, and economic distance.

Mercedes-Benz is considering the possibility of opening several factories in Austria. Using the CAGE distance framework, describe, the relative distance (large vs. small) for Mercedes-Benz entering into Austria. Make sure to provide an analysis for each dimension of the framework, and justify each aspect of your response.

Based on your analysis, do you recommend entering into this new market? Why or why not?