MKT 3360 FINAL

Which of the following is a general term that can refer to any type of relationship between firms?

Alliance

_____ are legally binding contractual arrangements to ensure that partners are fully aware of their rights and obligations in the collaboration and have legal remedies available if a partner should violate the agreement.

Alliance contracts

_____ refers to the reduction in a firm's sales of one product as a result of its sales of another of its products; it influences the firm's decision on timing new product introduction.

Cannibalization

Match the types of decisions that a firm can take on timing new product introduction (in the left column) with their possible outcomes (in the right column). Delaying the introduction of a next generation in industries driven by technological innovation Investing in continuous innovation and willingly cannibalizing its existing products with more advanced products

Competitors are able to gain a significant technological gap, which leads them to introduce products that have a large technological advantage over the firm's current products. Competitors find it very difficult to achieve a technological lead large enough to prove persuasive to customers.

Which of the following are types of governance mechanisms firms use to manage their collaborative relationships? (Check all that apply.)

Equity ownership Alliance contracts

A firm cannot collaborate with its competitor.

False

A firm's effectiveness at managing its collaborations will increase with the number of collaborations to which it is committed.

False

It is unusual for a company to lack certain complementary assets required to transform a body of technological knowledge into a commercial product.

False

Joint ventures offer low potential for leveraging a firm's existing competencies because they typically entail a short-term relationship between two or more firms.

False

Licensing a technology from another firm is typically more expensive for a licensee than developing a new technology in-house.

False

Obtaining some of the necessary capabilities or resources from a partner rather than building them in-house will increase a firm's asset commitment.

False

Solo internal development is, on average, a relatively fast and inexpensive way of developing a technology.

False

The value of a technological innovation is solely determined by what the technology can do.

False

True or false: Firms often use promotions as permanent selling tactics at the distributor or customer level.

False

True or false: Alliances formed between firms must be long term and must include formally contracted agreements.

False Alliance is a general term that can refer to any type of relationship between firms. Alliances may be short or long term and may include formally contracted agreements or be entirely informal in nature.

Firms use promotions as selling tactics to market their products at the distributor or customer level. Which of the following are primarily examples of such tactics? (Check all that apply.)

Including an additional product, such as a premium, with purchase Providing samples or free trial

Arrange the adopter categories of an innovation in the order in which they adopt the innovation. (Place the adopter category that adopts the innovation first at the top.)

Innovators Early Adopters The Early Majority The Late Majority Laggards

Which of the following statements is true of a collective research organization?

It allows a firm to share the cost and risk of basic research.

In the context of outsourcing, identify a true statement about contract manufacturing.

It allows a firm to tap the greater economies of scale and faster response time of a dedicated manufacturer.

Identify the true statements about pay-per-click online advertising. (Check all that apply.)

It allows rapid and efficient tracking of responses for analyzing the effectiveness of an advertisement. It lets an advertisement gain immediate visibility.

Identify the true statements about a strategic alliance between two or more firms. (Check all that apply.)

It can involve an equity investment made by the partners in each other. It is allowed to be a long-term or a short-term agreement.

Which of the following statements is true of outsourcing?

It carries a risk of proprietary technology being expropriated by the contract manufacturer.

Match the types of governance mechanisms that are used by a firm to manage its collaborative relationship with another firm (in the left column) with their features (in the right column). An alliance contract Equity ownership Relational governance

It contains information about what each partner is obligated to contribute to the collaboration, including money, services, equipment, intellectual property, and so on. It helps align the incentives of the partners and provides a sense of proprietorship and commitment to the project that can facilitate supervision and monitoring of the alliance. It can help decrease contracting and monitoring costs of managing the alliance and facilitate more extensive cooperation, sharing, and learning by the alliance partners.

Which of the following statements is true of contract manufacturing?

It enables a firm to tap the greater economies of scale.

Which of the following is an advantage of collaborating?

It gives firms more flexibility.

Which of the following is a feature of a joint venture that differentiates it from other forms of alliances?

It involves a significant equity stake by the partners.

Identify the true statements about a survival price strategy that is used by a firm. (Check all that apply.)

It involves the firm first estimating costs and demand and then setting the price of its goods to maximize cash flow. It does not lead to long-term profits for the firm.

Match the types of governance mechanisms a firm uses to manage its collaborative relationship with another firm (in the left column) with their descriptions (in the right column). An alliance contract Equity ownership Relational governance

It is a legally binding contractual arrangement that ensures that the partners are fully aware of their rights and obligations in the collaboration and have legal remedies available if a partner should violate the agreement. It refers to each partner contributing capital and owning a specified right to a percentage of the proceeds from the alliance. It refers to self-enforcing norms based on goodwill, trust, and reputation of the partners.

Match the factors associated with a company that launches a new product (in the left column) with their significance (in the right column). The company's track record for technological innovation The company's prior commercial success

It is used by customers, distributors, and complementary goods producers as an indicator of the new product's functionality and value. It is an indicator of the company's capability to build and manage the necessary support network around the new technology to create the required momentum in the installed base-complementary goods cycle.

In the context of the modes of firms' collaboration, identify the true statements about a firm's solo internal development. (Check all that apply.)

It lets the firm retain total control over how its technology is developed and used. It provides the firm with great potential to leverage its existing competencies.

Which of the following statements are true about a strategic alliance between two or more firms? (Check all that apply.)

It often does not have the shared language, routines, and coordination that facilitate the transfer of knowledge. It is used to enable the partners to learn from each other and develop new competencies.

Match the ways of protecting intellectual property (in the left column) with their descriptions (in the right column). A patent A trademark A copyright

It protects an invention. It protects words or symbols intended to distinguish the source of a good. It protects an original artistic or literary work.

Match the factors that can influence how well suited partner firms of a collaborative arrangement are to each other (in the left column) with their descriptions (in the right column). Resource fit Strategic fit

It refers to the degree to which the firms have assets that can be effectively integrated into a strategy that creates value. It is the degree to which partners have compatible styles and objectives.

Easymake Corp. developed a new Web design software to build Web pages for its clients. However, Easymake soon realized it could make more money by selling this software to those who wish to quickly build Web pages to sell their products. Which of the following would be the most appropriate strategy for Easymake?

It should become a licensor of the new Web design software.

Identify a true statement about a penetration price strategy that is used by a company.

Its effective utilization often requires that the company build large production capacity in advance of demand.

The R&D team of Zelda Technozone Inc. has developed a prototype for a two-seater car that runs primarily on solar energy. Since the firm usually manufactures household appliances, the management acknowledges that it does not have the required competencies to manufacture this car on a large scale. It decides to access another firm's manufacturing competencies. Which of the following collaborative arrangements is most appropriate in this scenario?

Joint venture

An organization's unique previous experience or talent pool may give it a foundation of technical know-how that its competitors do not possess. Match the types of this knowledge (in the left column) with their descriptions (in the right column). Tacit knowledge Socially complex knowledge

Knowledge that cannot be readily codified or transferred in written form Knowledge that arises from the interaction of multiple individuals

_____ refers to a contractual arrangement whereby one organization or individual obtains the rights to use the proprietary technology of another organization or individual. Hedging Narrowcasting Licensing Sandbagging

Licensing

Identify true statements about a licensing agreement between two firms. (Check all that apply.)

Licensing a technology from the licensor is typically much cheaper for the licensee than developing a new technology in-house. Through licensing, the licensee is enabled to rapidly acquire a technology (or other resource or capability) it does not possess.

_____ offers a fast way for a firm to extend the reach of its technology that is nearly free and offers the potential for royalties.

Licensing out a technology

A(n)______ _______ ______ (OEM), or a value-added reseller (VAR), is a company that buys products from other manufacturers and assembles them or customizes them into a product that is then sold under the OEM's own name.

Original equipment manufactures

Yves Doz and Gary Hamel state that it is useful to categorize a firm's alliance strategy along two dimensions. Match the aspects that are involved in the first dimension (in the left column) with their descriptions (in the right column). Capability complementation Capability transfer

Pooling the capabilities and other resources of partner firms, but not necessarily moving those resources between the partners Exchange of capabilities across firms in such a manner that partners can internalize the capabilities and use them independently of the particular development project

In the context of the modes of firms' collaboration, which of the following is, on average, a relatively slow and expensive way of developing a technology?

Solo internal development

_____ refers to the degree to which partners have compatible objectives and styles.

Strategic fit

A collaborative arrangement between two firms involves a significant equity investment from each firm and leads to establishment of a new separate entity. The carefully constructed contractual arrangement specifies the capital and other resources to be committed by each firm and the division of any profits earned by the arrangement. Based on the given information, which of the following is most likely true about this arrangement?

The arrangement is a joint venture.

Resource fit is one of the factors that can influence how well suited partner firms of a collaborative arrangement are to each other. In this context, match the types of collaborations (in the left column) with their features (in the right column). Collaborations based on the combination of complementary resources Collaborations based on the combination of supplementary resources

The collaborations are motivated by the requirement to access resources a partner firm does not possess. The pooling of the resources that are similar to those possessed by a partner firm can enable both partner firms to achieve market power or economies of scale.

Collaborating on development projects can offer a firm various advantages. Which of the following are these advantages? (Check all that apply.)

The firm can have rapid access to significant complementary assets that are required to transform a body of technological knowledge into a commercial product. A project's costs and risks can be shared, and this can be helpful when the project is very expensive.

Identify a likely reason a firm might choose to engage in solo development of a project.

The firm does not have certain required capabilities, but there are also no potential partners with such capabilities.

Identify the steps that should be taken by a firm to market its product to the early majority of adopters. (Check all that apply.)

The firm should communicate the product's consistency with the customer's way of life, its ease of use, and its legitimacy. The firm should use market channels with high reach and high credibility.

In the context of the adopters of a product, identify the steps that should be taken by a firm to market its product to the late majority and laggards. (Check all that apply.)

The firms should ensure that the marketing message stresses the reliability, simplicity, and cost-effectiveness of the product. The firms should ensure that the marketing channel is not so expensive as to drive the product costs up significantly.

Identify the true statements about direct-mail advertising. (Check all that apply.)

There is no advertisement competition within the same medium. It allows communication of significant technical content.

Match the types of intermediaries used by firms to sell their products (in the left column) with their descriptions (in the right column). Manufacturers' representatives Wholesalers Retailers

They are independent agents that promote and sell the product lines of one or a few manufacturers. They are companies that buy a manufacturer's products in bulk and then resell them to other supply channel members. They are companies that sell goods to the public.

Identify the true statements about original equipment manufacturers (OEMs), or value-added resellers (VARs). (Check all that apply.)

They are very popular in the computer and electronics industries. They often provide marketing and service support for products that they have bought from other manufacturers.

Identify the likely reasons firms choose not to collaborate with other firms. (Check all that apply.)

They do not want to expose their existing proprietary technologies to the prying eyes of a would-be competitor. They want to completely control their development processes and the use of any resulting new technologies. They think that solo development efforts are key to building and renewing their capabilities.

Identify the true statements about joint ventures. (Check all that apply.)

They often result in establishment of a new separate entity. They are a specific type of strategic alliance that entails significant structure and commitment.

Based on M. Gladwell's classification, match the categories of individuals who have a disproportionate amount of influence on marketplace behavior (in the left column) with their characteristics (in the right column). Connectors Mavens Salespersons

They tend to form an exceptionally large circle of acquaintances. They are driven to gain and disseminate knowledge about one or more of their interests. They are naturally talented persuaders.

According to M. Gladwell's classification, match the categories of individuals who have a disproportionate amount of influence on marketplace behavior (in the left column) with their attributes (in the right column). Connectors Mavens Salesperson

They typically have a knack for remembering people's names and keeping track of social details and can bring together people who would otherwise be unlikely to meet. They closely track the prices charged by different retailers and will vociferously complain if they find something improper. They are gifted at providing verbal responses that their listener is likely to find compelling and can influence others' emotional response to something.

In the context of the adopter categories of an innovation, identify the true statements about innovators and early adopters. (Check all that apply.)

They typically seek very advanced technologies that offer a significant advantage over previous generations. They are ready to take risks and to pay high prices, and they will accept some incompleteness in the product.

After licensing a technology, a firm typically has limited discretion over what it can do with the technology.

True

Collective research organizations can take the form of trade associations.

True

Equity ownership helps to align the incentives of the partners and provides a sense of ownership and commitment to the project that can facilitate supervision and monitoring of the alliance.

True

Firms can use strategic alliances to exploit their own capabilities by leveraging them in another firm's development efforts.

True

Large firms often make greater use of formalization and standardization because as the firm grows it becomes more difficult to exercise direct managerial oversight.

True

Modular products become more valuable when customers have heterogeneous demands and there are diverse options for meeting them.

True

Product life cycles shorten with high-speed technological changes.

True

Some firms avoid collaboration for fear of giving up their proprietary technologies.

True

The pooling of supplementary resources can enable partners to achieve market power or economies of scale.

True

Through a strategic alliance, firms can establish a limited stake in a venture while maintaining the flexibility to either increase their commitment later or shift these resources to another opportunity.

True

True or false: A firm uses the freemium model of pricing to manipulate buyers' perception of the costs of the firm's products.

True

True or false: A major reason firms collaborate on a development project is to share the costs and risks of the project.

True

True or false: When a company is poised to introduce a new technological innovation, its reputation for both commercial and technological competence will critically affect the market's expectation about its likelihood of success.

True

Yves Doz and Gary Hamel state that it is useful to categorize a firm's alliance strategy along two dimensions. Which of the following are these dimensions? (Check all that apply.)

Whether the firm manages a collective network of alliances or manages each alliance individually The extent to which the firm practices capability complementation versus capability transfer

Identify the true statements about the intermediaries used by firms to sell their products. (Check all that apply.)

Wholesalers and retailers are able to pool large orders from a large number of manufacturers and sell a wide range of goods in small quantities to customers. They offer various services such as transporting goods, carrying inventory, providing selling services, and handling transactions with customers.

Match the tools that a firm can use to assess its potential partners (in the left column) with the corresponding questions that need to be asked by the firm (in the right column). Assessing the collaboration's effect on the firm's opportunities and threats Assessing the collaboration's effect on the firm's internal strengths and weaknesses Assessing the collaboration's effect on the firm's strategic direction

Would the collaboration affect the availability of complementary goods or the threat of substitutes? Would the collaboration enhance or leverage the core capabilities of the firm? Are the collaboration's objectives likely to change over time?

Match the tools that can be used by a firm to evaluate its potential partners (in the left column) with the corresponding questions that need to be asked by the firm (in the right column). Assessing the collaboration's effect on the firm's opportunities and threats Assessing the collaboration's effect on the firm's internal strengths and weaknesses Assessing the collaboration's effect on the firm's strategic direction

Would the collaboration affect the firm's position vis-à-vis its rivals? Is the collaboration likely to result in a position of competitive advantage that is difficult for competitors to imitate? Is the collaboration likely to assist the firm in closing any resource or technology gap between where it is now and where it would like to be?

Carl owns a software firm, and Mike owns a computer hardware manufacturing firm. They decide to create an alliance in order to manufacture laptops and desktops using the shared competencies of their respective firms. When creating the alliance, they make sure that each of them invests 50% capital and that they would each own a specified right to a percentage of the profits from the alliance. The collaborative relationship in this scenario is known as _____.

alliance contracts

Products of a technological generation are backward compatible if they _____.

are able to work with products of a previous generation

When Pearl Love Inc. introduced its new range of body wash, consumers switched from using its soap bars, being sold under the same brand name, to using the body wash. As a result, the company experienced a sharp drop in its soap sales. This scenario represents:

cannibalization

Combining the capabilities and other resources of partner firms but not necessarily transferring those resources between the partners is referred to as _____.

capability complementation

In the context of outsourcing, the process of a firm hiring another firm (often a specialized manufacturer) to manufacture its products is known as

contract manufacturing

The reduction in the number of intermediaries in a supply channel is called _____.

disintermediation

In the context of the product distribution process, when manufacturers bypass wholesalers and/or retailers to sell directly to end users, _____.

disintermediation occurs

Greyer Corp. has developed a special drug that kills cancer cells. While the scientists at Greyer have the knowledge, they are short on equipment, money, and marketing know-how. In this situation, the most appropriate step for Greyer would be to:

find a partner to collaborate with to sell the drug.

A pricing model used by firms where a base product or service is offered for free, but a premium is charged for additional features or service, is known as a(n) ______ model.

freemium

Successful collaboration agreements typically have clear, yet flexible, monitoring and mechanisms of exerting authority and/or control. These mechanisms are known as _____ mechanisms.

governance

Usually, the appropriability of a firm's innovation is determined by _____.

how quickly or easily competitors can copy the innovation

A video game console is backward compatible if it _____.

is able to run the versions of games that were supported by a previous generation of the console

A partnership between two or more firms involving a significant equity stake by the partners and often resulting in the creation of a new business entity is known as a(n)

joint venture

Allured Architecture Inc. collaborated with Maze & Matiz Corp. to form a new architecture firm called AllureAmaze Inc. Both the firms had a significant equity stake in the new entity. This collaboration would most accurately be termed a(n) _____.

joint venture

Greyer Corp. manufactures surgical instruments. Systems Medico Inc. enters into a contractual arrangement with Greyer that allows it to use Greyer manufacturing methods and management structure to produce and sell surgical instruments. Systems Medico must pay a yearly fee to Greyer for the use of its manufacturing processes. In this scenario, Systems Medico is the _____.

licensee

A contractual arrangement whereby one organization or individual obtains the rights to use the proprietary technology of another organization or individual is called _____.

licensing

Allured Cosmetics Corp. enters into a contractual agreement with Pure Cosmetics Inc., a manufacturing firm in the West Coast. According to the contract, Pure Cosmetics can use the manufacturing processes of Allured Cosmetics to produce cosmetics in return for a specific fee. Pure Cosmetics is bound to use the manufacturing process only to make complementary products for the cosmetics manufactured by Allured Cosmetics. This collaborative arrangement is classified as _____.

licensing

Alumplus Aluminum Company has come up with a new type of metal. However, producing it would take up 75 percent of its manufacturing capacity and would hinder its ability to continue producing its other products. Alumplus Aluminum hires LM Group of Manufacturers to manufacture the new type of metal. This collaborative arrangement is most likely to be classified as _____.

outsourcing

When using a(n)_____ ______ strategy, a firm sets the price of a good very low (or free) to maximize the good's market share.

penetration pricing

Self-enforcing norms based on goodwill, trust, and reputation of partners are known as _____.

relational governance

Firms send information about their products or services directly to a set of targeted consumers as part of viral marketing. This process is called _____.

seeding

When using a(n) ______ ______ strategy, a firm prices its goods to cover variable costs and some fixed costs.

survival pricing

When technology is progressing rapidly, firms are more likely to:

use linkages with other specialized firms to access resources they do not possess.

In an organizational context, an attempt to capitalize on the social networks of individuals to stimulate word-of-mouth advertising is called _____.

viral marketing