Deck 7: Strategic Alliances and Networks

Question 1

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

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

Examples of equity-based alliances include strategic investment.

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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 19

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

Question 20

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

Question 21

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.

Question 22

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. Partner buyouts.
e. All of the above.

Question 23

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.
e. They must attempt to make the complex relationship work.

Question 24

Which (if any) of the following are not involved in the stages of forming business relationships?
a. The decision to cooperate.
b. The decision to not cooperate.
c. The choice of contract or equity.
d. Positioning the Relationship.
e. All of the above are involved.

Question 25

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.

Question 26

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.

Question 27

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

Question 28

Emerging trends concerning formal government policies on entry mode requirements include:
a. More liberal policies.
b. Imposing considerable requirements.
c. A and B above.
d. Welcoming wholly owned subsidiaries.
e. Banning joint ventures.

Question 29

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.

Question 30

Institution-based considerations regarding organization include:
a. Collusion concerns.
b. Entry requirements.
c. The social pressures to find partners.
d. The internalized beliefs in the value of collaboration.
e. All of the above.

Question 31

Strategic fit refers to whether the partner firm possesses:
a. Technology.
b. Capital.
c. Distribution channels.
d. A through C above.
e. Goals, experiences, and behaviors that facilitate cooperation.

Question 32

Which (if any) of the following will not influence the performance of alliances and networks?
a. Equity.
b. Learning and experience.
c. Nationality.
d. Relational capabilities.
e. All can have an influence.

Question 33

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.

Question 34

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. Opportunities to learn from partners.
e. Possibilities to use alliances and networks as real options.

Question 35

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.

Question 36

Which represents an alliance with suppliers?
a. Horizontal alliances.
b. Upstream vertical.
c. Downstream vertical.
d. All of the above.
e. None of the above.

Question 37

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.

Question 38

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.

Question 39

In measuring the performance of strategic alliances and networks, subjective measures include:
a. Market performance.
b. Stability.
c. A and B above.
d. The level of managers' satisfaction.
e. Longevity.

Question 40

A joint venture can be described as:
a. A special case of equity-based alliance.
b. A new legally independent entity.
c. A "corporate child" given birth by two (or more) parent firms.
d. All of the above.
e. None of the above.

Question 41

Why and how might a "real option" be useful in a joint venture?

Question 42

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?

Question 43

A friend of yours stated: "I would never want to be dependent on an alliance. I prefer an acquisition so that everything would be under my control." How would you respond?

Question 44

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

Question 45

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