Question 1

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

Accepted Answer

While contracts can provide guidelines for behavior and consequences for non-compliance, they cannot fully control a partner's actions. Factors such as individual values and external circumstances can still affect behavior.

Question 2

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

Accepted Answer

The use of alliances as a strategy vehicle has actually increased in the last few decades, as companies seek to leverage their resources and capabilities through partnerships with other businesses. Examples include strategic alliances in technology, manufacturing, and distribution.

Question 3

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

Accepted Answer

False

Question 4

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

Accepted Answer

The failure rate of alliances is generally considered to be higher than 20 percent, with many studies suggesting rates between 50 to 70 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.

Accepted Answer

The answer of With a sole-sourcing arrangement, buyers expect that...

Question 6

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

Accepted Answer

Small businesses often have innovative and creative ideas that larger companies may not have considered. Giant companies may acquire or partner with small businesses to acquire these ideas and expand their offerings.

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.

Accepted Answer

Weedman's Corollary is true and follows the pattern of a decreasing reciprocal sequence, where each subsequent deal takes a fraction of the time of the previous deal.

Question 8

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

Accepted Answer

The answer of Alliances can decrease returns by motivating firms...

Question 9

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

Accepted Answer

An alliance may be more important for one firm than the other, which means it can be a strategic move for one company and only a tactical move for the other. This happens when one firm needs the alliance to achieve its long-term goals, while the other simply sees it as a means to an end (e.g., a shorter-term benefit or a way to reduce costs).

Question 10

Firms participating in effective alliances can gain competitive advantage.

Accepted Answer

By forming alliances with other firms, companies can access new markets, technologies, and expertise, which can help them increase their competitiveness. Through collaboration and resource sharing, firms can also reduce costs and improve efficiencies, leading to improved performance and profitability. Therefore, effective alliances can provide a significant competitive advantage for participating firms.

Question 11

Pursuing an alliance is an important strategic consideration for growth.

Accepted Answer

Pursuing an alliance can bring many benefits such as access to new markets, expertise, technology, and resources. Therefore, it 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.

Accepted Answer

An alliance is formed with the objective of achieving certain goals through cooperation and collaboration between the partners. If any of the partners fail to achieve their objectives, it can lead to the failure of the alliance as a whole. Therefore, the given statement is true.

Question 13

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

Accepted Answer

For an alliance to work, both partners should benefit from it. If only one partner benefits, the other partner may feel exploited and the alliance may fail.

Question 14

An alliance is one vehicle for realizing a strategy.

Accepted Answer

An alliance is a strategic partnership between two or more organizations that join forces to achieve mutually beneficial goals. Thus, an alliance can be an effective vehicle for realizing a strategy, as it allows organizations to pool resources, capabilities, and expertise towards a common objective.

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.

Accepted Answer

An alliance may involve sharing resources related to only one key activity in the partners' value chains or coordination across many value-chain activities. The scope and depth of the alliance depend on the partners' strategic objectives and the nature of their value chains.

Question 16

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

Accepted Answer

The success of an alliance depends on the partners' willingness to collaborate and prioritize mutual interests over individual self-interests.

Question 17

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

Accepted Answer

An effective alliance should align with the economic logic of the strategy to ensure that it contributes to the overall goals and objectives, maximizing value and competitive advantage.

Question 18

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

Accepted Answer

The answer of Subsequent deals for a company are faster,...

Question 19

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

Accepted Answer

Alliances involve pooling resources and sharing risks and rewards, which can result in reduced uncertainty and increased efficiency.

Question 20

Alliances are strategies in and of themselves.

Accepted Answer

Alliances are not strategies themselves; they are tools or means to achieve strategic objectives.

Quiz 9: Understanding Alliances and Cooperative Strategies