Chapter 7

________ are transition mechanisms that propel the partners' strategies forward in a turbulent environment faster than would be possible for each company alone. A) Cooperative strategies B) Entry strategies C) Options strategies D) Competitive strategies

A) Cooperative strategies

________ refers to the processes that management puts in place in order to direct the success of the joint venture's goals. A) IJV control B) Knowledge management C) Turnkey operations D) Offshoring

A) IJV control

MNCs often partner with local SMEs in order to ________. A) capture new innovations and ideas B) reduce the potential risks of the company C) ensure international expansion D) maximize the autonomy of the partners

A) capture new innovations and ideas

Which of the following represents government influence on IJVs? A) copyright protection B) partnership of firm C) organization structure D) negotiation practice

A) copyright protection

Which of the following terms refers to company specialists who provide other companies with services such as Web site translation? A) e-commerce enablers B) virtual global teams C) e-businesses D) born globals

A) e-commerce enablers

Trout Corp., Kirgo Ltd., and Sturgeon Inc., three of the leading construction companies in the U.S., have decided to join hands and create a new cement manufacturing company. According to their agreement, Trout Corp. will have 50 percent equity, Kirgo Ltd. will have 20 percent equity, and Sturgeon Inc. will have 30 percent equity. In this given scenario, Sturgeon Inc. is referred to as a(n) ________. A) minority JV partner B) majority JV partner C) sole proprietor D) franchisor

A) minority JV partner

Cross-border allies often have difficulty collaborating effectively, especially in competitively sensitive areas. This generally leads to ________. A) mistrust and secrecy B) limitation of investment C) short-term corporate restructuring D) lowering of exit barriers

A) mistrust and secrecy

Runnerz Inc., a leading manufacturing and retail company that designs and develops footwear and apparel, has signed a contract with a particular courier service for managing the delivery process. The courier service is required to deliver goods from the factory to the warehouse, to customers, and also to collect customer payments for the goods. This is a typical example of a(n) ________. A) non-equity strategic alliance B) turnkey operation C) greenfield investment D) international licensing agreement

A) non-equity strategic alliance

Joint ventures are often the chosen form of multinational firm alliances because they ________. A) provide greater control of proprietary technology B) increase the level of competition between partner firms C) enhance the specific skills of the personnel D) enhance the rewards of the firm

A) provide greater control of proprietary technology

Which of the following primarily determines the extent of control exercised over an IJV by its parent company? A) staffing choices for top IJV positions B) policies of the smaller firm C) cultural background D) IJV industry

A) staffing choices for top IJV positions

Alliances are also known as ________. A) competitive strategies B) cooperative strategies C) relational strategies D) virtual strategies

B) cooperative strategies

With regard to less-developed countries, most problems with international joint ventures involve ________. A) the parent corporation B) the local partner C) differences in accounting standards between nations D) differences in control system information management between nations

B) the local partner

Which of the following motivates a company to form cross-border alliances? A) to regulate and favor domestic companies B) to gain rapid entry into a new and consolidating market C) to remove exporting barriers for domestic companies D) to allow local companies to gain access to international products and services

B) to gain rapid entry into a new and consolidating market

Which of the following most likely provides a strategic advantage during the implementation of a global alliance? A) non-collaboration in competitively sensitive areas B) unified technology infrastructure C) centralized decision making by one partner D) high levels of competition between the partners

B) unified technology infrastructure

The dual role of strategic alliance refers to the ________. A) constant requirement of resources and markets B) process of finding skilled personnel and training them to work efficiently C) conflict between cooperation and competition D) differences between home and host governments

C) conflict between cooperation and competition

Which of the following factors most significantly affects all other variables necessary for the successful implementation of a global alliance? A) organizational policies B) organizational structure C) employee leadership D) product performance

C) employee leadership

Which of the following terms refers to a bond between specially connected firms that generates preferential treatment to members of the network? A) kanban B) kaizen C) guanxihu D) guanxi

C) guanxihu

Parent companies use the IJV control process in order to ensure that the management of the joint venture conforms to ________. A) international accounting standards B) qualitative standards C) its own interests D) industry standards

C) its own interests

Alliances that are carried out through contract rather than ownership sharing are called ________. A) cultural strategic alliances B) equity strategic alliances C) non-equity strategic alliances D) transmodal strategic alliances

C) non-equity strategic alliances

Globe Cars, a leading automobile ancillary firm in China, has decided to form a global alliance with Fulda, a German tire manufacturing company. Which of the following is a primary challenge that Globe Cars is most likely to face in this alliance? A) existing competitors B) risk of investment C) extreme trade barriers in China D) differences in national cultures

D) differences in national cultures

Which of the following is NOT a knowledge management process? A) transferring existing knowledge B) transforming and creating of knowledge C) harvesting knowledge from the IJV to the parents D) distributing knowledge to clients and media outlets

D) distributing knowledge to clients and media outlets

France's Thomson Electronics combined with China's TCL to form TCL-Thomson Electronics. Thomson owns 33% and TCL owns the remaining 67% of TCL-Thomson Electronics. This is best described as a(n) ________. A) turnkey operation B) acquisition C) international licensing agreement D) equity strategic alliance

D) equity strategic alliance

Which of the following types of alliances can be formed between a company and a foreign government? A) international joint venture B) equity strategic alliance C) non-equity strategic alliance D) global strategic alliance

D) global strategic alliance

Overlooking cultural differences in cross-border alliances can create a negative impact when ________. A) target country has similar views on organizational formality B) target country and host country equally participate in decision making C) target country is technologically superior to the host country D) target country has conflicting practices and systems

D) target country has conflicting practices and systems

T/F: A de-merger is a transition mechanism that propels the partner's strategies forward in a turbulent environment faster than would be possible for each company alone.

FALSE

T/F: A joint venture is a situation in which two or more partners have different relative ownership shares in the new venture.

FALSE

T/F: A major drawback of global and cross-border alliances is that they do not share the cost and risk of research and development of new products.

FALSE

T/F: Agreements are carried out through contract rather than ownership sharing in an international joint venture.

FALSE

T/F: An equity strategic alliance is a new independent entity jointly created and owned by two or more parent companies.

FALSE

T/F: Cross-border allies usually collaborate effectively, and are most often associated with long lasting trust and loyalty.

FALSE

T/F: In a highly competitive environment, alliances are a slow and risky route to globalization, and therefore, are likely to be avoided.

FALSE

T/F: The conscious and active management of creating, disseminating, evolving, and applying knowledge to strategic ends is known as a strategic alliance.

FALSE

T/F: MNCs often partner with local small enterprises to capture new ideas and innovations.

TRUE

T/F: One major disadvantage of cross-border alliances is that there is a potential loss of a company's technology and knowledge.

TRUE

T/F: The most important single factor determining IJV success or failure is the choice of a partner.

TRUE

T/F: The term IJV control refers to the processes that management puts in place so as to direct the success of the firm's goals.

TRUE

T/F: Transformational outsourcing refers to the view that global sourcing can produce gains in efficiency and profitability by fully leveraging talent around the world.

TRUE

T/F: Working partnerships between two or more companies across national boundaries and increasingly across industries are referred to as global strategic alliances.

TRUE

The initial challenge in implementing strategies in emerging markets is likely to be the navigation of poor infrastructures, supply chains, and distribution networks.

TRUE

Which of the following is a cooperative aspect of strategic alliances? A) creating economies of scale in tangible assets B) accelerating diffusion of industry standards to erect barriers to entry C) learning new intangible skills from alliance partners D) denying technological and learning initiative to partners

A) creating economies of scale in tangible assets

NextLinx Corporation provides a wide range of strategic implementation services for small- and medium-sized organizations. It allows all trading partners to collaborate in a single online location, using the same information and processes. Therefore, NextLinx is an example of a(n) ________. A) e-commerce enabler B) knowledge management firm C) IJV controller D) outsourcing company

A) e-commerce enabler

Which of the following factors has the maximum influence on the success of multinational firm alliances? A) form of governance chosen B) introduction of new competition C) differing national cultures D) cumulative learning of partner

A) form of governance chosen

A(n) ________ refers to a JV among companies in different countries. A) international joint venture B) equity joint venture C) global joint venture D) transnational joint venture

A) international joint venture

International joint ventures are less likely to break up when ________. A) issues are settled before the merger B) new policies are created after the merger C) one partner has all the decision-making autonomy and the other has none D) each firm explicitly states its actions and requirements after the merger

A) issues are settled before the merger

Which of the following is a strategic implementation used by McDonald's? A) keeping prices low to build market share B) altering menu items significantly to match cultural norms C) using American managers to run international franchises D) forming joint ventures with foreign restaurants to enter new markets

A) keeping prices low to build market share

Which of the following terms refers to the process by which the firm integrates and benefits from the experiences and skills learned by its employees? A) knowledge management B) employee value proposition C) employee retention D) business process outsourcing

A) knowledge management

Which of the following is an area where the host government influences the strategic choices and implementations of foreign firms? A) level of taxation B) equity share in joint venture C) knowledge management D) partnership of target firms

A) level of taxation

Where ownership is divided among several partners, the parent organizations are more likely to delegate the operational running of the IJV to ________. A) local IJV management B) parent company management C) middle managers at the parent company level D) management teams from the largest company in the joint venture

A) local IJV management

According to Berdrow and Lane, the process of transfer can be defined as ________. A) managing the flow of existing knowledge between parents and from the parents to the IJV B) managing the transformation and creation of knowledge within the IJV through its independent activities C) managing the flow of transformed and newly created knowledge from the IJV back to the parents D) capturing and keeping knowledge confidential that exists among the local partners

A) managing the flow of existing knowledge between parents and from the parents to the IJV

Which of the following is NOT a characteristic of strategic implementation of the McDonald's corporation? A) minimizing autonomy B) hiring locals whenever possible C) forming paradigm-busting arrangements with suppliers D) making minor changes to the standard menu based on location

A) minimizing autonomy

In a cross-border alliance, cultural differences can be overlooked when ________. A) the target country is similar to the home country B) when there is a considerable difference in practices of the target country C) the target country has a high number of domestic mergers D) the target country insists on participating in the decision-making processes

A) the target country is similar to the home country

Which of the following terms suggests that global sourcing can produce gains in efficiency, productivity, quality, and profitability by fully leveraging talent around the world? A) transformational outsourcing B) business process reengineering C) inverted sourcing D) lean integration

A) transformational outsourcing

According to Dovev Lavie, which of the following is a caution given to global companies by value capture strategies? A) Set organizational and technological buffers between competing partners. B) Avoid partners that compete in your industry if they enjoy superior bargaining power. C) Learn and assimilate network resources in order to develop new skills and capabilities. D) Align organizational units and create a coherent interface with each partner in the alliance.

B) Avoid partners that compete in your industry if they enjoy superior bargaining power.

Barton & Green is an MNC based in the U.S. that provides a wide range of software development products. Executives at the firm are considering the idea of outsourcing the company's IT infrastructure. Which of the following best supports the argument that Barton & Green should outsource its IT infrastructure to TMC Enterprises, one of the best IT infrastructure maintenance firms in India? A) The main competitor of Barton & Green outsources all IT functions. B) Outsourcing will enhance Barton & Green's competitiveness. C) Barton & Green's employees frequently need IT support, so it is best to outsource the IT infrastructure. D) Barton & Green has proprietary technology and processes.

B) Outsourcing will enhance Barton & Green's competitiveness.

________ are partnerships between two or more firms that decide they can better pursue their mutual goals by combining their resources as well as their existing distinctive competitive advantages. A) Greenfield investments B) Strategic alliances C) Foreign subsidiaries D) Turnkey operations

B) Strategic alliances

The most important single factor determining IJV success or failure is the ________. A) percentage of equity share held by each partner B) choice of a partner C) proprietary technologies held by a partner D) amount of decision-making control given to each firm

B) choice of a partner

In order to minimize potential problems in alliances, companies should most likely choose partners with ________. A) competitively sensitive technology B) complementary products and skills C) significant control of the target market D) superior bargaining power in the same industry

B) complementary products and skills

The need for knowledge management in IJVs primarily stems from ________. A) employee concerns regarding job security and benefits B) cultural and system differences between partners C) local government regulations and restrictions D) proprietary information legalities

B) cultural and system differences between partners

Which of the following variables is frequently overlooked when deciding on entry strategies and alliances, particularly when the target country is perceived to be similar to the home country? A) political stability B) culture C) currency stability D) competition

B) culture

Which of the following is a pitfall of cross-border alliances? A) increase in the number of existing competitors B) disputes over management C) convincing expatriates D) finding local skilled employees

B) disputes over management

Alliances in which two or more partners have different relative ownership shares in the new venture are called ________. A) cultural strategic alliances B) equity strategic alliances C) non-equity strategic alliances D) transmodal strategic alliances

B) equity strategic alliances

A ________ is a new independent entity that is collectively created and owned by two or more parent companies. A) subsidiary B) joint venture C) greenfield investment D) turnkey operation

B) joint venture

Opening its own subsidiaries in the host country may be better than contracting with an outside firm in the host country, if it is crucial for the firm to ________. A) produce gains in efficiency, productivity, and quality B) keep control of proprietary technology and processes C) minimize job losses in the home country D) market its products in the host country

B) keep control of proprietary technology and processes

According to Berdrow and Lane, the process of harvest can be defined as ________. A) managing the flow of existing knowledge between parents and from the parents to the IJV B) managing the flow of transformed and newly created knowledge from the IJV back to the parents C) capturing knowledge of local partners and keeping it confidential D) managing the transformation and creation of knowledge within the IJV through its independent activities

B) managing the flow of transformed and newly created knowledge from the IJV back to the parents

According to Berdrow and Lane, the process of transformation can be defined as ________. A) transforming the existing knowledge of parents and managing the flow of this transformed knowledge between parents B) managing the transformation and creation of knowledge within the IJV through its independent activities C) capturing and keeping knowledge that exists within the local partners confidential D) managing the flow of transformed and newly created knowledge from the IJV back to the parents

B) managing the transformation and creation of knowledge within the IJV through its independent activities

________ is the conscious and active management of creating, disseminating, evolving, and applying facts, information, or skills acquired through experience or education, to strategic ends. A) Business continuity management B) Employee value proposition C) Knowledge management D) Employee retention

C) Knowledge management

Which of the following best describes the role of e-commerce enablers? A) They facilitate multinational companies to collaborate with medium-sized organizations. B) They allow innovative transnational companies to gain entry into foreign markets. C) They help small- and medium-sized companies to go global without the internal capabilities to carry out global activities. D) They reduce the risks involved in joint venture and other forms of alliances.

C) They help small- and medium-sized companies to go global without the internal capabilities to carry out global activities.

Barton & Green is an MNC based in the U.S. that makes a wide range of software development products. Executives at the firm are considering the idea of outsourcing the company's IT infrastructure. Which of the following questions is the most relevant to Barton & Green's decision to outsource its IT infrastructure to TMC Enterprises, a firm in India? A) Which type of operating system is primarily used by TMC Enterprises? B) What is the attitude of U.S. consumers about TMC Enterprises? C) What is the financial health of TMC Enterprises? D) Which other firms have outsourced their processes to TMC Enterprises?

C) What is the financial health of TMC Enterprises?

Which of the following is a competitive aspect of strategic alliances? A) sharing resources to limit investment risk when entering new markets or uncertain technological fields B) lowering exit barriers in mature industries, therefore, assisting short-term corporate restructurings C) accelerating diffusion of industry standards and new technologies to create barriers to entry D) creating a critical mass to develop new technologies to protect domestic, strategic industries

C) accelerating diffusion of industry standards and new technologies to create barriers to entry

According to Dovev Lavie, which of the following is a value-creation strategy? A) setting organizational buffers between competing partners B) allying with multiple partners in one industry to limit power C) assimilating network resources to acquire new skills and capabilities D) aligning organizational units to create coherent interfaces

C) assimilating network resources to acquire new skills and capabilities

Which of the following is a cultural difference that can significantly affect cross-border alliances? A) use of e-commerce enablers B) emergence of market firms in the host country C) organizational formality D) protectionist legislation

C) organizational formality

All of the following are examples of international joint venture control mechanisms used by parent firms EXCEPT ________. A) staffing policies B) legal contracts C) regional authorities D) organizational design

C) regional authorities

Which of the following human resource problems can be simplified by increasing the autonomy of the IJV? A) workplace deviance B) employment discrimination C) staffing friction D) employee silence

C) staffing friction

International joint ventures are like a marriage because ________. A) the firms cannot be separated into single entities after the merging B) each firm will have access to all of the others' proprietary technologies and competitively sensitive information C) the more issues that can be settled before the merger, the less likely it will be to break up D) each firm will have equal decision-making powers

C) the more issues that can be settled before the merger, the less likely it will be to break up

Which of the following is the most beneficial aspect of an international joint venture? A) the international partner receives the entire profit B) the responsibility of risks is solely taken by the international partner C) the partner's local contacts and markets will be utilized D) the entire cost of production will be borne by the local partner

C) the partner's local contacts and markets will be utilized

Organizational design as a mechanism for factoring international joint venture control refers to the ________. A) human resource plans and policies of the joint venture B) market share and profitability ratios of the organization C) geographic location of the joint venture's facilities D) amount of decision-making power that the joint venture holds

D) amount of decision-making power that the joint venture holds

SoftCorp and TechGig, upcoming software companies in San Diego, have decided to create a new and independent telecommunications company, ST-source. Each parent firm has agreed to have 50 percent equity in the new company. This is an example of a(n) ________. A) e-business B) subsidiary C) franchise D) joint venture

D) joint venture

All of the following are cooperative aspects of strategic alliances EXCEPT ________. A) creating economies of scale in tangible assets B) forming upstream-downstream divisions of labor C) limiting investment risks through shared resources D) learning new intangible skills from alliance partners

D) learning new intangible skills from alliance partners

The initial challenge in implementing strategies in emerging markets is likely to be how to ________. A) compete with other emerging markets B) allocate responsibilities between the partners C) set up new policies and regulations D) navigate poor infrastructures

D) navigate poor infrastructures

Which of the following is a typical task performed by e-commerce enablers? A) evaluating skill sets of personnel B) conducting performance appraisals C) establishing criteria for partnership D) screening orders

D) screening orders

In spite of the potential problems with local partners, many firms rush the process of partner selection because ________. A) they want to reduce the amount spent on establishing subsidiaries abroad B) they want to take advantage of the local partner's technological innovations C) they mostly aim at increasing the number of equity shares within a short period of time D) they are anxious to get into an attractive market

D) they are anxious to get into an attractive market

Which of the following is NOT a typical reason for forming cross-border alliances? A) to avoid import barriers B) to share R&D costs and risks C) to gain access to specific markets D) to test marketing campaigns overseas

D) to test marketing campaigns overseas

T/F: A major benefit of cross-border alliances is that they facilitate the access to specific markets where regulations favor domestic companies.

TRUE

T/F: Alliances can be formed for various purposes, e.g., sharing technology, marketing, or production joint ventures.

TRUE

T/F: Cross-border alliances are used to gain rapid entry into a new or consolidating industry and to take advantage of synergies.

TRUE

T/F: E-commerce enablers help small and medium-sized companies to go global without the internal capabilities to carry out global e-commerce functions.

TRUE

T/F: Guanxihu refers to a bond between specially connected firms that generates preferential treatment for members of the network.

TRUE