International Business Chapter 13
65) Sharing risk in a strategic alliance is most important for a firm that is entering a(n) ________ market. A) competitive B) established C) high-tech D) new
Answer: D Diff: 1 Skill: Concept Objective: 2
19) A marketing alliance is a type of ________. A) business-level alliance B) operational alliance C) corporate-level alliance D) functional alliance
Answer: D Diff: 1 Skill: Concept Objective: 3
46) Which action below is permissible by the dominant partner in an assigned arrangement? A) set agendas B) make decisions C) overrule partner's decisions D) all of the above
Answer: D Diff: 1 Skill: Concept Objective: 4
62) ________ affect(s) the viability of strategic alliances when the conditions that first motivated the arrangement no longer exist. A) Incompatibility B) Information access C) Distribution of earnings D) Changing circumstances
Answer: D Diff: 1 Skill: Concept Objective: 5
34) Which of the following best explains the growing number of research and development alliances? A) laws regarding intellectual property rights B) expansion among emerging economies C) decreasing costs of high technology D) rapid technological changes
Answer: D Diff: 2 AACSB: Dynamics of the global economy Skill: Concept Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets
2) Company X and Company Z have established a business arrangement whereby the two firms will cooperate for their mutual benefit. Which of the following has most likely been established? A) competitive advantage B) licensing agreement C) franchising arrangement D) strategic alliance
Answer: D Diff: 2 Skill: Application Objective: 1
7) Advanced Audio and EQ Electronics recently established a joint venture for the purpose of cooperating in the design, production, and sale of a line of audio equipment. Executives at the two firms must now decide the best way to manage the joint venture. Which of the following choices would defeat the purpose of the joint venture? A) hiring an independent management team B) jointly sharing management responsibilities C) assigning one firm all management responsibilities D) continuing completely separate management activities
Answer: D Diff: 2 Skill: Application Objective: 1
15) PepsiCo and Thomas J. Lipton Co. established a joint venture. PepsiCo supplied an extensive distribution network, and Lipton provided manufacturing expertise and brand recognition in teas. What benefit of strategic alliances were they most likely seeking? A) ease of market entry B) shared risk C) shared knowledge D) synergy
Answer: D Diff: 2 Skill: Application Objective: 2
17) Winston Foods and O'Toole's Soda have agreed to perform together multiple stages of the process by which products are brought to the market. The two firms have most likely formed a ________. A) joint venture B) production alliance C) process alliance D) comprehensive alliance
Answer: D Diff: 2 Skill: Application Objective: 3
20) Chrysler and BMW formed a joint venture to build engines in South America. Which term best describes this type of alliance? A) franchise agreement B) financial alliance C) licensing agreement D) production alliance
Answer: D Diff: 2 Skill: Application Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets
32) Bayer AG formed alliances with smaller biotechnology companies like Millennium Pharmaceuticals and MophoSys to develop miracle drugs. What type of alliance is this an example of? A) production B) marketing C) financial D) research and development
Answer: D Diff: 2 Skill: Application Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets
42) The government of Abu Dhabi formed a joint venture with Exxon Mobil in 2006. What type of joint venture is this an example of? A) limited partnership B) partnership C) corporation D) public-private venture
Answer: D Diff: 2 Skill: Application Objective: 4
1) How was General Mills able to gain 25% of the European cereal market? A) selling organic products B) sharing facilities with Kellogg C) marketing its products online D) forming a joint venture with Nestle
Answer: D Diff: 2 Skill: Concept Objective: 1
31) A financial alliance is formed primarily for the purpose of ________. A) performing multiple tasks as quickly as possible B) sharing a common manufacturing facility C) generating technological change D) reducing investment risks
Answer: D Diff: 2 Skill: Concept Objective: 3
41) A public-private venture is a joint venture that involves a partnership between a privately owned firm and a ________. A) financial institution B) rival corporation C) board of directors D) government
Answer: D Diff: 2 Skill: Concept Objective: 4
52) What is the most likely problem associated with an assigned arrangement? A) product incompatibility B) management complexity C) earnings distributions D) conflict potential
Answer: D Diff: 2 Skill: Concept Objective: 4
54) Which of the following is considered one of the primary pitfalls of strategic alliances? A) mutual trust B) more autonomy C) partner compatibility D) changing circumstances
Answer: D Diff: 2 Skill: Concept Objective: 5
61) Firms involved in joint ventures experience the pitfalls of ________ when they realize that their decision-making powers are limited. A) incompatibility B) information access C) distribution of earnings D) loss of autonomy
Answer: D Diff: 2 Skill: Concept Objective: 5
63) When technological advances render an agreement obsolete, it is an example of ________. A) incompatibility B) information access C) distribution of earnings D) changing circumstances
Answer: D Diff: 2 Skill: Concept Objective: 5
18) Most comprehensive alliances are organized as ________. A) joint ventures B) licensing agreements C) management contracts D) turnkey projects
Answer: A Diff: 1 Skill: Concept Objective: 3
43) In which of the following industries is a public-private venture most likely? A) oil B) banking C) technology D) pharmaceutical
Answer: A Diff: 1 Skill: Concept Objective: 4
9) Feldman Insurance wants to enter the Brazilian market but is concerned about hostile government regulations in Brazil. Which of the following would most likely help Feldman overcome this problem? A) forming a joint venture with a local firm B) identifying the potential market share C) hiring only local employees D) appealing to the WTO
Answer: A Diff: 2 Skill: Application Objective: 2
23) Avia Battery and Simon Battery both manufacture batteries in a shared facility. The two firms have most likely established a(n) ________ alliance. A) production B) marketing C) financial D) R & D
Answer: A Diff: 2 Skill: Application Objective: 3
49) Under the agreement between Coca-Cola and Danone each company supplies three members of the joint venture's board of directors. What management form is this an example of? A) shared management agreement B) assigned arrangement C) delegated arrangement D) consensual arrangement
Answer: A Diff: 2 Skill: Application Objective: 4
57) AT&T and Olivetti announced a strategic alliance. They could not reach an agreement on a marketing strategy for the alliance. What type of problem is this an example of? A) incompatibility B) information access C) distribution of earnings D) loss of autonomy
Answer: A Diff: 2 Skill: Application Objective: 5
3) A ________ is a special type of strategic alliance in which two or more firms join together to create a new business entity that is legally separate and distinct from its parents. A) joint venture B) licensing agreement C) franchising arrangement D) greenfield strategy
Answer: A Diff: 2 Skill: Concept Objective: 1
24) A production alliance is formed when ________. A) two or more firms each manufacture products or provide services in a shared or common facility B) two or more firms share marketing services or expertise for a short-term development C) firms form an alliance to reduce the financial risks associated with a project D) partners agree to undertake joint research to develop new products
Answer: A Diff: 2 Skill: Concept Objective: 3
22) A comprehensive alliance is formed when two or more firms ________. A) agree to perform together multiple stages of the process to bring goods or services to market B) manufacture products or provide services in a shared or common facility C) share marketing services or expertise D) reduce their financial risks
Answer: A Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets
40) Which of the following most likely explains why some firms form limited partnership arrangements instead of joint ventures? A) stringent local restrictions B) equal division of financial resources C) government control of natural resources D) decreased risk for the managing partner
Answer: A Diff: 2 Skill: Concept Objective: 4
44) Under a(n) ________, each partner in the joint venture fully and actively participates in managing the alliance. A) shared management agreement B) assigned arrangement C) delegated arrangement D) consensual arrangement
Answer: A Diff: 2 Skill: Concept Objective: 4
55) Of the potential pitfalls of strategic alliances, which one is the primary cause of failure? A) partner incompatibility B) loss of autonomy C) access to information D) conflicts over distributing earnings
Answer: A Diff: 2 Skill: Concept Objective: 5
64) Which pitfall of alliances exists when the economic circumstances that motivated the alliance no longer exist? A) changing circumstances B) loss of autonomy C) distribution of earnings D) information access
Answer: A Diff: 2 Skill: Concept Objective: 5
11) IMAX, the entertainment firm, recently entered into a joint venture with Wanda Cinema Line, a Chinese theater chain. What was IMAX primarily seeking by forming this arrangement? A) easing entry into the Chinese market B) acquiring technology from the Chinese firm C) reducing economies of scale in China D) obtaining a growing, niche Chinese market
Answer: A Diff: 3 AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets
12) Boeing collaborated in a strategic alliance with Fuji, Mitsubishi, and Kawasaki in the development and production of the Boeing 777 to minimize Boeing's financial exposure. What benefit of strategic alliances was Boeing seeking? A) ease of market entry B) shared risk C) shared knowledge D) synergy
Answer: B Diff: 1 Skill: Application Objective: 2
35) Research suggests that strategic alliances are more likely to be successful if the skills and resources of the partners are ________. A) nearly identical B) complementary C) incompatible D) observable
Answer: B Diff: 1 Skill: Concept Objective: 4
66) Simmons Semiconducter and Rapid Electronics have formed a strategic alliance to develop a tool that will facilitate computer chip manufacturing. The two firms will work together only to design the tool. Which term best describes this strategic alliance? A) financial alliance B) functional alliance C) manufacturing alliance D) comprehensive alliance
Answer: B Diff: 2 Skill: Application Objective: 3
21) General Mills and Nestle created a joint venture which fully integrated all facets of conducting business necessary to compete against Kellogg in the European cereal market. This is an example of a(n) ________ alliance. A) functional B) comprehensive C) production D) international
Answer: B Diff: 2 Skill: Application Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets
48) GM, with a 67-percent stake in a joint venture with Raba, has assumed management control over the venture's operations. What management form is this an example of? A) shared management agreement B) assigned arrangement C) delegated arrangement D) consensual arrangement
Answer: B Diff: 2 Skill: Application Objective: 4
10) Which of the following advantages might an organization gain by participating in a strategic alliance? A) the elimination of government regulations B) achieving economies of scale C) minimizing import tariffs D) increasing costs
Answer: B Diff: 2 Skill: Concept Objective: 2
25) A(n) ________ alliance occurs when partners share expertise or services related to distribution, pricing, and communications. A) production B) marketing C) financial D) R & D
Answer: B Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets
37) Partnerships should be formed between firms whose products ________. A) compete directly B) complement one another C) compete indirectly D) are in different product categories
Answer: B Diff: 2 Skill: Concept Objective: 4
39) Which of the following is a benefit of the corporate form for joint ventures? A) development of a centralized hierarchy B) protection of assets C) implementation of high-performance work systems D) continuation of same identities
Answer: B Diff: 2 Skill: Concept Objective: 4
45) Which type of venture is the most difficult to maintain? A) assigned arrangement B) shared management agreement C) delegated arrangement D) split venture arrangement
Answer: B Diff: 2 Skill: Concept Objective: 4
47) Under a(n) ________, one partner assumes primary responsibility for the operations of the alliance. A) shared management agreement B) assigned arrangement C) delegated arrangement D) consensual arrangement
Answer: B Diff: 2 Skill: Concept Objective: 4
51) Boeing controls the overall operation of its strategic alliance with Fuji, Mitsubishi, and Kawasaki. This is an example of a(n) ________. A) shared management agreement B) assigned arrangement C) delegated arrangement D) consensual arrangement
Answer: B Diff: 2 Skill: Concept Objective: 4
53) Which of the following is responsible for making day-to-day decisions and strategy implementation in a delegated arrangement? A) both alliance partners B) joint venture executives C) one of the alliance partners D) shareholders and stockholders
Answer: B Diff: 2 Skill: Concept Objective: 4
67) Which type of arrangement is limited to joint ventures? A) assigned arrangement B) delegated arrangement C) joint-partnership arrangement D) shared-management arrangement
Answer: B Diff: 2 Skill: Concept Objective: 4
56) What has been the primary problem associated with the joint venture between VW and Suzuki? A) conflicts over earnings distributions B) partner incompatibility C) competing goals D) unclear objectives
Answer: B Diff: 2 Skill: Concept Objective: 5
58) When a firm involved in a strategic alliance wants to maintain confidential information about its operations, which pitfall of strategic alliances is likely to occur? A) incompatibility of management styles B) limited access to information C) unequal distribution of earnings D) loss of autonomy
Answer: B Diff: 2 Skill: Concept Objective: 5
59) A strategic alliance between Ford and Mazda experienced problems when Mazda refused to allow Ford officials to visit the Mazda research laboratory. What was the source of this problem? A) incompatible cultures B) limited information access C) unfair distribution of earnings D) loss of autonomy for both partners
Answer: B Diff: 2 Skill: Concept Objective: 5
6) What is the primary difference between a joint venture and a non-joint venture strategic alliance? A) level of political, cultural and financial risk for each firm B) formation of a third, legally separate business entity C) amount of financial investment required D) geographic location of the alliance
Answer: B Diff: 3 Skill: Concept Objective: 1
14) ________ refers to value achieved through the combination of market entry, risk sharing, and learning potential that is gr eater than what the firm could have done alone. A) Shared risk B) Shared knowledge C) Synergy D) Scale economy
Answer: C Diff: 1 Skill: Concept Objective: 2
33) A ________ is a confederation of organizations that band together to research and develop new products and processes for world markets. A) research and development alliance B) functional alliance C) research and development consortium D) joint venture
Answer: C Diff: 1 Skill: Concept Objective: 3
4) Nestle and General Mills created Cereal Partners Worldwide to compete effectively in the European market. Cereal Partners Worldwide is owned equally by the two firms, so CPW is an example of a(n) ________. A) franchising arrangement B) acquisition strategy C) joint venture D) FDI
Answer: C Diff: 2 Skill: Application Objective: 1 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets
8) Furman Furnishings wants to expand its international operations in cooperation with another firm. Which of the following methods would be most appropriate for Furman? A) exporting B) licensing C) joint venture D) foreign direct investment
Answer: C Diff: 2 Skill: Application Objective: 1 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets
13) Toyota and GM created a joint venture called NUMMI because Toyota wanted to learn about how to deal with labor and parts suppliers in the U.S. market while GM wanted to observe Japanese management practices. What benefit of strategic alliances were Toyota and GM primarily seeking? A) ease of market entry B) shared risk C) shared knowledge D) synergy
Answer: C Diff: 2 Skill: Concept Objective: 2
16) The degree of collaboration in a strategic alliance primarily depends on the ________ of each partner firm. A) history B) available resources C) basic goals D) leadership
Answer: C Diff: 2 Skill: Concept Objective: 3
30) How does the Star Alliance primarily benefit customers? A) coordinating service inquiries B) supporting airport construction C) facilitating airline transfers D) easing government restrictions
Answer: C Diff: 2 Skill: Concept Objective: 3
36) Which of the following factors is the most relevant to a firm in the process of selecting a partner for a strategic alliance? A) partner's wage scale for employees B) partner's use of e-commerce C) nature of potential partner's products D) learning potential of the consumer
Answer: C Diff: 2 Skill: Concept Objective: 4
38) What form does a joint venture usually take? A) limited partnership B) partnership C) corporation D) public-private venture
Answer: C Diff: 2 Skill: Concept Objective: 4
50) Under which management form are managers less accountable to managers in the partner firms? A) shared management agreement B) assigned arrangement C) delegated arrangement D) consensual arrangement
Answer: C Diff: 2 Skill: Concept Objective: 4
60) Rubbermaid ended a joint venture in Europe when the partner firm refused to reinvest its profits into the development of new products. What was the source of this problem? A) incompatibility among managers B) inadequate access to information C) conflicts over earnings distribution D) loss of autonomy within the organization
Answer: C Diff: 2 Skill: Concept Objective: 5
5) Cross-licensing of proprietary technology, sharing of production facilities, cofounding research projects, and the marketing of each other's products using existing distribution networks is known as ________. A) a joint venture B) a merger C) an acquisition D) a strategic alliance
Answer: D Diff: 1 Skill: Application Objective: 2 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets