MGMT 493 CH.9 PART 1

Mutual forbearance is a. illegal in the United States b. a type of competitive reducing strategy c. a variety of risk sharing by firm in highly fragmented industries d. exercised when alliance partners refrain from opportunistic behaviors

b

Of the various business-level strategic alliances, ______ alliances have the most probability of creating sustainable competitive advantage, and ______ have the lowest. a. horizontal complementary; vertical complementary b. vertical complementary; competition reducing c. competition reducing; horizontal complementary d. uncertainty reducing; competition reducing

b

Which type of strategic alliance is best at passing tacit knowledge between firms? a. primary cooperative strategic alliances b. joint ventures c. equity strategic alliances d. nonequity strategic alliances

b

_____ strategic alliances have stronger focus on value creation than do ____alliances a. competition reducing; complementary b. complementary; competition reducing c. uncertainty reducing; complementary d. collusive; uncertainty reducing

b

BPM Corp. is a manufacturer of radar systems for regional-sized jet aircraft. The company has announced plans to enter into a joint venture with J3 Composites, a producer of advanced composite materials. The announced venture will produce a new, combined product consisting of the radar unit and protective composite cover. Which of the following ownership arrangements would be most typical for a joint venture? a. BPM will own more than 50 percent of the venture and a new company will be formed. b. J3 will own more than 50 percent of the venture and a new company will be formed. c. BPM and J3 will both own 50 percent of the venture and a new company will be formed. d. BPM and J3 will both own 50 percent of the venture but no new company will be formed

c

Burgess Corp. manufactures a line of heavy construction equipment. The company has announced a contractual relationship with FS Electronics whereby FS will supply Burgess with advanced GPS navigation and guidance systems. These systems will be an option on all bulldozers, dump trucks, and road graders Burgess produces. What type of alliance is this? a. joint venture b. equity strategic alliance c. nonequity strategic alliance d. competition reduction alliance

c

Firms in a standard-cycle market may form alliances in order to a. take advantage of opportunities in emerging market countries. b. more quickly distribute new products. c. capture economies of scale. d. share risky R&D investments

c

In a(n)______, two or more firms create a legally independent company to share some of their resources capabilities to develop a competitive advantage a. equality-based strategic alliance b. non-equity strategic alliance c. joint venture d. equity strategic alliance

c

Japanese telecom NTT DoCoMo Inc. and Chinese Internet search operator Baidu Inc. established an alliance to distribute games and other mobile-phone content. Baidu will own 80 percent of this collaboration with DoCoMo holding the remaining 20 percent. This collaborative arrangement is an example of a(n) a. joint venture. b. network strategy. c. equity strategic alliance. d. nonequity strategic alliance

c

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

The fact that the price 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 a. excessive cooperation b. joint venture c. tacit collusion d. horizontal strategic alliances

c

The primary responsibility of the franchisor, such as Mcdonalds or Hilton International is to a. learn about the brand and technology from the franchisee b. test the franchisee for potential future acquisition c. transfer to the franchisee knowledge and skills needed to compete at the local level d. provide feedback to the franchisee regarding how the franchisor could become more effective and efficient

c

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 ________ market in which firms typically use alliances to gain market access. a. fast-cycle b. standard cycle c. slow cycle d. intermediate cycle

c

A competitive advantage that is developed through a cooperative strategy is called a collaborative or a(n)_____ advantage. a. economic b. collusive c. alliance d. relational

d

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 a. low-cost labor production facilities in another country. b. similar products who could help the firm establish economies of scale. c. access to franchises in new markets. d. excess resources for investing

d

A strategy in which firms work together to achieve a shared objective is a a. functional-level strategy. b. business-level strategy. c. corporate-level strategy. d. cooperative strategy

d

Firms participate in strategic alliances for all the following reasons EXCEPT to a. create value that they could not develop by acting independently. b. enter competitive markets more quickly. c. gain access to resources. d. retain tight control over intangible core competencies

d

Hewlett-Packard licenses some of its intellectual property though strategic alliances. Which of the following is correct about this relationship? a. this is a joint venture because in licensing arrangements a new company is created b. this is an equity strategic alliance because licensing does not involve the creation of a new company, but does involve an equity commitment c. the firms risk charges of collusion because most licensing relationship between competitors involve explicit collusions d. this is a non-equity strategic alliance with HP leveraging its unique capabilities

d

Meredith Inc. is a manufacturer of art supplies. The company has announced plans to enter into an equity strategic alliance with JaZz Paper to develop a line of specialty papers for use with a line of specialty paints Meredith manufactures. Which of the following would be the accurate interpretation of this announcement? a. Meredith will own a majority equity stake in the new venture. b. JaZz will own a majority equity stake in the new venture. c. Meredith or JaZz will own an equal equity stake in the new venture. d. Either Meredith or JaZz will own a majority equity stake, but we do not know which one based on the announcement.

d

The alliances between Nokia and Microsoft calls for Nokia to transition in smartphone portfolio to Microsoft's Windows phone platform. This is an example of using an alliance to _____ to speed up development of new products and services a. slow cycle market b. medium cycle market c. standard cycle market d. fast cycle market

d

The global airline industry is one in which a. national political interests prevent airlines from making international alliances b. the fast-cycle nature of the industry mandates heavy use of alliances c. most alliances tend to be vertical complementary d. alliance versus alliance competition dominates firm versus firm competition

d

The risks of being accused of collusion are MOST likely under what type of alliance? a. equity-based vertical complementary alliance b. equity-based horizontal complementary alliance c. nonequity-based vertical complementary alliance d. nonequity-based horizontal complementary alliance

d

The use of strategic alliances a. is unlikely to yield success if partnering firms are headquartered in the same country. b. may be too restrictive to facilitate entry into new markets. c. usually increases the investment necessary to introduce new products. d. is more frequent than other types of cooperative strategies

d

Which of the following statements is false? a. franchising is most approprite in fragmental industries b. franchising provides corporate growth with less risk than do mergers and acquisitions c. successful franchising allows transfer of knowledge and skills from the franchisor to franchisee d. franchising agreements require more trust between firms than do other cooperative strategies

d

Why are alliances in the airline industry unstable? a. Unstable industries make for unstable alliances. b. The potential for firms to take opportunistic actions is too widespread. c. The industry is declining and profits are not sufficient to divide among alliance partners. d. The alliances require cooperation among firms that must also compete with one another

d

____are LEAST likely to involve potential or current competitors a. mutual forebearance strategies b. tacit collusion strategies c. horizontal complementary strategic alliances d. vertical complementary strategic alliances

d

when using cooperative strategy, firms most frequently develop strategic alliances that a. enhance the firms reputation in the marketplace b. are long-lived c. will reduce the firms political risk d. create a competitive advantage

d

A cooperative strategy a. is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. b. is a strategy in which firms work together to achieve a shared objective. c. is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets. d. specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets.

B

Within the Renault Nissan alliance (Chapter 9 Opening Case), both Renault and Nissan have each formed ____ strategic alliances at the business-unit level with other companies. a. vertical complementary b. horizontal complementary c. synergistic d. diversifying

B

The Renault Nissan alliance (Chapter 9 Opening Case) is an example of a _______ created to gain economies of scope by sharing resources and capabilities. a. diversifying strategic alliance b. vertical complementary alliance c. synergistic strategic alliance d. nonequity-based horizontal complementary alliance

C

A manufacturer of speciality 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

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. non-equity strategic alliance d. cooperative arrangement

a

A______ cooperative strategy helps the firm diversify in terms of products offered, markets served, or both. a. corporate-level b. business-level c. national-level d. industry-level

a

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

a

In the franchising strategy, the most important competitive advantage for the franchisee is the franchisors a. brand name b. capital resources c. access to a consolidated market d. geographic locations

a

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

The cooperation between Fiat and Chrysler to produce a Fiat-designed car in Chrysler's Illinois factory is a(n) ______ alliance because it allows the firm to share resources and capabilities across multiple functions. a. synergistic b. opportunistic c. horizontal d. diversifying

a

The three main luxury hotels in a major tourist destination keep very close track of their competitors' room pricing, restaurant offerings, tour packages, and special services, such as airport transportation and spa privileges. When one hotel makes adjustments in prices or offerings, the other hotels follow suit. It is possible that these hotels are a. engaging in tacit collusion. b. following uncertainty reducing strategies. c. monitoring business competitors for opportunistic behaviors. d. following a competitive response strategy

a

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

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

A businessperson in Atlanta who wishes to develop a luxury pet kennel approaches the owner of the highly successful Pet Resort and Day Spa in Houston to see if the owner is interesting in franchising the Pet Resort brand. The Atlanta businessperson's goal is to a. get venture capital from Pet Resort. b. gain access to Pet Resort's tacit knowledge. c. collude with Pet Resort to diminish competition in the kennel industry in Atlanta. d. join in a vertical complementary alliance with Pet Resort

b

A nonequity strategic alliance exists when a. two firms join together to create a 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 new venture

b

A state-wide alliance of independent hospitals has formed in order to group purchasing of medical supplies. Group purchasing allows the hospital alliance to negotiate lower prices with suppliers because of the large quantity of materials ordered. This is an example of ____ resulting from an alliance a. explicit collusion b. economies of scale c. opportunistic behavior d. distribution opportunities

b

Firms entering into synergistic strategic alliances expect to attain a. technological complexity. b. economies of scope. c. monopolistic market power. d. learning curve efficiencies

b

Firms in _______ markets cooperate to pool resources and gain market power. a. slow-cycle b. standard-cycle c. fast-cycle d. hyper-cycle

b

For the purpose of diversification, a corporate-level cooperative strategy may be preferable to a merger or acquisition for all the following reasons EXCEPT a. a host nation may forbid a merger or acquisition. b. opportunistic behaviors are less likely. c. cooperative strategies require fewer resources. d. cooperative strategies allow greater flexibility in diversifying the firm's portfolio

b

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

In free-market economies, ______must decide how rivals can collaborate with their competitors without violating established regulations. a. the visible hand b. the government c. consumers d. the business community

b

In the United States, cooperative strategies to reduce competition may result in _____ if they are explicit. a. increased tax liabilities b. litigation c. government takeover of the firm d. dissolution of the firm

b

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