Ch. 9 Quiz

Based on what you know about the various cooperative strategies, which is the most costly to implement? a. Corporate-level cooperative strategy b. Business-level cooperative strategy c. Strategic alliance d. Network cooperative strategy

a. Corporate-level cooperative strategy

Because the resources and relationships among partners is complex, most R&D strategic alliances are what type? a. Equity b. Nonequity c. Cross-border d. Joint venture

a. Equity

What are the advantages of choosing a vertical complementary strategic alliance versus a horizontal complementary strategic alliance? a. Firms can partner to share resources for separate parts of the value chain, which helps them if they are pursuing projects in which they do not have previous experience in specific stages of the value chain. b. Firms can partner to share resources for the same parts of the value chain, which helps them if they are pursuing projects in which they do not have previous experience in specific stages of the value chain. c. Firms can prevent their partners from having access to their most valuable resources, which helps the firms prevent opportunistic behavior by their partners. d. A firm can give its partner access to its most valuable resources, which enables both partners to maximize its success.

a. Firms can partner to share resources for separate parts of the value chain, which helps them if they are pursuing projects in which they do not have previous experience in specific stages of the value chain.

What is explicit collusion? a. A form of competition-reducing strategy in which several firms indirectly coordinate their production and pricing decisions by observing each other's actions and responses b. A form of competition-reducing strategy in which two or more firms negotiate directly to determine the amount to produce and the prices for the product c. A form of competition-reducing strategy in which firms do not take competitive actions against rivals d. A form of competition-reducing strategy in which firms share some of their resources from different stages of the value chain to create competitive advantage

b. A form of competition-reducing strategy in which two or more firms negotiate directly to determine the amount to produce and the prices for the product

When a company in a cooperative strategy is implementing mechanisms to ensure that its partner does not use its trade secrets to benefit outside the relationship alone, a firm is practicing which cooperative strategy management practice? a. Cost maximization b. Cost minimization c. Opportunistic minimization d. Opportunity maximization

b. Cost minimization

How is an opportunity maximization approach a more effective alternative to the cost minimization approach of managing cooperative strategy? a. Opportunity maximization comes with a high level of trust between partners, which leads to an increased likelihood of success. b. Opportunity maximization enables firms to decrease their cost structure, which leads to an increased likelihood of success. c. Opportunity maximization leads to more definite contractual obligations for each partner, which leads to an increased likelihood of success. d. Opportunity maximization allows firms to take advantage of each other's resources without limitations imposed by one another.

a. Opportunity maximization comes with a high level of trust between partners, which leads to an increased likelihood of success.

In order to remain relevant, firms must explore opportunities to maintain or increase their competitive advantage at all times. In doing so, some opportunities may be out of reach of the firm's normal capabilities. By entering into strategic alliances, how can a firm achieve competitive advantage? a. Partnering with another firm in a strategic alliance and trading valuable resources enables both firms to further develop their products or markets to gain competitive advantage. b. Both firms can achieve competitive advantage over one another, even if they are operating in the same product market, by using each other's most valuable resources. c. Both firms can behave opportunistically towards one another to keep the other from gaining competitive advantage. d. One firm can gain competitive advantage by taking advantage of its partner's resources and giving its partner less valuable resources.

a. Partnering with another firm in a strategic alliance and trading valuable resources enables both firms to further develop their products or markets to gain competitive advantage.

Two American appliance firms have equal share of the market. U.S. Elite, one of the firms, has decided to implement an international strategy in China. The firm is looking to grow manufacturing and start selling internationally while increasing its competitive advantage in the process. Why is a cross-border strategic alliance the most effective option for U.S. Elite? a. The alliance enables U.S. Elite to share resources for manufacturing and knowledge about the Chinese market. b. The alliance keeps U.S. Elite from sharing resources with Chinese manufacturers to help them with manufacturing. c. The alliance gives U.S. Elite minimal responsibility for its foreign operations in China. d. The alliance gives the Chinese manufacturer sole control of U.S. Elite operations.

a. The alliance enables U.S. Elite to share resources for manufacturing and knowledge about the Chinese market.

A strategy through which a firm collaborates with one or more companies to expand its operations is called: a. corporate-level cooperative strategy. b. diversifying strategic alliance. c. synergistic strategic alliance. d. cross-border strategic alliance.

a. corporate-level cooperative strategy.

Two approaches used to manage cooperative strategies are: a. cost minimization and opportunity maximization. b. cost maximization and opportunity maximization. c. cost minimization and opportunity minimization. d. cost maximization and opportunity minimization.

a. cost minimization and opportunity maximization

The main objective of the collaborating firms in a cooperative strategy is to: a. increase competitive advantage. b. neutralize each other's competitive advantage. c. decrease the other's competitive advantage. d. decrease both partners' competitive advantage.

a. increase competitive advantage.

A firm in France that makes locally made designer loafers has decided to expand its operation to the United States to meet the "Made in America" market demand. In order to do so, the firm has decided to partner with a United States shoe manufacturer to produce the loafers. What type of strategic alliance would best fit the partnership the firm is looking for? a. Synergistic b. Diversifying c. Franchising d. Business

b. Diversifying

Risks associated with cooperative strategies include a partner's failure to present its resources to the other, as well as one firm acting opportunistically towards the other with the use of the partner's resources. How can these two risks be a result of each other? a. If a firm acts fairly towards its partner, the partner might misrepresent its resources in order to keep the firm from gaining any more access. b. If one firm feels that the other will act opportunistically, it might withhold its promised resources to keep the partner from gaining access to proprietary information. c. If one firm presents its resources first, the other will not present its resources to compete against the partner. d. When one firm doesn't present its resources, it is likely that it is going to try to act opportunistically towards its partner.

b. If one firm feels that the other will act opportunistically, it might withhold its promised resources to keep the partner from gaining access to proprietary information.

A small software firm has formed a cooperative strategic alliance with a startup company to develop the startup's product, an app for smartphones. The startup promised to connect the software firm with other startup companies looking for software services. So far, the startup has not followed through, while the software firm has neared completion of its portion of the app development. Based on this scenario, which risk has manifested in the alliance between the software firm and the startup company? a. The software firm has misrepresented its resources to the startup. b. The startup has failed to make its resources available to the software firm. c. The software firm has failed to make its resources available to the startup. d. The startup is acting opportunistically towards the software firm.

b. The startup has failed to make its resources available to the software firm.

In what type of strategy do several firms form multiple partnerships in order to reach their shared objectives? a. Complementary strategic alliance b. Cross-border strategic alliance c. Network cooperative strategy d. Uncertainty reducing strategy

c. Network cooperative strategy

A tech startup is exploring ways to develop an app that allows patients to visit their doctors virtually. The startup is partnering with a local practice to compile data, including symptoms, common ailments, and clinical expertise, to be accessible through the interface of the app. The company anticipates the project will take two to three years. What type of business-level strategy best fits this partnership? a. Competition-reducing strategy b. Vertical complementary strategic alliance c. Uncertainty-reducing strategy d. Competition response strategy

b. Vertical complementary strategic alliance

The complexities of cooperative strategies increase the challenge of effectively implementing them and may contribute to alliance: a. success. b. failure. c. partnerships. d. extensions.

b. failure.

A common reason firms enter into cross-border strategic alliances is: a. complete control over their foreign operations. b. limited domestic growth opportunities and foreign government economic policies. c. abundance of domestic growth opportunities and foreign government economic policies. d. help from domestic partners from an operational perspective.

b. limited domestic growth opportunities and foreign government economic policies.

MarTech is a technology firm. It must constantly develop product innovations and seek new markets. Its products are made up of a combination of hardware, requiring multiple component parts, and software which is regularly updated. What type of alliance network will MarTech use in order to develop additional competitive advantages? a. A stable alliance network b. A joint venture alliance network c. A dynamic alliance network d. A nonequity alliance network

c. A dynamic alliance network

A stable alliance network is formed primarily to do what? a. Explore new ideas that may lead to product innovation b. Allow partners to develop new markets c. Exploit economies of scale and/or scope that exist between the partners. d. Enable partners to gain entry into new markets

c. Exploit economies of scale and/or scope that exist between the partners.

A car manufacturer and its partner in a cooperative strategic alliance have very minimal contract terms. Both firms are hoping to learn from each other to develop new, value-creating, innovative products. By implementing very few contractual terms in their alliance, the two firms are managing their cooperative strategy using which approach? a. Cost maximization b. Cost minimization c. Opportunity maximization d. Opportunity minimization

c. Opportunity maximization

As web development continues to grow as a career field, more and more education options are being created for interested mid-career professionals. A software firm that has developed online courses for people to learn web development has decided to partner with a popular computer manufacturer to build a laptop with a special keyboard and interface elements for web development education. The idea came after a competitor implemented a similar strategy to develop a smartphone interface compatible with educational software. Which of the following is a motive for the education and computer firms to implement a cooperative strategy? a. To minimize their rivals' returns b. To gain a higher a price point than their rivals c. To outperform rivals with a similar idea d. To neutralize competition with rivals

c. To outperform rivals with a similar idea

An American sandal company has completely saturated its local market. The sandals, which are made of specially molded rubber soles that minimize soreness associated with unsupportive soles, have started to build a demand in Australia, a market the company is unfamiliar operating in. Why might the sandal company enter into a cooperative strategy with an Australian firm? a. To explore export options from the United States to Australia b. To give responsibility of the company's expansion to the Australian firm c. To share unique resources to design, produce, and launch the product in Australia d. To take advantage of the Australian company in a hostile takeover

c. To share unique resources to design, produce, and launch the product in Australia

A strategy in which firms collaborate to achieve a shared objective is known as: a. corporate strategy. b. a strategic alliance. c. cooperative strategy. d. international strategy.

c. cooperative strategy.

An automotive company has entered into a strategic alliance with a motor manufacturer. The automotive company is depending on the motor manufacturer's expertise and experience in developing high horsepower motors for small sports cars. The automotive company holds a 60 percent stake in the partnership, and the motor manufacturer holds 40 percent. The strategic alliance between the two firms is best described as a(n): a. cooperative strategy. b. joint venture. c. equity strategic alliance. d. nonequity strategic alliance.

c. equity strategic alliance.

When a firm uses a franchise as a form of corporate-level strategy, the franchisee gains the license of the franchisor's trademark and method of doing business through a(n): a. one-time royalty fee. b. ongoing franchise royalty rate. c. initial franchise fee and ongoing royalty rate. d. initial franchise fee.

c. initial franchise fee and ongoing royalty rate

If firms did not participate in cross-border strategic alliances, what might happen for firms expanding internationally? a. Firms would be more successful in entering foreign markets because they would be minimally influenced by other firms. b. Firms would be more successful in their domestic markets because they would not be as concerned with establishing themselves in a foreign market. c. There would be no measurable impact if firms did not implement cross-border strategic alliances. d. Firms would struggle to implement international strategies without the ability to use the resources and expertise of local firms in the foreign markets they were trying to enter.

d. Firms would struggle to implement international strategies without the ability to use the resources and expertise of local firms in the foreign markets they were trying to enter.

Why would firms choose to use complementary strategic alliances? a. To reduce competition b. To launch competitive responses to their competitor's actions c. To expand operations d. To focus on long-term product development and distribution opportunities

d. To focus on long-term product development and distribution opportunities

Why would a firm in a standard-cycle market want to pursue a strategic alliance? a. To gain access to a restricted market b. To speed up new market entry c. To share risky R&D expenses d. To overcome trade barriers

d. To overcome trade barriers

A cross-border strategic alliance is: a. a strategy through which firms combine some of their resources to create a competitive advantage by competing in one or more product markets. b. an alliance in which firms share some of their resources from the same stage of the value chain. c. a strategy in which firms share some of their resources to create economies of scope. d. a strategy in which firms with headquarters in different countries decide to combine some of their resources to create a competitive advantage.

d. a strategy in which firms with headquarters in different countries decide to combine some of their resources to create a competitive advantage.