ISM Chapter 7

An options strategy provides what kind of benefit from a partnership?

A. knowledge about developing and expanding projects

Which of the following is not a trend in partnering?

A. the diffusion of manufacturing practices

In which of the following situations is a firm sometimes ill-advised to vertically integrate an activity?

A. the firm's competence to perform the activity is high but the activity's strategic importance is low

Which of the following is not a key component of control determining vertical integration decisions?

A. the supplier's growth rate

When does the ability of a potential partner to cooperate effectively become apparent?

A. when the network of partnerships in the industry develops

Which of the following is a source of strategic inflexibility in partnerships?

B. a partners' commitments to relationship-specific investments

Which of the following types of technology partnership is most appropriate for a window strategy?

B. an R&D contract

The property rights theory of vertical integration assumes that the organization that vertically integrates an activity:

B. benefits the most from performing the activity in-house

Which of the following is not a rationale for vertical integration?

B. the relative competence of the firm to perform the activity has decreased

Vertical integration and outsourcing decisions are made for:

C. activities

Which of the following is a key practice in a strategic sourcing relationship?

C. build a strong purchasing organization

Which of the following is generally is not a motivation for the formation of technology partnerships among large firms?

C. coalition building in the context of standards competition

Which of the following alleviates antitrust concerns regarding an alliance?

C. demonstration of greater efficiency than harm to competition

which of the following ways must a potential partner exhibit competence?

C. the ability to grow its operations at a rate consistent with the partnership's goals

In the strategic sourcing framework, firms outsource when:

C. the firm's need to control, and its ability to perform, an activity are both low

Which of the following generally is not essential to successful cooperation for managing complementary assets in a partnership?

C. the life of the project the partnership is based on

The standard theory of vertical integration over the industry life cycle states:

C. vertical integration occurs primarily in the early and late stages

In the efficient boundaries framework, the coordination and production costs of vertical integration relative to outsourcing:

D. both decrease as customization increases

A key assumption underlying theories of vertical integration is:

D. employees give up control over work that cannot be specified in advance

According to transaction cost theory, vertical integration occurs under two conditions:

D. high uncertainty and high supplier asset specialization