Chapter 8

Collective research organizations can take the form of trade associations. ⊚ true ⊚ false

⊚ true

Some firms avoid collaboration for fear of giving up their proprietary technologies. ⊚ true ⊚ false

⊚ true

________ offers a fast way for a firm to extend the reach of its technology that is nearly free and offers the potential for royalties. A) Licensing out a technology B) Forming a joint venture C) Solo internal development D) Vertical integration

A) Licensing out a technology

Through a strategic alliance, firms can establish a limited stake in a venture while maintaining the flexibility to either increase their commitment later or shift these resources to another opportunity. ⊚ true ⊚ false

⊚ true

Which of the following statements is true of outsourcing? A) It involves significantly low amounts of transaction costs. B) It is the most viable option for companies seeking to avoid becoming hollow. C) It is the best way for a company to develop in-house manufacturing capabilities. D) It carries a risk of proprietary technology being expropriated by the contract manufacturer.

D) It carries a risk of proprietary technology being expropriated by the contract manufacturer.

Which of the following statements is true of resource fit? A) It refers to the degree to which partners have compatible objectives and styles. B) It excludes resources that are supplementary. C) It seldom enables partners to achieve economies of scale by pooling of supplementary resources. D) It encourages collaborations based on the combination of complementary resources to access resources a firm does not possess.

D) It encourages collaborations based on the combination of complementary resources to access resources a firm does not possess.

Self-enforcing norms based on goodwill, trust, and reputation of partners are known as ________. A) capability complementors B) alliance contracts C) equity ownership D) relational governance

D) relational governance

Carl owns a software firm, and Mike owns a computer hardware manufacturing firm. They decide to create an alliance in order to manufacture laptops and desktops using the shared competencies of their respective firms. When creating the alliance, they make sure that each of them invests 50 percent capital and that they would each own a specified right to a percentage of the profits from the alliance. The collaborative relationship in this scenario is known as ________. A) equity ownership B) relational governance C) alliance contracts D) solo internal development

A) equity ownership

Allured Cosmetics Corporation enters into a contractual agreement with Pure Cosmetics Incorporated, a manufacturing firm in the West Coast. According to the contract, Pure Cosmetics can use the manufacturing processes of Allured Cosmetics to produce cosmetics in return for a specific fee. Pure Cosmetics is bound to use the manufacturing process only to make complementary products for the cosmetics manufactured by Allured Cosmetics. This collaborative arrangement is classified as ________. A) licensing B) outsourcing C) a joint venture D) capability complementation

A) licensing

The R&D team of Zelda Technozone Incorporated has developed a prototype for a twoseater car that runs primarily on solar energy. Since the firm usually manufactures household appliances, the management acknowledges that it does not have the required competencies to manufacture this car on a large scale. It decides to access another firm's manufacturing competencies. Which of the following collaborative arrangements is most appropriate in this scenario? A) licensing in B) joint venture C) licensing out D) franchising

A) licensing in

Alumplus Aluminum Company has come up with a new type of metal. However, producing it would take up 75 percent of its manufacturing capacity and would hinder its ability to continue producing its other products. Alumplus Aluminum hires LM Group of Manufacturers to manufacture the new type of metal. This collaborative arrangement is most likely to be classified as ________. A) outsourcing B) disintermediation C) capability complementation D) solo internal development

A) outsourcing

________ refers to the degree to which partners have compatible objectives and styles. A) Resource fit B) Strategic fit C) Capability complementation D) Contractual fit

B) Strategic fit

Combining the capabilities and other resources of partner firms but not necessarily transferring those resources between the partners is referred to as ________. A) capability transfer B) capability complementation C) resource modification D) disintermediation

B) capability complementation

Greyer Corporation has developed a special drug that kills cancer cells. While the scientists at Greyer have the knowledge, they are short on equipment, money, and marketing knowhow. In this situation, the most appropriate step for Greyer would be to A) give up the idea of selling the drug altogether. B) find a partner to collaborate with to sell the drug. C) forge forward and develop the drug on its own. D) come up with a completely new drug.

B) find a partner to collaborate with to sell the drug.

Allured Architecture Incorporated collaborated with Maze & Matiz Corporation to form a new architecture firm called AllureAmaze Incorporated Both the firms had a significant equity stake in the new entity. This collaboration would most accurately be termed a(n) ________. A) licensing project B) joint venture C) outsourcing maneuver D) contract alliance

B) joint venture

A firm cannot collaborate with its competitor. ⊚ true ⊚ false

⊚ false

A firm's effectiveness at managing its collaborations will increase with the number of collaborations to which it is committed. ⊚ true ⊚ false

⊚ false

It is unusual for a company to lack certain complementary assets required to transform a body of technological knowledge into a commercial product. ⊚ true ⊚ false

⊚ false

Licensing a technology from another firm is typically more expensive for a licensee than developing a new technology in-house. ⊚ true ⊚ false

⊚ false

Obtaining some of the necessary capabilities or resources from a partner rather than building them in-house will increase a firm's asset commitment. ⊚ true ⊚ false

⊚ false

Research suggests that relational governance increases the contracting and monitoring costs of managing an alliance and impedes cooperation between alliance partners. ⊚ true ⊚ false

⊚ false

Solo internal development is, on average, a relatively fast and inexpensive way of developing a technology. ⊚ true ⊚ false

⊚ false

After licensing a technology, a firm typically has limited discretion over what it can do with the technology. ⊚ true ⊚ false

⊚ true

Equity ownership helps to align the incentives of the partners and provides a sense of ownership and commitment to the project that can facilitate supervision and monitoring of the alliance. ⊚ true ⊚ false

⊚ true

Firms can use strategic alliances to exploit their own capabilities by leveraging them in another firm's development efforts. ⊚ true ⊚ false

⊚ true

Product life cycles shorten with high-speed technological changes. ⊚ true ⊚ false

⊚ true

Solo development has the advantage of allowing firms to save time or money if they believe development efforts are crucial in building and renewing capabilities. ⊚ true ⊚ false

⊚ true

_________ are legally binding contractual arrangements to ensure that partners are fully aware of their rights and obligations in the collaboration and have legal remedies available if a partner should violate the agreement. A) Void contracts B) Alliance contracts C) Corporate charters D) Articles of association

B) Alliance contracts

Easymake Corporation developed a new Web design software to build Web pages for its clients. However, Easymake soon realized it could make more money by selling this software to those who wish to quickly build Web pages to sell their products. Which of the following would be the most appropriate strategy for Easymake? A) It should not sell the Web design software as it will give rise to competition on the Internet. B) It should become a licensor of the new Web design software. C) It should become a licensee of the new Web design software. D) It should make the Web design software available to users as open-source software.

B) It should become a licensor of the new Web design software.

Which of the following is an advantage of collaborating on development projects? A) It increases the in-house development time for the projects. B) It increases a product's cycle time. C) It allows firms to grow their knowledge bases rapidly. D) It causes firms to commit to assets that will rapidly become obsolete

C) It allows firms to grow their knowledge bases rapidly.

Which of the following statements is true of contract manufacturing? A) It requires companies to increase its labor force to meet the scale of market demand. B) It requires firms to meet the scale of market demand by committing to long-term capital investments. C) It enables a firm to tap the greater economies of scale. D) It decreases organizational responsiveness to the environment.

C) It enables a firm to tap the greater economies of scale.

Greyer Corporation manufactures surgical instruments. Systems Medico Incorporated enters into a contractual arrangement with Greyer that allows it to use Greyer manufacturing methods and management structure to produce and sell surgical instruments. Systems Medico must pay a yearly fee to Greyer for the use of its manufacturing processes. In this scenario, Systems Medico is the ________. A) licensor B) contract manufacturer C) licensee D) intrapreneur

C) licensee

When technology is progressing rapidly, firms are more likely to A) commit themselves to fixed assets that will rapidly become obsolete. B) avoid forming alliances for projects that are risky and complex. C) use linkages with other specialized firms to access resources they do not possess. D) avoid becoming more narrowly specialized.

C) use linkages with other specialized firms to access resources they do not possess.

Which of the following statements is true of a collective research organization? A) It does not help firms to leverage their competencies. B) It is a short-term commitment. C) It is an effort to rapidly access capabilities or technology. D) It allows a firm to share the cost and risk of basic research.

D) It allows a firm to share the cost and risk of basic research.

Which of the following is a feature of a joint venture that differentiates it from other forms of alliances? A) It usually does not result in the creation of a new business entity. B) It increases asset commitment to products that will become rapidly obsolete. C) It increases cycle time of a technology. D) It involves a significant equity stake by the partners.

D) It involves a significant equity stake by the partners.