Question 1

Close monitoring, formal contracts, and constant vigilance against opportunism increase the probability of alliance success.

Accepted Answer

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Question 2

A stable alliance network is used in industries characterized by frequent product innovations and short product life cycles.

Accepted Answer

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Question 3

The alliance between BP Plc and OAO Rosneft to extract oil from Russia's Arctic Ocean was managed using contracts, i.e., the cost minimization approach.

Accepted Answer

The alliance between BP Plc and OAO Rosneft to extract oil from Russia's Arctic Ocean was managed using contracts, which is a cost minimization approach.

Question 4

Within the Renault Nissan alliance (Chapter 9 Opening Case), both Renault and Nissan have each formed ____________ strategic alliances at the business-unit level with other companies.

Accepted Answer

Both Renault and Nissan have formed horizontal complementary strategic alliances at the business-unit level with other companies, such as Nissan's alliance with Mitsubishi and Renault's alliance with AvtoVAZ. These alliances involve partnerships between firms that operate in the same industry and complement each other's strengths and weaknesses.

Question 5

Network cooperative strategies among Silicon Valley firms have been successful, in part, because they are geographically close together.

Accepted Answer

This statement is true. The close proximity of firms in Silicon Valley allows for easier collaboration, shared resources, and a general sense of community that fosters networking and cooperative strategies.

Question 6

In the cost minimization approach to managing competitive strategies, the relationship between the firms is based on trust of the other partner.

Accepted Answer

In the cost minimization approach, the relationship between the firms is not necessarily based on trust but rather on the pursuit of cost efficiencies and the minimization of expenses. Trust can be a factor in any business relationship, but it is not the core principle of this particular strategy.

Question 7

A cooperative strategy

Accepted Answer

A cooperative strategy is a strategy in which firms work together to achieve a shared objective. It involves collaboration and coordination between two or more firms to achieve a mutual goal that could not be achieved as effectively by one firm alone. This can include joint ventures, strategic alliances, and partnerships.

Question 8

The Renault Nissan alliance (Chapter 9 Opening Case) is an example of a _______ created to gain economies of scope by sharing resources and capabilities.

Accepted Answer

The Renault Nissan alliance is an example of a synergistic strategic alliance, as it involves two companies collaborating to achieve mutual benefits through the sharing of resources and capabilities. This type of alliance is often formed to capture economies of scope, which can help the companies involved reduce costs, increase efficiencies, and access new markets.

Question 9

The cost minimization approach of managing alliances is more expensive to put into place and to use than is the opportunity maximization management approach.

Accepted Answer

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Question 10

In the Microsoft/Nokia alliance discussed in the earlier Strategic Focus, the hundreds of pages that were developed to specify the responsibilities of each partner suggests a cost-minimization approach to managing cooperative strategies.

Accepted Answer

The detailed specification of the responsibilities of each partner suggests a focus on reducing costs and maximizing efficiency in the Microsoft/Nokia alliance. This is a characteristic of cost-minimization strategies.

Question 11

A strategy in which firms work together to achieve a shared objective is a

Accepted Answer

The strategy in which firms work together to achieve a shared objective is a cooperative strategy. This type of strategy involves collaboration between two or more companies to achieve a goal that they could not achieve independently. Examples of cooperative strategies include strategic alliances, joint ventures, and supplier-customer partnerships.

Question 12

When using cooperative strategies, a firms most frequently develop strategic alliances that

Accepted Answer

Strategic alliances are developed to gain a competitive advantage. By cooperating with another firm, a company can access resources, knowledge, and capabilities that it may not possess on its own, ultimately enhancing its overall competitiveness in the market. While strategic alliances can also help reduce political risk and improve reputation, their primary purpose is to create a competitive advantage. Therefore, option D is the best choice.

Question 13

Only about 50% of cooperative strategies succeed.

Accepted Answer

This statement is generally true, as research has shown that approximately 50% of cooperative strategies fail to achieve their intended goals. However, success rates can vary widely depending on the context, specific strategies being used, and other factors.

Question 14

The Renault Nissan approach to managing its collaboration involves less reliance on contracts and more reliance on trust, respect, and transparency (i.e., the opportunity-maximization approach to managing cooperative strategies).

Accepted Answer

The statement correctly describes the Renault Nissan approach to managing its collaboration. According to Carlos Ghosn, the former CEO of both Renault and Nissan, their partnership was based on "respect, mutual trust, and transparency," which allowed them to work together effectively and overcome cultural differences and organizational challenges. This approach is consistent with the opportunity-maximization approach to managing cooperative strategies, which focuses on creating value and seizing opportunities through cooperation rather than relying on contracts and legal safeguards.

Question 15

High levels of trust allow less formal contracts to govern the relationship between alliance partners and increases the likelihood of alliance success.

Accepted Answer

When there is high trust between alliance partners, they are more likely to rely on informal communication and understanding rather than formal contracts that may restrict their flexibility. This can lead to a more efficient and effective alliance partnership.

Question 16

International strategic alliances have played an important role in helping manufacturers of jet aircraft engines respond to increasing fuel prices and tougher environmental regulations.

Accepted Answer

International strategic alliances provide manufacturers of jet aircraft engines with access to new technologies, expertise, and markets that can help them develop more efficient and eco-friendly engines to meet the challenges of higher fuel prices and stricter environmental standards. Collaboration with partners from different countries also allows for sharing risks and costs, as well as generating economies of scale and scope, which can improve the competitiveness and performance of both the individual firms and the industry as a whole. Examples of such alliances include the partnership between GE Aviation and Safran to develop the LEAP engine, and the joint venture between Pratt & Whitney and MTU Aero Engines to produce the PW1000G geared turbofan engine.

Question 17

A network strategy involves a series of horizontal acquisitions by firms that are committed to dominating a particular industry.

Accepted Answer

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Question 18

Failure of a partner to contribute needed resources and capabilities to a cooperative venture is a particular risk in international ventures especially in emerging economies.

Accepted Answer

This statement is true as emerging economies may have limited resources and capabilities and partners may not be able to contribute as expected, leading to the failure of the cooperative venture.

Question 19

Some cooperative strategies fail when it is discovered that a firm has misrepresented the competencies it can bring to the partnership.

Accepted Answer

If a firm misrepresents its competencies, it can lead to a breakdown in the partnership and the cooperative strategy can fail.

Question 20

A major risk of a network cooperative strategy is that firms gain access to their partner's partners thus exposing their proprietary processes to loss or theft.

Accepted Answer

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Quiz 9: Cooperative Strategy