Deck 13: International Strategic Alliances

Question 1

Advanced Audio and EQ Electronics recently established a joint venture for the purpose of cooperating in the design, production, and sale of a line of audio equipment. Executives at the two firms must now decide the best way to manage the joint venture. Which of the following is the LEAST likely option?

A) hiring an independent management team
B) jointly sharing management responsibilities
C) assigning one firm all management responsibilities
D) continuing completely separate management activities

Answer 1

D

Question 2

How was General Mills able to gain 25% of the European cereal market?

A) selling organic products
B) sharing facilities with Kellogg
C) marketing its products online
D) forming a joint venture with Nestle

Answer 2

D

Question 3

What is the primary difference between a joint venture and a non-joint venture strategic alliance?

A) level of political, cultural and financial risk for each firm
B) formation of a third, legally separate business entity
C) amount of financial investment required
D) geographic location of the alliance

Answer 3

B

Question 4

PepsiCo and Thomas J. Lipton Co. established a joint venture. PepsiCo supplied an extensive distribution network, and Lipton provided manufacturing expertise and brand recognition in teas. What benefit of strategic alliances were they most likely seeking?

A) ease of market entry
B) shared risk
C) shared knowledge
D) synergy

Question 5

A ________ is a special type of strategic alliance in which two or more firms join together to create a new business entity that is legally separate and distinct from its parents.

A) joint venture
B) licensing agreement
C) franchising arrangement
D) greenfield strategy

Question 6

Which of the following is not a hurdle firms can overcome by participating in a strategic alliance?

A) avoiding hostile government regulations
B) achieving economies of scale
C) minimizing import tariffs
D) controlling risk

Question 7

Executives at Bantam Bicycles realize that the firm lacks the necessary internal resources to compete internationally. Which of the following would most likely enable Bantam to compete in the global market?

A) exporting to emerging economies
B) investing in a financial portfolio
C) forming a strategic alliance
D) opening a retail store

Question 8

IMAX, the entertainment firm, recently entered into a joint venture with Wanda Cinema Line, a Chinese theater chain. What was IMAX primarily seeking by forming this arrangement?

A) easing entry into the Chinese market
B) acquiring technology from the Chinese firm
C) reducing economies of scale in China
D) obtaining a growing, niche Chinese market

Question 9

Boeing collaborated in a strategic alliance with Fuji, Mitsubishi, and Kawasaki in the development and production of the Boeing 777 to minimize Boeing's financial exposure. What benefit of strategic alliances was Boeing seeking?

A) ease of market entry
B) shared risk
C) shared knowledge
D) synergy

Question 10

Nestle and General Mills created Cereal Partners Worldwide to compete effectively in the European market. Cereal Partners Worldwide is owned equally by the two firms, so CPW is an example of a(n) ________.

A) franchising arrangement
B) acquisition strategy
C) joint venture
D) FDI

Question 11

Toyota and GM created a joint venture called NUMMI because Toyota wanted to learn about how to deal with labor and parts suppliers in the U.S. market while GM wanted to observe Japanese management practices. What benefit of strategic alliances were Toyota and GM primarily seeking?

A) ease of market entry
B) shared risk
C) shared knowledge
D) synergy

Question 12

Which of the following is not a benefit of strategic alliances?

A) shared knowledge
B) synergy
C) shared customers
D) ease of market entry

Question 13

The degree of collaboration in a strategic alliance primarily depends on the ________ of each partner firm.

A) history
B) available resources
C) basic goals
D) leadership

Question 14

What strategy is frequently used by Otis Elevator when it enters a new foreign market?

A) investing in the local infrastructure to improve safety
B) providing specialized training to local workers
C) waiting for competitors to enter a market first
D) seeking local partners to minimize risks

Question 15

Feldman Insurance wants to enter the Brazilian market but is concerned about hostile government regulations in Brazil. Which of the following would most likely help Feldman overcome this problem?

A) forming a joint venture with a local firm
B) identifying the potential market share
C) hiring only local employees
D) appealing to the WTO

Question 16

Company X and Company Z have established a business arrangement whereby the two firms will cooperate for their mutual benefit. Which of the following has most likely been established?

A) competitive advantage
B) licensing agreement
C) franchising arrangement
D) strategic alliance

Question 17

________ refers to value achieved through the combination of market entry, risk sharing, and learning potential that is greater than what the firm could have done alone.

A) Shared risk
B) Shared knowledge
C) Synergy
D) Scale economy

Question 18

Furman Furnishings wants to expand its international operations in cooperation with another firm. Which of the following methods would be most appropriate for Furman?

A) exporting
B) licensing
C) joint venture
D) foreign direct investment

Question 19

The strategic alliance between Kodak, Fuji, and three Japanese camera firms was primarily developed to ________.

A) increase Kodak's profits
B) avoid government takeover
C) reduce Kodak's risks
D) protect intellectual property

Question 20

Winston Foods and O'Toole's Soda have agreed to perform together multiple stages of the process by which products are brought to the market. The two firms have most likely formed a ________.

A) joint venture
B) production alliance
C) process alliance
D) comprehensive alliance

Question 21

A comprehensive alliance is formed when two or more firms ________.

A) integrate different operating procedures to bring goods or services to the market
B) manufacture products or provide services in a shared or common facility
C) share marketing services or expertise
D) reduce their financial risks

Question 22

Which of the following is not one of the types of functional alliances?

A) research and development
B) human resources
C) marketing
D) financial

Question 23

General Mills and Nestle created a joint venture which fully integrated all the efforts necessary to compete against Kellogg in the European cereal market. This is an example of a(n) ________ alliance.

A) functional
B) comprehensive
C) production
D) international

Question 24

Most comprehensive alliances are organized as ________.

A) joint ventures
B) licensing agreements
C) management contracts
D) turnkey projects

Question 25

A production alliance is formed when ________.

A) two or more firms each manufacture products or provide services in a shared or common facility
B) two or more firms share marketing services or expertise for a short-term development
C) firms form an alliance to reduce the financial risks associated with a project
D) partners agree to undertake joint research to develop new products

Question 26

Avia Battery and Simon Battery both manufacture batteries in a shared facility. The two firms have most likely established a(n) ________ alliance.

A) production
B) marketing
C) financial
D) R & D

Question 27

How does the Star Alliance primarily benefit customers?

A) coordinating service inquiries
B) supporting airport construction
C) facilitating airline transfers
D) easing government restrictions

Question 28

The Japanese company Bandai and the U.S. toymaker Mattel entered into a strategic alliance. Bandai agreed to distribute Mattel products like Barbie dolls in Japan while Mattel agreed to distribute Power Rangers in Latin America. What type of alliance is this an example of?

A) production
B) marketing
C) financial
D) research and development

Question 29

Chrysler and BMW formed a joint venture to build engines in South America. Which term best describes this type of alliance?

A) franchise agreement
B) financial alliance
C) licensing agreement
D) production alliance

Question 30

If Sony and Samsung create an alliance to manufacture 3-D televisions in a shared facility, then the two firms have most likely formed a ________ alliance.

A) production
B) marketing
C) financial
D) research and development

Question 31

A(n) ________ alliance is a functional alliance of firms that want to reduce financial risks associated with a project.

A) production
B) marketing
C) financial
D) R & D

Question 32

A marketing alliance is a type of ________.

A) business-level alliance
B) operational alliance
C) corporate-level alliance
D) functional alliance

Question 33

Which of the following factors is LEAST relevant to a firm in the process of selecting a partner for a strategic alliance?

A) partner compatibility
B) partner's use of e-commerce
C) nature of potential partner's products
D) learning potential of the alliance

Question 34

A financial alliance is formed primarily for the purpose of ________.

A) performing multiple tasks as quickly as possible
B) sharing a common manufacturing facility
C) generating technological change
D) reducing investment risks

Question 35

Research suggests that strategic alliances are more likely to be successful if the skills and resources of the partners are ________.

A) nearly identical
B) complementary
C) incompatible
D) observable

Question 36

In a marketing alliance, the established firm assists the newcomer with ________.

A) management and metrics
B) promotion and distribution
C) financing and production
D) research and development

Question 37

A ________ is a confederation of organizations that band together to research and develop new products and processes for world markets.

A) research and development alliance
B) functional alliance
C) research and development consortium
D) joint venture

Question 38

A(n) ________ alliance occurs when partners share expertise or services related to distribution, pricing, and communications.

A) production
B) marketing
C) financial
D) R & D

Question 39

Micron Technology, Intel, Samsung, Hyundai, and Siemens have formed an alliance to develop the next generation of DRAM chips. What type of alliance is this an example of?

A) production
B) marketing
C) financial
D) research and development

Question 40

Which of the following best explains the growing number of research and development alliances?

A) laws regarding intellectual property rights
B) expansion among emerging economies
C) decreasing costs of high technology
D) rapid technological changes

Question 41

What is the most likely problem associated with an assigned arrangement?

A) product incompatibility
B) management complexity
C) earnings distributions
D) conflict potential

Question 42

Which type of venture is the most difficult to maintain?

A) assigned arrangement
B) shared management agreement
C) delegated arrangement
D) split venture arrangement

Question 43

What form does a joint venture usually take?

A) limited partnership
B) partnership
C) corporation
D) public-private venture

Question 44

Under the agreement between Coca-Cola and Danone each company supplies three members of the joint venture's board of directors. What management form is this an example of?

A) shared management agreement
B) assigned arrangement
C) delegated arrangement
D) consensual arrangement

Question 45

Agro Corporation, a French firm, formed a joint venture with Woxhu, a Chinese firm. According to the text, which of the following has the most power to make decisions in this joint venture?

A) CCP party secretary
B) managing partners
C) board of directors
D) alliance CEO

Question 46

Under a(n) ________, each partner in the joint venture fully and actively participates in managing the alliance.

A) shared management agreement
B) assigned arrangement
C) delegated arrangement
D) consensual arrangement

Question 47

In which of the following industries is a public-private venture most likely?

A) oil
B) banking
C) technology
D) pharmaceutical

Question 48

Partnerships should be formed between firms whose products ________.

A) compete directly
B) complement one another
C) compete indirectly
D) are in different product categories

Question 49

Boeing controls the overall operation of its strategic alliance with Fuji, Mitsubishi, and Kawasaki. This is an example of a(n) ________.

A) shared management agreement
B) assigned arrangement
C) delegated arrangement
D) consensual arrangement

Question 50

Which of the following is a benefit of the corporate form for joint ventures?

A) development of a centralized hierarchy
B) protection of assets
C) implementation of high-performance work systems
D) continuation of same identities

Question 51

Under which management form are managers less accountable to managers in the partner firms?

A) shared management agreement
B) assigned arrangement
C) delegated arrangement
D) consensual arrangement

Question 52

GM, with a 67 percent stake in a joint venture with Raba, has assumed management control over the venture's operations. What management form is this an example of?

A) shared management agreement
B) assigned arrangement
C) delegated arrangement
D) consensual arrangement

Question 53

The government of Abu Dhabi formed a joint venture with Exxon Mobil in 2006. What type of joint venture is this an example of?

A) limited partnership
B) partnership
C) corporation
D) public-private venture

Question 54

Executives at Korman Foods, a U.S. grocery store chain, are considering a partnership with Asahi Foods, a Japanese firm. Korman Foods has never been involved in an international strategic alliance, and the firm's executives are concerned about the safety of such an arrangement. Which of the following questions is LEAST relevant for Korman executives to consider?

A) What does Asahi hope to gain from the arrangement ?
B) What is the success rate of Asahi's previous alliances?
C) What performance metric tools are utilized by Asahi?
D) What are Asahi's strengths and weaknesses?

Question 55

Under a(n) ________, one partner assumes primary responsibility for the operations of the alliance.

A) shared management agreement
B) assigned arrangement
C) delegated arrangement
D) consensual arrangement

Question 56

Which of the following most likely explains why some firms form limited partnership arrangements instead of joint ventures?

A) stringent local restrictions
B) equal division of financial resources
C) government control of natural resources
D) decreased risk for the managing partner

Question 57

All of the following are standard approaches to strategic alliance management EXCEPT ________.

A) shared management agreements
B) assigned arrangements
C) delegated arrangements
D) consensual arrangements

Question 58

A public-private venture is a joint venture that involves a partnership between a privately owned firm and a ________.

A) financial institution
B) rival corporation
C) board of directors
D) government

Question 59

Which action below is permissible by the dominant partner in an assigned arrangement?

A) set agendas
B) make decisions
C) overrule partner's decisions
D) all of the above

Question 60

An alliance between General Electric Corporation, which is run by financial experts, and Siemens, which is run by engineers, failed because of ________.

A) a lack of trust between the partners
B) a difference between the firms' products
C) incompatible management styles
D) an inability of firms to learn from each other

Question 61

Rubbermaid ended a joint venture in Europe when the partner firm refused to reinvest its profits into the development of new products. What was the source of this problem?

A) incompatibility among managers
B) inadequate access to information
C) conflicts over earnings distribution
D) loss of autonomy within the organization

Question 62

Which of the following is not considered one of the primary pitfalls of strategic alliances?

A) mutual trust
B) loss of autonomy
C) partner incompatibility
D) changing circumstances

Question 63

What has been the primary problem associated with the joint venture between VW and Suzuki?

A) conflicts over earnings distributions
B) partner incompatibility
C) competing goals
D) unclear objectives

Question 64

A 50:50 ownership structure is required in a joint venture.

Question 65

Of the potential pitfalls of strategic alliances, which one is the primary cause of failure?

A) partner incompatibility
B) loss of autonomy
C) access to information
D) conflicts over distributing earnings

Question 66

Which type of arrangement is limited to joint ventures?

A) assigned arrangement
B) delegated arrangement
C) joint-partnership arrangement
D) shared-management arrangement

Question 67

Joint ventures are generally less stable than non-joint venture strategic alliances.

Question 68

When a firm involved in a strategic alliance wants to maintain confidential information about its operations, which pitfall of strategic alliances is likely to occur?

A) incompatibility of management styles
B) limited access to information
C) unequal distribution of earnings
D) loss of autonomy

Question 69

Which of the following is responsible for making day-to-day decisions and strategy implementation in a delegated arrangement?

A) both alliance partners
B) joint venture executives
C) one of the alliance partners
D) shareholders and stockholders

Question 70

Which pitfall of alliances exists when the economic circumstances that motivated the alliance no longer exist?

A) changing circumstances
B) loss of autonomy
C) distribution of earnings
D) information access

Question 71

Of the potential pitfalls facing strategic alliances, over which one do the alliance members have the least control?

A) incompatibility
B) information access
C) distribution of earnings
D) changing circumstances

Question 72

A joint venture is a type of strategic alliance.

Question 73

Joint ventures tend to have a longer duration than non-joint venture strategic alliances.

Question 74

________ affect(s) the viability of strategic alliances when the conditions that first motivated the arrangement no longer exist.

A) Incompatibility
B) Information access
C) Distribution of earnings
D) Changing circumstances

Question 75

Sharing risk in a strategic alliance is most important for a firm that is entering a(n) ________ market.

A) competitive
B) established
C) high-tech
D) new

Question 76

Strategic alliances include cooperation between international firms such as cross-licensing of proprietary technology.

Question 77

AT&T and Olivetti announced a strategic alliance. They could not reach an agreement on a marketing strategy for the alliance. What type of problem is this an example of?

A) incompatibility
B) information access
C) distribution of earnings
D) loss of autonomy

Question 78

A strategic alliance between Ford and Mazda experienced problems when Mazda refused to allow Ford officials to visit the Mazda research laboratory. What was the source of this problem?

A) incompatible cultures
B) limited information access
C) unfair distribution of earnings
D) loss of autonomy for both partners

Question 79

Simmons Semiconducter and Rapid Electronics have formed a strategic alliance to develop a tool that will facilitate computer chip manufacturing. The two firms will work together only to design the tool. Which term best describes this strategic alliance?

A) financial alliance
B) functional alliance
C) manufacturing alliance
D) comprehensive alliance

Question 80

Firms involved in joint ventures experience the pitfalls of ________ when they realize that their decision-making powers are limited.

A) incompatibility
B) information access
C) distribution of earnings
D) loss of autonomy