Chapter 8-9 TEST

A strategic alliance in which the partners own different percentages of the new company they have formed is called a(n) a. equity strategic alliance. b. joint venture. c. nonequity strategic alliance. d. cooperative arrangement

a. equity strategic alliance.

113. Which of the following is NOT a disadvantage associated with exporting? a. potential loss of proprietary technologies b. high transportation costs c. loss of control over distribution activities d. tariffs imposed by local governments

a. potential loss of proprietary technologies

Reduction of competition can be accomplished through all of the following EXCEPT a. predatory alliances. b. explicit collusion. c. tacit collusion. d. mutual forbearance

a. predatory alliances.

All of the following are business-level cooperative strategic alliances EXCEPT a. synergistic strategic alliances. b. uncertainty reduction strategic alliances. c. complementary strategic alliances. d. competition response strategic alliances

a. synergistic strategic alliances.

117. One of the primary reasons for failure of cross-border strategic alliances is a. the incompatibility of the partners. b. conflict between legal and business systems. c. security concerns and terrorism. d. high debt financing.

a. the incompatibility of the partners.

The two types of complementary strategic alliances are a. vertical and horizontal. b. macro and micro. c. outsourcing and insourcing. d. network and complementary

a. vertical and horizontal.

A manufacturer of specialty jams and jellies has decided to ally itself with an orchard and vineyard growing rare strains of fruit. This is a(n) ______ strategy. a. vertical complementary b. horizontal complementary c. uncertainty reduction d. network

a. vertical complementary

110. A U.S. manufacturer of adaptive devices for persons with disabilities is considering expanding internationally. It is a fairly small company, but it is looking for growth opportunities. This company should primarily consider the option of a. licensing. b. exporting. c. a strategic alliance. d. a greenfield venture.

b. exporting.

Moon Flower cosmetics company executives are aware that their Asian customer base is interested in advanced skin care treatments beyond Moon Flower's traditional herbal and organic compounds. Moon Flower and a large American chemical company are in discussions to create a 50-50 partnership in a new firm, which would create skin care treatments based on innovative chemical formulations that would be marketed both in Asia and in the United States. Beyond being a cross-border alliance, this partnership can be called a(n) a. nonequity strategic alliance. b. joint venture. c. horizontal complementary alliance. d. equity strategic alliance

b. joint venture.

Fujitsu Siemens Computers is a legally independent company of which Fujitsu and Siemens each own 50 percent. This collaboration is an example of a ______, which is effective at transferring ______. a. nonequity strategic alliance; explicit knowledge. b. joint venture; tacit knowledge. c. joint venture; explicit knowledge. d. equity strategic alliance; tacit knowledge

b. joint venture; tacit knowledge.

65. International strategy refers to a(n) a. action plan pursued by American companies to compete against foreign companies operating in the United States. b. strategy through which the firm sells products in markets outside the firm's domestic market. c. political and economic action plan developed by businesses and governments to cope with global competition. d. strategy American firms use to dominate international markets.

b. strategy through which the firm sells products in markets outside the firm's domestic market.

A _______ is a strategy in which firms share some of their resources and capabilities to create economies of scope and is similar to the business-level horizontal complementary alliance. a. joint venture b. synergistic strategic alliance c. diversifying strategic alliance d. dynamic alliance network

b. synergistic strategic alliance

To increase the likelihood of success between partners assuming that trust exists, ______ approach(es) should be used to manage cooperative strategies. a. the cost minimization b. the opportunity maximization c. both the cost minimization and opportunity maximization d. None of the these options are correct.

b. the opportunity maximization

102. Increasingly, customers worldwide are demanding emphasis on local requirements and companies are needing efficiency as global competition increases. This has triggered an increase in the number of firms using the strategy. a. multidomestic b. transnational c. universal d. global

b. transnational

A nonequity strategic alliance exists when a. two firms join together to create a new company. b. two or more firms have a contractual relationship to share resources and capabilities. c. two partners in an alliance own unequal shares in the combined entity. d. the partners agree to sell bonds instead of stock in order to finance a new venture

b. two or more firms have a contractual relationship to share resources and capabilities.

118. If conflict in a strategic alliance or joint venture is not manageable, a(n) may be a better option. a. licensing strategy b. exporting strategy c. acquisition d. new wholly owned subsidiary

c. acquisition

114. A licensing agreement a. results in two firms agreeing to share the risks and the resources of a new venture. b. is best way to protect proprietary technology from future competitors. c. allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country. d. can be greatly impacted by currency exchange rate fluctuations.

c. allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country.

The collaboration between Volvo Aero (a subsidiary of Sweden's AB Volvo) and U.S.-based Pratt & Whitney to produce a new jet engine would be characterized as a(n) a. collusive tactic. b. merger. c. cross-border strategic alliance. d. international acquisition

c. cross-border strategic alliance.

99. A transnational corporate-level strategy seeks to achieve a. customization for the local market. b. economies of scale and centralized strategic control. c. global efficiency and local responsiveness. d. standardization of products across countries.

c. global efficiency and local responsiveness.

Smith Commercial Lighting, Inc., which sells lighting for factories and businesses, has entered into an alliance with Revelation Lighting, Inc., a retailer of home decor lighting, in order to expand into the trend of using industrial-type lighting in non-traditional style homes. Smith has invested 40 percent and Revelation has invested 60 percent into the new operation. This is an example of a(n) a. joint venture. b. nonequity alliance. c. horizontal complementary strategic alliance. d. vertical complementary strategic alliance

c. horizontal complementary strategic alliance.

106. Associations such as the European Union, Organization of American States, and the North American Free Trade Association, encourage a. global strategies. b. domestication. c. regional strategies. d. nationalization.

c. regional strategies.

U.S. Steel and Nucor (the two remaining major players in the U.S. steel industry) have been forming alliances as a means to enter ________ markets in Europe and Asia. The steel industry is an example of a typically use alliances to gain market access. a. fast-cycle b. standard-cycle c. slow-cycle d. intermediate-cycle

c. slow-cycle

104. Disney suffered lawsuits in France at Disneyland Paris as a result of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of a. the effects of regionalization. b. the risks of a multidomestic strategy. c. the liability of foreignness. d. the effect of demand conditions.

c. the liability of foreignness.

In managing cooperative strategies, research indicates that ______ can be a capability that is valuable, rare, imperfectly imitable, and often nonsubstitutable giving these firms a competitive advantage. a. extensive capitalization b. stability c. trustworthiness d. Internet competency

c. trustworthiness

________ are LEAST likely to involve potential or current competitors. a. Mutual forbearance strategies b. Tacit collusion strategies c. Horizontal complementary strategic alliances d. Vertical complementary strategic alliances

d. Vertical complementary strategic alliances

77. The location advantages associated with locating facilities in other countries can include all of the following EXCEPT a. low-cost labor. b. access to critical supplies. c. access to customers. d. evasion of host country governmental regulations.

d. evasion of host country governmental regulations.

McDonald's, Hilton International, and Subway all heavily rely on the ______ strategy. a. transnational b. network cooperative c. cross-border alliances d. franchising cooperative

d. franchising cooperative

100. The transnational strategy is becoming increasingly necessary to compete in international markets for all the following reasons EXCEPT a. the growing number of competitors heightens the requirements to keep costs down. b. the desire for specialized products to meet consumers' needs. c. differences in culture and institutional environments also require firms to adapt their products and approaches to local environments. d. it is easy to use.

d. it is easy to use.

97. A global strategy a. is easy to manage because of common operating decisions across borders. b. achieves efficient operations without sharing resources across country boundaries. c. increases risk because decision making is centralized at the home office. d. lacks responsiveness to local markets

d. lacks responsiveness to local markets.

103. The two important environmental trends that influence a firm's choice and use of international corporate-level strategies are _________ and a. culture; geographic scope. b. cost; quality. c. regionalization; globalization. d. liability of foreignness; regionalization.

d. liability of foreignness; regionalization.

In some countries, the only legal way for foreign firms to invest in the country is through a. acquisitions. b. mergers. c. greenfield ventures. d. strategic alliance with a local firm

d. strategic alliance with a local firm

The opportunity maximization approach is more difficult to establish in international relationships than in domestic relationships because of differences in all EXCEPT a. laws. b. culture. c. trade policies. d. technology

d. technology

Which type of strategic alliance is best at passing tacit knowledge between firms?

joint venture