Deck 9: Understanding Alliances and Cooperative Strategies

Question 1

Contracts are always the best method for controlling partners' behaviors.

Answer 1

False

Question 2

The use of alliances as a strategy vehicle has dropped dramatically in the last few decades.

Answer 2

False

Question 3

Alliances tend to be low-risk and high-return vehicles for realizing a firm's strategy.

Answer 3

False

Question 4

In reality, the failure rate of alliances is less than 20 percent.

Question 5

With a sole-sourcing arrangement, buyers expect that suppliers will provide materials at the exact point in time that they are needed in the production process.

Question 6

Small businesses often bring giant companies the ideas they need to expand.

Question 7

"Weedman's Corollary" says that the second deal takes half the time of the first deal, the third deal takes one-third the time, and so on.

Question 8

Alliances can decrease returns by motivating firms to make investments that they would not normally be willing to make.

Question 9

An alliance may be strategic to one firm and only tactical to the other.

Question 10

Firms participating in effective alliances can gain competitive advantage.

Question 11

Pursuing an alliance is an important strategic consideration for growth.

Question 12

An alliance is deemed a failure when one of more of the partners does not achieve its objectives.

Question 13

Sometimes an alliance may fail simply because one partner benefits and the other does not.

Question 14

An alliance is one vehicle for realizing a strategy.

Question 15

An alliance may involve sharing resources related to only one key activity in the partners' value chains, or it may involve coordination across many value-chain activities.

Question 16

The success of an alliance depends on the willingness of the partners to enhance their self-interests.

Question 17

An effective alliance does not need to be consistent with the economic logic of the strategy.

Question 18

Subsequent deals for a company are faster, but are generally not as profitable.

Question 19

Alliances enable participants to share in investments and rewards while reducing risk and uncertainty.

Question 20

Alliances are strategies in and of themselves.

Question 21

Alliances are ineffective vehicles for creating new capabilities and markets.

Question 22

Both supplier and buyer can benefit from gains in efficiency and savings in the bureaucratic costs entailed by vertical integration.

Question 23

The two primary dimensions on which alliances can be categorized are the nature of the time commitment and the respective investment commitment.

Question 24

A potential problem in any alliance is that one partner may take advantage of another.

Question 25

Experts argue that the true cost savings of alliances comes to those firms that rely on formal managerial control.

Question 26

It is not necessary for an alliance to create a separate legal entity or share equal ownership.

Question 27

A firm is motivated to enter an alliance because it expects its resources and capabilities to yield competitive advantage.

Question 28

In the 1980s, firms focused on position issues such as the building of industry stature.

Question 29

Learning requires partners to cooperate in transferring knowledge.

Question 30

To minimize the risk that one partner might take advantage of the other, many alliances call for formal protection mechanisms or contracts.

Question 31

Productivity gains are possible when activities linked in the value chain are supported with transaction-specific investments.

Question 32

In the 1980s, alliances focused on product and service performance.

Question 33

One alternative to an alliance is a purchase contract.

Question 34

Equity alliances involve equal partners.

Question 35

The drivers behind many of today's alliances assume that a firm possesses the ability to manage the benefits of product performance and market position.

Question 36

Whether or not an alliance is deemed as strategic does not depend on the degree to which one or both parties' survival or competitive advantage depends on the alliance.

Question 37

More recently, alliances are likely to proactively maximize delivered value.

Question 38

Joint ventures do not have to be equal partnerships.

Question 39

In the 1970s, alliances were likely to gain economies of scale and scope.

Question 40

If partners combine resources and capabilities, they may be able to create a stock of resources that is unavailable to other competitors in the industry.

Question 41

In the value-chain model, the firm of interest is linked to all possible exchange partners.

Question 42

The vertical alliance is an alternative for vertical integration.

Question 43

Horizontal alliances are more likely to succeed when the partners are co-industry leaders.

Question 44

In successful horizontal alliance, partners must protect proprietary skills.

Question 45

Decisions about external vehicles are actually more complex in domestic contexts.

Question 46

Alliances are more effective than multinational corporations in facilitating the flow of knowledge across borders.

Question 47

Governments may actually become consortia partners.

Question 48

The purpose of consolidation is to find ways of increasing the total value created by parties in the value net.

Question 49

A firm's international strategy should be driven by its alliance relationships.

Question 50

Horizontal alliances encourage learning in the development and innovation of new products.

Question 51

A diversified firm can broker relationships among its portfolio businesses.

Question 52

Alliances are typically vehicles for business strategy, but not corporate or international strategy.

Question 53

Alliances are vehicles for exploring and implementing diversification options.

Question 54

Competition is based on the principle that firms must compete and cooperate simultaneously.

Question 55

Vertical alliances enable potential competitors to gain a presence in multiple segments of an industry.

Question 56

Almost any organization is a potential alliance partner.

Question 57

Horizontal alliances improve value to customers by making it possible for alliance partners to respond more quickly to market changes.

Question 58

Corporations can use alliances to create value across a portfolio of products or services.

Question 59

The alliance-net model helps managers find potential partners.

Question 60

The value-net model helps managers find alternatives to conventional win-lose business scenarios.

Question 61

In stable environments, any distraction of a firm's resources or managerial time can have serious consequences.

Question 62

The coevolution model suggests that firms pursuing growth strategies increase alliances developed around commoditized products.

Question 63

In relatively dynamic contexts, partners are typically seeking access to production technologies or markets.

Question 64

Partners foster interorganizational trust by using unpredictable processes.

Question 65

Once some level of interorganizational trust is established, stock and flow reflect the partners' reciprocal experiences.

Question 66

Interactions with other organizations outside the alliance have no impact on partner trust.

Question 67

Alliance networks frequently take on the characteristics of the partner organizations.

Question 68

Typically, the hardest part of drawing up a good alliance contract is negotiating termination rights.

Question 69

Cooperative ventures can be extremely risky.

Question 70

The relative stability of context affects the objectives that partners set for an alliance.

Question 71

Dynamic environments allow firms to participate in more alliances.

Question 72

The ability of a single partner to learn increases the collective benefits derived by every partner in the alliance.

Question 73

The stability of a firm's competitive context will determine the suitability of an alliance.

Question 74

A vulnerable partner is usually most supportive of a winner-take-all strategy.

Question 75

Sometimes when resources are made available, the firm that needs them may, in fact, become dependent on the alliance.

Question 76

Relatively dynamic environments can mask poor decisions such as alliance structures.

Question 77

Managers face significant pressure to structure alliances so that they enhance the value of resources and capabilities.

Question 78

Alliances perform better when partners trust each other.

Question 79

Cooption refers to orchestrating a web of shifting linkages among evolving businesses.

Question 80

Misappropriation occurs when one partner misrepresents the quality of a resource or capability.