Deck 9: Understanding Alliances and Cooperative Strategies

Question 1

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

Answer 1

False

Question 2

Alliances are strategies in and of themselves.

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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 7

An alliance is one vehicle for realizing a strategy.

Question 8

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

Question 9

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

Question 10

Pursuing an alliance is an important strategic consideration for growth.

Question 11

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

Question 12

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

Question 13

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 14

"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 15

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

Question 16

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

Question 17

Firms participating in effective alliances can gain competitive advantage.

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

Equity alliances involve equal partners.

Question 25

Learning requires partners to cooperate in transferring knowledge.

Question 26

Alliances are ineffective vehicles for creating new capabilities and markets.

Question 27

One alternative to an alliance is a purchase contract.

Question 28

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 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

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 34

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 35

Joint ventures do not have to be equal partnerships.

Question 36

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

Question 37

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

Question 38

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

Question 39

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

Question 40

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

Question 41

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

Question 42

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

Question 43

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

Question 44

The vertical alliance is an alternative for vertical integration.

Question 45

Alliances are vehicles for exploring and implementing diversification options.

Question 46

A diversified firm can broker relationships among its portfolio businesses.

Question 47

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

Question 48

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

Question 49

Governments may actually become consortia partners.

Question 50

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

Question 51

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

Question 52

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

Question 53

In successful horizontal alliance, partners must protect proprietary skills.

Question 54

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

Question 55

Almost any organization is a potential alliance partner.

Question 56

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

Question 57

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

Question 58

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

Question 59

The alliance-net model helps managers find potential partners.

Question 60

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

Question 61

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

Question 62

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

Question 63

Cooperative ventures can be extremely risky.

Question 64

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

Question 65

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

Question 66

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

Question 67

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

Question 68

Dynamic environments allow firms to participate in more alliances.

Question 69

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

Question 70

Alliances perform better when partners trust each other.

Question 71

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

Question 72

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

Question 73

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

Question 74

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

Question 75

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

Question 76

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

Question 77

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

Question 78

Partners foster interorganizational trust by using unpredictable processes.

Question 79

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

Question 80

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