Deck 7: Making Strategic Alliancee and Networks Work

Question 1

Firms with a high degree of network centrality are likely to be more attractive partners.

Answer 1

True

Question 2

A firm that does not exercise a real option faces punitive consequences.

Answer 2

False

Question 3

Keiretsu networks often consist of upstream vertical alliances.

Answer 3

True

Question 4

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

Question 5

Cross-shareholding is a popular form of non-equity-based alliances

Question 6

Decisions to form a strategic alliance are based primarily on resource-based considerations.

Question 7

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

Question 8

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

Question 9

Many governments tend to prefer alliances over the establishment of wholly owned subsidiaries.

Question 10

In finding organizational partners, it is desirable to identify candidates that present both strategic fit and organizational fit.

Question 11

Examples of equity-based alliances include strategic investment.

Question 12

Since firms act to enhance or protect their legitimacy, copying other reputable organizations is not a way to gain legitimacy.

Question 13

In regards to strategic alliances and networks, in the traditional industry-based view, firms are dependent players.

Question 14

A joint venture is a strategic alliance that is closest to a merger/acquisition.

Question 15

A non-JV, equity-based alliance can be regarded as two firms "getting married," but not having "children."

Question 16

A horizontal alliance consists of members that are competitors.

Question 17

Strategic networks work against other groups, but not against traditional single firms

Question 18

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

Question 19

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

Question 20

Successful alliances and networks normally avoid socially complex relations among partners.

Question 21

In international alliances, setting up a parallel and reciprocal relationship in the foreign partner's home country may decrease the incentives for both partners to cooperate.

Question 22

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

Question 23

Experience is typically used as a proxy for measuring the learning that results from an alliance.

Question 24

Opportunism is seldom an issue with members of an alliance.

Question 25

Objective, rather than subjective, measures are used to judge the performance of strategic alliances.

Question 26

Higher level shared technology is associated with lower profitability for parent firms.

Question 27

Detailed formalization of an alliance relationship is a sign of trust.

Question 28

Strong ties are more beneficial to environments conductive for exploitation whereas weak ties are more suitable for exploration.

Question 29

Weak ties excel at connecting with distant others who possess unique and novel information.

Question 30

Acquisitions work well when the ratio of soft to hard assets is relatively high, whereas alliances may be preferred when such a ratio is low.

Question 31

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

Question 32

The choice between contract and equity approaches to growth is highly dependent on institutional constraints.

Question 33

Like married individuals who work hard to stimulate and strengthen their ties, alliances require continuous nurturing.

Question 34

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.

Question 35

Possible ways to minimize the threat of opportunism include swapping critical skills and technologies through credible commitments.

Question 36

In alliance formation, the question of whether to cooperate or not cooperate is essentially answered by whether a firm goes the route of market transactions/acquisitions or forms an alliance.

Question 37

Contract- or non-equity-based approaches allow firms to have more direct control over joint activities.
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Question 38

After the initial set of opportunities are exploited and exhausted by the partners to a joint venture, they tend to seek out relationships with weak ties among a diverse set of players.

Question 39

The marriage/divorce metaphor works if the alliance has only two partners, but not if it involves more than two.

Question 40

To ward off potential opportunism, a firm may place its critical skills and technologies in a "black box' sort of arrangement to which the alliance partner has no access.

Question 41

Which is not an advantage of strategic alliances and networks?

A)Reduce costs, risks and uncertainties.
B)Costs of negotiation and coordination.
C) Gain access to complementary assets and capabilities.
D) Possibilities to use alliances and networks as real options.

Question 42

Cooperation between rivals is usually suspected of being:

A)Tacit collusion.
B)Explicit collusion.
C) Socialism.
D) All of the above.

Question 43

Three medical supply companies join together to bring a burn wound treatment to market more quickly. Their collaboration is a:

A)​Horizontal alliance.
B)​Upstream vertical alliance.
C) ​Institution-based merger.
D) ​Downstream vertical alliance.

Question 44

Which represents an alliance with suppliers?

A)Horizontal alliances.
B)Upstream vertical.
C) Downstream vertical.
D) None of the above

Question 45

Firm X is considering an alliance with Firm A. Which of the following institution-based consideration is most important to Firm X's decision?

A)​High entry barriers discourage our competitors from making similar alliances.
B)​The alliance will create an acceptable level of value for us.
C) ​Local content requirements are minimal.
D) ​The opportunity to learn from Firm A is significant.

Question 46

The high entry barriers in a given industry:

A)​Preclude any alliance activity.
B)​May result in alliances that can lower cost and risks to market entry.
C) ​Prevent network ties from reaching an alliance level.
D) ​Tend to dilute the individual strength of any firm in the alliance.

Question 47

Emerging trends concerning formal government policies on entry mode requirements include:

A)More conservative policies.
B)Imposing considerable requirements.
C) Banning joint ventures.
D) Welcoming wholly owned subsidiaries.

Question 48

Firm X and Firm Z become cross-shareholders, which means that they:

A)​Participate in co-marketing.
B)​Share in a turnkey project.
C) ​Engage in a market transaction.
D) ​Invest as strategic investors in each other.

Question 49

Institution-based considerations regarding organization include:

A)Collusion concerns.
B)Entry requirements.
C) The social pressures to find partners.
D) All of the above.

Question 50

Underlying the decision to engage in cooperative interfirm relationships is

A)​A set of strategic considerations.
B)​A comprehensive model based on formation, evolution, and performance.
C) ​Elements of the industry-, resource-, and institution-based considerations.
D) ​All of the above.

Question 51

A joint venture can be described as:

A)A special case of equity-based alliance.
B)A legally dependent entity.
C) An alliance based on contracts and does not involve the sharing of ownership.
D) A compromise between merger and acquisition.

Question 52

Contractual alliances include all of the following except:

A)Licensing/franchising.
B)Research and development (R&D) contracts.
C) Cross-shareholding.
D) Turnkey projects.

Question 53

In order to extract the most benefit from alliances, managers need to:

A)​Focus on the social and psychological phenomenon of the relationship rather than the economic aspects.
B)​Emphasize competition.
C) ​Foster trust with partners.
D) ​Practice opportunism.

Question 54

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.

Question 55

Which of the following is NOT involved in the stages of forming business relationships?

A)The decision to cooperate.
B)Positioning the relationship.
C) The choice of contract or equity.
D) All of the above.

Question 56

Which of the following are NOT true regarding managers involved in alliances and networks?

A)They require relationship skills which foster trust with partners.
B)They must guard against opportunism.
C) They must recognize that interests of the firms fully overlap.
D) They have to represent the interests of their respective firms.

Question 57

A way that many large MNEs typically deal with deal with the organizational issues of alliances is:

A)​A way that many large MNEs typically deal with deal with the organizational issues of alliances is:
B)​By developing a dedicated alliance function.
C) ​To focus primarily on firm-level organizational issues.
D) ​Through an alliance template and standard metrics and checklists.

Question 58

Strategic alliances involve:

A)Obligatory agreements between firms.
B)Compromises between short-term transactions and long-term solutions.
C) Eventual acquisitions.
D) None of the above.

Question 59

In the context of strategic alliances, a constellation is:

A)​An industry agreement in which firms compete against one another.
B)​A two-firm equity-based partnership.
C) ​A strategic network.
D) ​All of the above.

Question 60

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.

Question 61

In measuring the performance of strategic alliances and networks, subjective measures include:

A)Market performance.
B)Stability.
C) Longevity.
D) The level of managers' satisfaction.

Question 62

A firm in an alliance is likely to have other interfirm alliances as well, which makes it important to:

A)​Close the door to additional alliances.
B)​Insist on direct monitoring and control.
C) ​Manage the relationships as a corporate portfolio.
D) ​None of the above.

Question 63

At Stage I of the alliance formation process, which of the following is a viable option?

A)Engage in market transactions.
B)Pursue cooperative interfirm relationships.
C) Opt for merger or acquisition.
D) All of the above.

Question 64

As a type of relationship tie, exploitation refers to such things as:

A)Selfishness.
B)Lack of choice.
C) Inefficiency.
D) Execution.

Question 65

To protect against opportunism within an alliance relationship, a firm could minimize the threat by:

A)​Walling off critical capabilities.
B)​Swapping critical capabilities through credible commitments.
C) ​Holding each other "hostage."
D) ​All of the above.

Question 66

International alliances tend to have:

A)​More problems than domestic ones.
B)​Greater longevity.
C) ​Experiences that affect performance in a linear way.
D) ​Easier-to-measure relational capabilities.

Question 67

A firm deciding to pursue an alliance relationship with another firm has already made which of the following decisions?

A)​Growth through market transactions is the best course of action.
B)​Acquisition in this situation is risky.
C) ​Real options are not to be considered.
D) ​Institutional constraints are unimportant.

Question 68

Stock markets are more likely to respond favorably to companies that engage in alliance activities if the partners:

A)​Are from countries with no political risk.
B)​Have previous alliance experiences.
C) ​Possess similar resources.
D) ​Are small in size.

Question 69

For parent firms, a higher level of collaboration and shared technology is often associated with:

A)​Lower profitability and market share.
B)​Better profitability and market share.
C) ​Poor stock market response.
D) ​Lower profitability but higher market share.

Question 70

The first step in the dissolution of an alliance is:

A)​Going it alone.
B)​Uncoupling.
C) ​Initiation.
D) ​Going public.

Question 71

Strong ties between alliance partners are:

A)​Less costly to maintain than weak ties.
B)​Better for exploring new opportunities.
C) ​The initial foundation of many strategic alliances.
D) ​Needed for greater flexibility.

Question 72

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.

Question 73

The stock market responds favorably to alliance activities, but only under which circumstances?

A)Complementary resources.
B)Previous alliance experience.
C) Ability to manage the host country's political risk.
D) All of the above.

Question 74

Among the ways to improve the odds of a successful alliance, which of the following would be considered a "don't"?

A)​Rely on a detailed contract to ensure a successful relationship.
B)​Identify symptoms of frequent criticisms.
C) ​Continuously work on nurturing the relationship.
D) ​Avoid escalation of conflicts.

Question 75

A lower level of ____contribution may indicate a firm's relative lack of commitment:

A)Equity
B)Learning and experience
C) Nationality similarities.
D) Relational capabilities

Question 76

The performance of an alliance can probably be best measured

A)​By objective measures only.
B)​Through an assessment of learning and experience.
C) ​Through an assessment of relational capabilities.
D) ​By a combination of objective and subjective measures.

Question 77

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) Are less costly to maintain.

Question 78

For equity-based alliances and networks, the nature of shared resources and the degree of tacitness and complexity are:

A)​Low.
B)​Moderate.
C) ​High.
D) ​Irrelevant.

Question 79

Which of the following is a subjective factor that affects the performance of alliances and networks?

A)Equity invested.
B)Learning and experience.
C) Profitability.
D) Market share.

Question 80

For non-equity-based alliances, the importance of direct organizational monitoring and control is:

A)​Low.
B)​Moderate.
C) High.
D) ​Irrelevant.