Deck 7: Cooperative Strategy

Question 1

International strategic alliances are less risky than domestic strategic alliances.

Answer 1

False

Question 2

When a firm is in the early stages of geographic diversification,cross-border alliances may be a good learning step before contemplating mergers.

Answer 2

True

Question 3

Tacit collusion is illegal in the United States.

Answer 3

False

Question 4

Aerospace companies such as Boeing use cooperative alliances to stay competitive.

Question 5

Although strategic alliances are growing in popularity with small and medium-sized firms,large companies tend to avoid them.

Question 6

Horizontal business-level strategic alliances have the greatest probability of creating sustainable competitive advantage.

Question 7

Because of U.S.legal restrictions concerning large acquisitions,American firms are unable to enter into diversifying alliances.

Question 8

The cost minimalization management approach involves the firm's use of formal contracts with partners.

Question 9

The failure rate of cooperative strategies is very low.

Question 10

Distributed alliance networks are often the organizational structure used to manage international competitive strategies.

Question 11

Strategic alliances can be used to respond to competitors' attacks.

Question 12

The primary responsibility of the franchisor is to transfer capital to the franchisee.

Question 13

Being (and having) a trustworthy partner increases the probability of alliance success.

Question 14

An alliance can be used to test whether the partners would benefit from a future merger.

Question 15

Mergers are the most popular cooperative strategy used in standard-cycle markets.

Question 16

A horizontal complementary strategic alliance is an alliance in which firms share some of their resources and capabilities from the same stage of the value chain to create a competitive advantage.

Question 17

Synergistic strategic alliances allow firms to expand into new product or market areas without an acquisition.

Question 18

Firms in slow-cycle markets can use cooperative strategies in the transition to more competitive markets.

Question 19

Cooperation in slow-cycle markets is extremely rare,especially in emerging markets.

Question 20

Equity strategic alliances exist when two or more firms join together to create an independent firm.

Question 21

A nonequity strategic alliance exists when:

A) two firms join together to create a new company.
B) a contract is granted to a company to supply,produce,or distribute a firm's goods.
C) two partners in an alliance own equal shares in the combined entity.
D) the partners agree to sell bonds instead of stock in order to finance a new venture.

Question 22

As illustrated by NTT DoCoMo's alliance with Nippon television network,many firms form business-level strategic alliances in order to reduce uncertainty associated with the ____ function(s).

A) accounts payable and payroll
B) marketing
C) legal
D) research and development

Question 23

A major risk of cooperative strategies is that firms gain access to their partner's partners.

Question 24

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

Question 25

____ are a common strategy for U.S.and Japanese firms investing in China.

A) Joint ventures
B) Collusive agreements
C) Equity strategic alliances
D) Nonequity strategic alliances

Question 26

Which of the following is NOT a reason for firms to participate in strategic alliances?

A) To enter markets more quickly
B) To allow firms to combine their resources and capabilities
C) To allow firms to create values they could not develop acting independently
D) To develop oligopolies in a market and eliminate competition

Question 27

In a(n) ____ the firms involved own equal shares of a newly-created venture.

A) equality-based strategic alliance
B) non-equity strategic alliance
C) joint venture
D) equity strategic alliance

Question 28

The new trend of competitors cooperating with one another is often referred to as:

A) "cooperatives."
B) "cartelization."
C) "competitive co-ops."
D) "cooperative strategies."

Question 29

A strategic control issue for McDonald's is the location of franchised restaurants.

Question 30

Firms in ____ markets cooperate to pool resources and gain market power.

A) slow-cycle
B) standard-cycle
C) fast-cycle
D) hyper-cycle

Question 31

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.

Question 32

A strategic alliance in which the partners do not own equal equity is called a(n):

A) equity strategic alliance.
B) joint venture.
C) nonequity strategic alliance.
D) cooperative arrangement.

Question 33

Horizontal partnerships often focus on:

A) decreasing the purchasing power of consumers.
B) the development of just-in-time inventory systems.
C) long-term product development and distribution opportunities.
D) lobbying Congress to deregulate the industry.

Question 34

The use of 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 increasing,especially among large global firms.

Question 35

The information technology (IT) industry is a:

A) mixed cycle market.
B) slow cycle market.
C) fast cycle market.
D) standard cycle market.

Question 36

In general,strategic alliances are primarily formed to respond to ____ rather than ____ actions.

A) outsourcing,complementary
B) well-planned,spontaneous
C) business-level,corporate-level
D) strategic,tactical

Question 37

The information in the text about Kodak's partnering philosophy illustrates ____.

A) the difficulty of coordinating cross-border alliances when each partner is a potential competitor
B) the fact that research and development costs make it difficult to undertake major projects without alliances
C) the problems involved with sharing sufficient knowledge and resources to provide synergy without losing unique competitive advantages
D) the challenges involved in dealing with multiple organizational and national cultures in an alliance

Question 38

All of the following are business-level cooperative strategic alliances EXCEPT:

A) synergistic strategic alliances.
B) uncertainty reduction strategic alliances.
C) complementary strategic alliances.
D) competition response strategic alliances.

Question 39

When partnerships are designed to take advantage of market opportunities by combining firm assets to create new value,they are engaging in:

A) competition reduction strategies.
B) competitive response alliances.
C) uncertainty reduction strategies.
D) complementary strategic alliances.

Question 40

____ are rare and quickly disappearing.

A) Fast-cycle markets
B) Standard-cycle markets
C) Slow-cycle markets
D) Medium-cycle markets

Question 41

In the franchising strategy,the most important competitive advantage for the franchisee is ____.

A) the franchisor's brand name
B) the franchisor's capital resources
C) the franchisor's access to a consolidated market
D) the franchisor's geographic locations

Question 42

Franchising is a particularly attractive strategy in ____.

A) competing more effectively within the traditional passenger aircraft market
B) developing new marketing processes
C) large firms with dominant market share
D) fragmented industries

Question 43

Some governments,such as those of India:

A) encourage high levels of foreign ownership.
B) adamantly oppose foreign ownership of a firm.
C) often put limits on the level of foreign ownership in a local firm.
D) restrict the entry mode into the domestic market to licensing only.

Question 44

____ have stronger focus on creation of value than do ____ alliances.

A) Competition reducing strategic alliances,complementary strategic alliances
B) Complementary strategic alliances,competition reducing alliances
C) Uncertainty reducing strategic alliances,complementary strategic alliances
D) Collusive strategic alliances,uncertainty reducing strategic alliances

Question 45

Which of the following is NOT a true statement about franchising as a corporate strategy?

A) Franchising is most appropriate in concentrated industries.
B) Franchising provides corporate growth with less risk than diversification.
C) Successful franchising requires close cooperation between franchisee and franchisor.
D) Franchising agreements are prohibited by law in many industries.

Question 46

A firm may pursue an international strategic alliance for all of the following reasons EXCEPT:

A) to enhance the compensation packages of top managers.
B) to leverage core competencies in new markets.
C) to operate within government restrictions in the local country.
D) to escape limited domestic growth opportunities.

Question 47

Intelligent Energy entered a cooperative strategy with Seymourpowell in order to ____.

A) generate synergies in manufacturing
B) focus on research and development
C) determine if their firms should merge in the future
D) provide greater focus on their distribution efforts

Question 48

If GM and Toyota were to combine some of their automobile manufacturing operations,this would be characterized as a(n):

A) collusive tactic.
B) merger.
C) cross-border strategic alliance.
D) international acquisition.

Question 49

As a form of business-level cooperative strategy,____ alliances are more likely to create a sustainable competitive advantage and earn above-average returns.

A) complementary
B) uncertainty reduction
C) competition reduction
D) franchising

Question 50

A ____ strategy alliance allows firms to expand into new product or market areas without having to make an acquisition.

A) synergistic
B) diversifying
C) competition reduction
D) complementary

Question 51

McDonald's franchising system is a:

A) worldwide product divisional structure.
B) strategic network.
C) SBU multidivisional structure.
D) simple structure.

Question 52

According to recent statistics,____ in annual U.S.retail sales is generated through franchised outlets.

A) $50 million
B) $1 billion
C) $ 50 billion
D) $1 trillion

Question 53

The arrangement Toyota initiated with six auto manufacturers:

A) would be legal in many undeveloped countries.
B) is an example of legal tacit collusion.
C) is an example of illegal explicit collusion.
D) is an example of mutual forbearance,the legality of which is established on a case-by-case basis.

Question 54

In free market economies ____ must decide how rivals can collaborate with their competitors without violating established regulations.

A) the invisible hand
B) the government
C) consumers
D) the free market itself

Question 55

Compared to business-level strategies,corporate-level cooperative strategies are all of the following EXCEPT:

A) broader in scope.
B) more costly to implement.
C) more likely to be value-creating.
D) more complex.

Question 56

In some countries,the only legal way for foreign firms to invest in the country is through:

A) silent partner agreements.
B) franchising.
C) wholly-owned subsidiaries.
D) partnership with a local firm.

Question 57

Reduction of competition can be accomplished through all of the following EXCEPT:

A) comparative pricing.
B) explicit collusion.
C) tacit collusion.
D) mutual forbearance.

Question 58

Which of the following is NOT an advantage for a firm engaged in diversifying alliances?

A) Expansion into new market areas
B) Entering new product areas
C) Achieving growth without merging with another firm
D) Overcoming organizational weaknesses

Question 59

In the U.S.,cooperative strategies to reduce competition may result in ____ if they are explicit.

A) competitive production output
B) litigation
C) higher levels of product quality
D) indirect price fixing

Question 60

Prices above the competitive level in the branded breakfast cereal market suggest that these firms are engaging in ____.

A) excessive cooperation.
B) joint ventures.
C) tacit collusion.
D) standard strategic alliances.

Question 61

Identify the competitive risks associated with cooperative strategies.

Question 62

A cooperative strategy in which multiple firms agree to form partnerships to achieve shared objectives is a:

A) cross-border franchise.
B) network cooperative strategy.
C) competition reducing strategy.
D) complementary strategic alliance.

Question 63

Firms participate in ____ to facilitate exploitation of economies between firms.

A) stable alliance networks
B) dynamic alliance networks
C) internal alliance networks
D) centralized alliance networks

Question 64

The two basic approaches to successfully managing cooperative strategic alliances involve ____ and ____.

A) cost minimization,opportunity maximization
B) monitoring systems,multiple management approaches
C) trustworthiness,large financial reserves
D) knowledgeable managers,skilled employees

Question 65

Identify and define the two different types of network strategies.

Question 66

One disadvantage of developing effective monitoring systems to manage a strategic alliance is that:

A) firms will have to accept greater risks.
B) returns will often be decreased.
C) spontaneous opportunities are minimized.
D) power coalitions will still develop.

Question 67

Explain the rationale for a cooperative strategy under each of the three types of basic market situations (i.e.,slow,standard,and fast cycles).

Question 68

Identify the four general types of business-level cooperative strategies and the advantages and disadvantages of each.

Question 69

Which of the following is NOT a risk for firms engaged in cooperative strategies?

A) Misrepresentation of a partner's competencies
B) False perception of partner trustworthiness
C) Conflicting managerial frames of reference
D) Failure of partners to make complementary resources available to the partnership

Question 70

All of the following EXCEPT ____ are some ways in which the cost minimization strategy can be more expensive than the opportunity maximization strategy.

A) the loss of unexpected opportunities
B) the cost of extensive monitoring mechanisms
C) the costs of writing detailed contracts
D) the reluctance of some parties to go beyond the formal contracts

Question 71

The opportunity maximization approach is more difficult to establish in international relationships than in domestic relationships because of all of the following EXCEPT:

A) differences in law and politics.
B) differences in culture.
C) differences in trade policies.
D) differences in technological development.

Question 72

In managing cooperative strategies,research indicates that ____ can be a capability that is valuable,rare,imperfectly imitable,and often nonsubstitutable giving these firms a competitive advantage.

A) extensive capitalization
B) stability
C) trustworthiness
D) Internet competency

Question 73

Dynamic alliance networks work best in industries:

A) where technological innovations are introduced frequently.
B) that are mature and stable in nature.
C) where the coordination of product and global diversity is critical.
D) that are characterized by predictable market cycles and demand.

Question 74

Identify the three types of corporate-level cooperative strategies.

Question 75

In general,cross-border alliances are more ____ and ____ than domestic alliances.

A) profitable,R&D intensive
B) complex,risky
C) contract-driven,focused
D) common,useful

Question 76

In a cross-border alliance,the local partner is often a useful source of information about:

A) local capital sources.
B) the strengths of the foreign firm's technology.
C) market synergies.
D) long-term planning.

Question 77

A dynamic strategic alliance is most useful in ____.

A) industries characterized by frequent product innovations
B) standard-cycle industries
C) cross-border cooperative strategies
D) the cost-minimization approach of managing a cooperative strategy

Question 78

Identify and define the different types of strategic alliances.

Question 79

Describe the strategic management approaches to managing alliances.

Question 80

Why are cooperative strategies often used when firms pursue international strategies and what are the advantages and disadvantages of international cooperative strategies?