Question 1

The two types of complementary strategic alliances are

Accepted Answer

The two types of complementary strategic alliances are vertical and horizontal. Vertical alliances involve companies partnering with suppliers or distributors, while horizontal alliances involve companies partnering with similar companies to increase market share or pool resources.

Question 2

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

Accepted Answer

Complementary strategic alliances typically focus on creating value through partnerships that leverage each other's strengths and capabilities. In contrast, competition reducing alliances may focus more on reducing competition in a particular market or industry, while uncertainty reducing alliances are aimed at reducing risk and uncertainty in business operations. Collusive alliances involve illegal collaboration between competitors, and are not a legitimate form of strategic alliance.

Question 3

The three main luxury hotels in a major tourist destination keep very close track of their competitors' room pricing, restaurant offerings, tour packages, and special services, such as airport transportation and spa privileges. When one hotel makes adjustments in prices or offerings, the other hotels follow suit. It is possible that these hotels are

Accepted Answer

The hotels are engaging in tacit collusion, as they are closely monitoring their competitors' offerings and adjusting their own prices and services accordingly. This suggests an agreement to maintain an equilibrium in which no hotel gains a competitive advantage.

Question 4

____ are LEAST likely to involve potential or current competitors.

Accepted Answer

The answer of ____ are LEAST likely to involve potential...

Question 5

A manufacturer of specialty jams and jellies has decided to ally itself with an orchard and vineyard growing rare strains of fruit. This is a(an) ____ strategy.

Accepted Answer

The manufacturer's decision to ally with the orchard and vineyard growing rare strains of fruit is an example of a vertical complementary strategy, where two companies that are part of the same supply chain partner up to increase their value proposition to customers. The manufacturer can now source high-quality rare fruits from the orchard and vineyard, and offer unique and high-end jams and jellies to its customers.

Question 6

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

Accepted Answer

Synergistic strategic alliances are a type of business-level cooperative strategic alliance. Uncertainty reduction strategic alliances involve partnering to minimize risk and uncertainty. Complementary strategic alliances involve partnering to bring different strengths and resources together to create value. Competition response strategic alliances involve partnering to respond to a competitive threat. Therefore, the correct answer is A, as it is not a type of business-level cooperative strategic alliance.

Question 7

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

Accepted Answer

In free market economies, the government is responsible for setting and enforcing regulations that prevent anti-competitive behavior and ensure fair competition. Therefore, it is up to the government to determine how rivals can collaborate with their competitors without violating these regulations.

Question 8

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

Accepted Answer

Cooperating strategies to reduce competition may be a violation of antitrust laws if they are explicit, leading to litigation. Antitrust laws in the U.S. prohibit companies from conspiring to lower competition, fix prices or allocate markets. Violations may result in civil or even criminal penalties. Increased tax liabilities, government takeover of the firms, or dissolution of the firm are not typically consequences of violating antitrust laws.

Question 9

For the purpose of diversification, a corporate-level cooperative strategy may be preferable to a merger or acquisition for all the following reasons EXCEPT

Accepted Answer

The statement "opportunistic behaviors are less likely" is a reason why a corporate-level cooperative strategy may be preferable to a merger or acquisition. However, this is not a reason why it may be preferable to a cooperative strategy. The other options are all valid reasons why a cooperative strategy may be preferable to a merger or acquisition.

Question 10

Why are alliances in the airline industry unstable?

Accepted Answer

The alliances in the airline industry require cooperation among firms that must also compete with one another, making it difficult to maintain stable relationships. Each firm wants to increase its own profits, but doing so may come at the expense of other alliance partners, creating tension and potential for opportunistic actions. Thus, the alliances are inherently unstable.

Question 11

Of the various business-level strategic alliances, ____ alliances have the most probability of creating sustainable competitive advantage, and ____ have the lowest.

Accepted Answer

The answer of Of the various business-level strategic alliances, ____...

Question 12

Smith Commercial Lighting, Inc., which sells lighting for factories and businesses, has entered into an alliance with Revelation Lighting, Inc., a retailer of home decor lighting, in order to expand into the trend of using industrial-type lighting in non-traditional style homes. Smith has invested 40% and Revelation has invested 60% into the new operation. This is an example of a(an)

Accepted Answer

The answer of Smith Commercial Lighting, Inc., which sells lighting...

Question 13

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

Accepted Answer

Predatory alliances refer to alliances or partnerships between competitors that are designed to increase competition and actually encourage competitive behavior, rather than reduce it. Therefore, they are not a means of reducing competition. Explicit collusion, tacit collusion, and mutual forbearance are all examples of methods that can be used to reduce competition.

Question 14

Firms entering into synergistic strategic alliances expect to attain

Accepted Answer

Firms entering into synergistic strategic alliances expect to attain economies of scope, which refers to cost savings that occur when a firm produces two or more products/services together rather than separately. This allows firms to complement each other's strengths and leverage their joint resources to become more competitive. While the other options (technological complexity, monopolistic market power, learning curve efficiencies) may be potential outcomes of strategic alliances, they are not the primary objective.

Question 15

The cooperation between Fiat and Chrysler to produce a Fiat-designed car in Chrysler's Illinois factory is a(n) _________ alliance because it allows the firms to share resources and capabilities across multiple functions.

Accepted Answer

A synergistic alliance involves the sharing of resources and capabilities across multiple functions to create mutual benefit. In this case, Fiat and Chrysler are sharing resources and capabilities to produce a car, which aligns with a synergistic alliance. Option B (opportunistic) refers to alliances formed for short-term gains, while D (diversifying) refers to alliances formed to diversify a firm's product line. Option C (horizontal) refers to alliances between firms in the same industry or market.

Question 16

A ____ cooperative strategy helps the firm diversify in terms of products offered, markets served, or both.

Accepted Answer

Corporate-level cooperative strategies involve collaboration between different businesses or divisions within a company to achieve common goals. This type of strategy can help a firm diversify in terms of the products it offers, the markets it serves, or both. By working together, different parts of the company can leverage each other's strengths and resources to create synergies and improve overall performance.

Question 17

Mutual forbearance is

Accepted Answer

The answer of Mutual forbearance is
...

Question 18

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

Accepted Answer

The answer of Firms in ____ markets cooperate to pool...

Question 19

The risks of being accused of collusion are MOST likely under what type of alliance?

Accepted Answer

Collusion is most likely to occur in a nonequity-based horizontal complementary alliance where firms agree to collude and fix prices. Equity-based alliances involve sharing ownership, which reduces the incentives to engage in anti-competitive behavior. Vertical complementary alliances involve collaboration between firms in different stages of the value chain, which also reduces the likelihood of collusion.

Question 20

The fact that the prices consumers pay for branded breakfast cereals are above the prices that would exist if there were true competition suggests that the cereal manufacturers are engaging in

Accepted Answer

The fact that prices for branded breakfast cereals are above what would exist under perfect competition suggests that the manufacturers are colluding in some way to keep prices high. Tacit collusion occurs when firms in an industry follow each other's lead in terms of pricing without explicitly agreeing to do so. This behavior can lead to higher prices and reduced competition, which appears to be the case with branded breakfast cereals.

Quiz 9: Cooperative Strategy