Exam 7: Strategic Alliances and Networks

The ad hoc approach to organization allows firms to systematically learn from the experience.

A lower level of ____contribution may indicate a firm's relative lack of commitment: a. Equity b. Learning and experience c. Nationality d. Relational capabilities e. All of the above

From the view of industry structure, in oligopolistic industries, there are an above average number of available players as potential partners.

The strategic choice concerning whether to form cooperative interfirm relationships or to rely on pure market transactions or M&As to grow the firm is part of: a. Stage One. b. Stage Two. c. Stage Three. d. Stage Four. e. Stage Five.

The term "strategic networks" is derived from the term "social networks" highlighting the social aspects of interfirm relationships.

Strategic alliances involve: a. Voluntary agreements between firms. b. Compromises between short-term transactions and long-term solutions. c. Contracts. d. Equity-based arrangements. e. All of the above.

What can be done to maintain a successful alliance among global firms?

A firm would prefer equity relationships if it fears that its intellectual property may be expropriated by partners.

In comparing M&As with alliances and networks, which of the following is not correct? a. M&As are costly. b. M&As have significant transaction costs. c. Many M&As end up destroying value. d. Alliances and networks preclude future upgrading into possible M&As. e. Alliances and networks can be considered as a flexible intermediate solution.

The first concern in determining whether a relationship should be based on contract or equity is: a. The kind of resources and capabilities that are shared. b. Direct monitoring and control. c. Real options. d. Institutional constraints. e. None of the above.

The more tacit the resources and capabilities are, the less likely firms will prefer equity involvement in establishing relationships.

How can an organizational alliance be "win-win?" How can the concept of "cooperative specialization" help?

Weak ties in organizational relationships: a. Are more trustworthy and are cultivated over a long period of time. b. Are associated with exchanging finer-grained information. c. Provide an informal, social control mechanism. d. A through C above. e. Are less costly to maintain.

Contractual alliances include all of the following except: a. Co-marketing. b. Research and development (R&D) contracts. c. Cross-shareholding. d. Turnkey projects. e. Licensing/franchising.

An increase in the experience of one partner may bring instability into the relationship as it reduces the need to rely on the other partner.

As a type of relationship tie, exploitation refers to such things as: a. Selfishness. b. Choice. c. Efficiency. d. Execution. e. B through D above.

From the perspective of network position, firms located in the center of interfirm networks accumulate less power and influence.

Cooperation between rivals is usually suspected of being: a. Tacit collusion. b. Explicit collusion. c. Socialism. d. All of the above. e. None of the above.

As each firm is likely to have multiple interfirm relationships, it is important to not manage the relationships as a corporate portfolio.

Shown in Table 7.4, alliances, which tend to be loosely coordinated among partners, do not work well in a setting that requires a high degree of interdependence. Such a setting would call for acquisitions. Alliances work well when the ratio of soft to hard assets is relatively high (such as a heavy concentration of tacit knowledge), whereas acquisitions may be preferred when such a ratio is low. Alliances create value primarily by combining complementary resources, whereas acquisitions derive most of their value by eliminating redundant resources. Finally, consistent with real options thinking,?alliances are more suitable under conditions of uncertainty, and acquisitions are more preferred when the level of uncertainty is low. AACSB: BUSPROG: Analytic; DISC: Strategy LO: 7-3; Bloom's: Analysis; Difficulty: Moderate -What are the limitations in trying to clearly identify rights and expectations for alliances and acquisitions among global corporations?