MGT 187 Chapter 9

Mutual forbearance is

A type of competition-reducing strategy

The global airline industry is one in which

Alliance vs. alliance competition dominates firm vs. firm competition

Stable alliance networks will most often

Appear in mature industries where demand is relatively constant & predictable

Which of the following statements is TRUE?

As many as 50% of cooperative strategies fail

In the franchising strategy, the most important competitive advantage for the franchisee is the franchisor's

Brand name

Firms in a standard-cycle market may form alliances in order to

Capture economies of scale

Dynamic alliance networks work best in industries

Characterized by frequent product innovations & short product life cycles

___ strategic alliances have stronger focus on value creation than do ___ alliances.

Complementary; competition

A strategy in which firms work together to achieve a shared objective is a

Cooperative strategy

A ___ cooperative strategy helps the firm diversify in terms of products offered, markets served, or both.

Corporate-level

The two basic approaches to successfully manage cooperative strategic alliances involve ___ and ___.

Cost minimization; opportunity maximization

When using cooperative strategies, firms most frequently develop strategic alliances that

Create a competitive advantage

A statewide alliance of independent hospitals has formed in order to do group purchasing of medical supplies. Group purchasing allows the hospital alliance to negotiate lower prices w/ suppliers because of the

Economies of scale

Firms entering into synergistic strategic alliances expect to attain

Economies of scale

The three main luxury hotels in a major tourist destination keep very close track of their competitors' room pricing, restaurant offerings, tour packages, & special services, such as airport transportation & spa privileges. When one hotel makes adjustments in prices or offerings, the other hotels follow suit. Is it possible that these hotels are

Engaging in tacit collusion

A strategic alliance in which the partners own different percentages of the new company they have formed is called a(n)

Equity strategic alliance

A relatively young firm has developed a method of transferring photographic images of surface textures onto any type of hard surface. This potentially has a huge market in the home-decorating field as well as any hard surface that is typically painted, such as car bodies. The type of alliance partner this firm would be searching for would be one with

Excess resources for investing

Which of the following statements is FALSE?

Franchising agreements require more trust b/w firms than do other cooperative strategies

Which of the following is NOT a risk for firms engaged in cooperative strategies?

Insufficient variation in firms' core competencies

A cooperative strategy

Is a strategy in which firms work together to achieve a shared objective

The use of strategic alliances

Is more frequent than other types of cooperative strategies

In a(n) ___, two or more firms create a legally independent company to share some of their resources & capabilities to develop a competitive advantage.

Joint venture

Which type of strategic alliance is best at passing tacit knowledge b/w firms?

Joint ventures

The risks of being accused of collusion are MOST likely under what type of alliance?

Nonequity-based horizontal complementary alliance

For the purpose of diversification, a corporate-level strategy may be preferable to a merger or acquisition for all the following reasons EXCEPT

Opportunistic behaviors are less likely

Reduction of competition can be accomplished through all of the following EXCEPT

Predatory alliances

A competitive advantage that is developed through a cooperative strategy is called a collaborative or a(n) ___ advantage.

Relational

Firms participate in strategic alliances for all of the following reasons EXCEPT to

Retain tight control over intangible core competencies

In a cross-border alliance, the local partner is often a useful source of information about

Sources of capital

One disadvantage of developing effective monitoring systems to manage a strategic alliance is that

Spontaneous opportunities are minimized

Firms in ___ markets cooperate to pool resources & gain market power.

Standard-cycle

In some countries, the only legal way for foreign firms to invest in the country is through

Strategic alliance w/ a local firm

All of the following are business-level cooperative strategic alliances EXCEPT

Synergistic strategic alliances

The fact that the prices consumers pay for branded breakfast cereals are above the prices that would exist if there were true competition suggests that the cereal manufacturers are engaging in

Tacit collusion

The opportunity maximization approach is more difficult to establish in international relationships than in domestic relationships b/w of differences in all EXCEPT

Technology

Why are alliances in the airline industry unstable?

The alliances require cooperation among firms that must also compete w/ one another

In free-market economies, ___ established regulations.

The government

To increase the likelihood of success b/w partners assuming that trust exists, ___ is used to manage cooperative strategies.

The opportunity maximization

In practice, the cost of minimization strategy can be more expensive than the opportunity maximization strategy. Which of the following is a way in which the cost minimization strategy is less expensive than the opportunity minimization strategy?

The prevention of opportunistic behavior by the partner(s)

Legitimately, a firm may pursue an international strategic alliance for all of the following reasons EXCEPT

To enhance the compensation packages of top managers

The primary responsibility of the franchisor is to

Transfer to the franchisee knowledge & skills needed to compete at the local level

A nonequity alliance exists when

Two or more firms have a contractual relationship to share resources & capabilities

The two types of complementary strategic alliances are

Vertical & horizontal

A manufacturer of specialty jams & jellies has decided to ally itself w/ an orchard & vineyard growing rare strains of fruit. This is a(n) ___ strategy.

Vertical complementary

___ are LEAST likely to involve potential or current competitors.

Vertical complementary strategic alliances