Question 1

In a strategic alliance, the firm that learns faster:

Accepted Answer

The firm that learns faster and accomplishes its goal more quickly has an incentive to exit the alliance or, at a minimum, to reduce its knowledge sharing.

Question 2

Supply, distribution, and licensing contractual agreements between firms, which result in vertical strategic alliances, are all examples of _____.

Accepted Answer

The most frequent forms of non-equity alliances are supply agreements, distribution agreements, and licensing agreements. As suggested by their names, these contractual agreements are vertical strategic alliances, connecting different parts of the industry value chain.

Question 3

Aro Shoes Inc.and Mova Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other competencies.Aro Shoes entered the strategic alliance to acquire the production system pioneered by Mova Shoes.Similarly, Mova Shoes agreed to the strategic alliance to study the designing process of Aro Shoes.However, Aro Shoes was more successful and faster than Mova Shoes in accomplishing its alliance goal.What does this scenario best illustrate?

Accepted Answer

This scenario best illustrates learning races. Co-opetition can lead to learning races in strategic alliances, a situation in which both partners are motivated to form an alliance for learning, but the rate at which the firms learn may vary. The firm that learns faster and accomplishes its goal more quickly has an incentive to exit the alliance or, at a minimum, to reduce its knowledge sharing.

Question 4

FR Pharmaceuticals Inc., BioCure Pharma Inc., and Regime Pharma Inc.are three rival firms who have set up an alliance to conduct research and find a cure for cancer.They have made almost equal contributions to the research, and they also share their expertise with each other.However, the three firms will continue to behave as competitors in markets for other drugs and vaccines.What is this arrangement best referred to as?

Accepted Answer

This arrangement is best referred to as co-opetition. Co-opetition is a portmanteau describing cooperation by competitors. It is described as cooperation by competitors to achieve a strategic objective.

Question 5

Which of the following is an advantage of non-equity alliances?

Accepted Answer

Because of their contractual nature, non-equity alliances are flexible and easy to initiate and terminate.

Question 6

A(n)_____ occurs when firms enter into a partnership based on contractual agreements, which results in vertical strategic alliances, that connect different parts of the industry value chain.

Accepted Answer

The most common type of alliance is a non-equity alliance, which is based on contracts between firms. These contractual agreements are vertical strategic alliances, connecting different parts of the industry value chain.

Question 7

When North Autos Inc.wanted to sell its cars in the country of Balvia, it lacked access to distribution channels and marketing expertise in the country.Thus, North Autos had to enter into a strategic alliance with a local automobile company to get access to the foreign partner's well-established distribution channels.Which of the following reasons for entering into a strategic alliance is best illustrated in this scenario?

Accepted Answer

In this scenario, North Autos's decision to enter into an alliance can be best attributed to the need for accessing critical complementary assets. Building downstream complementary assets such as marketing and regulatory expertise or a sales force is often prohibitively expensive and time-consuming, and thus frequently not an option for new ventures. Strategic alliances allow firms to match complementary skills and resources to complete the value chain.

Question 8

With regard to New United Motor Manufacturing, Inc.(NUMMI), why did General Motors (GM)enter into a strategic alliance with Toyota?

Accepted Answer

In the NUMMI joint venture, each partner was motivated to learn new capabilities: GM entered the strategic alliance to learn the lean manufacturing system pioneered by Toyota in order to produce high-quality, fuel-efficient cars at a profit.

Question 9

Amiware Inc., a manufacturer of ceramic cookware, has entered into a contractual agreement with Micoware Inc.The agreement involves vertical strategic alliances connecting different parts of the industry value chain.This arrangement between the two companies best illustrates a(n)_____.

Accepted Answer

This arrangement between the two companies best illustrates a non-equity alliance. Non-equity alliances are partnerships based on contracts between firms. The most frequent forms of non-equity alliances are supply agreements, distribution agreements, and licensing agreements.

Question 10

When entering a foreign market, it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because:

Accepted Answer

Building downstream complementary assets such as marketing and regulatory expertise or a sales force is often prohibitively expensive and time-consuming, and thus frequently not an option for new ventures. Strategic alliances allow firms to match complementary skills and resources to complete the value chain.

Question 11

New United Motor Manufacturing, Inc.(NUMMI), formed between General Motors (GM)and Toyota in 1984 was the first _____ in the U.S.automobile industry.

Accepted Answer

NUMMI was the first joint venture in the U.S. automobile industry, formed between GM and Toyota in 1984.

Question 12

How does taking a real-options perspective by entering strategic alliances help incumbent firms?

Accepted Answer

Taking a wait-and-see approach by entering strategic alliances allows incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade. Many firms in fast-moving markets subscribe to this rationale.

Question 13

_____ are best described as situations in which both partners in a strategic alliance are motivated to form an alliance for learning, but the rate at which the firms learn may vary.

Accepted Answer

Co-opetition can lead to learning races in strategic alliances, a situation in which both partners are motivated to form an alliance for learning, but the rate at which the firms learn may vary.

Question 14

_____ are best described as contractual alliances in which the participants regularly exchange codified knowledge.

Accepted Answer

Licensing agreements are contractual alliances in which the participants regularly exchange codified knowledge.

Question 15

_____ is best described as cooperation by competitors to achieve a strategic objective.

Accepted Answer

Co-opetition is a portmanteau describing cooperation by competitors. It is described as cooperation by competitors to achieve a strategic objective.

Question 16

Which of the following statements is true of explicit knowledge?

Accepted Answer

In a non-equity alliance, firms tend to share explicit knowledge-knowledge that can be codified. Patents, user manuals, fact sheets, and scientific publications are all ways to capture explicit knowledge, which concerns the notion of knowing about a certain process or product.

Question 17

In a non-equity alliance, which of the following types of information would firms most likely share?

Accepted Answer

The firms would most likely share the documented information about the material composition of a product. Explicit knowledge is knowledge that can be codified. Patents, user manuals, fact sheets, and scientific publications are all ways to capture explicit knowledge, which concerns the notion of knowing about a certain process or product.

Question 18

Which of the following is a disadvantage of equity alliances?

Accepted Answer

Equity alliances are less flexible, slower, and can entail significant investments.

Question 19

Which of the following best illustrates a non-equity alliance?

Accepted Answer

A contractual agreement that provides Motor Source Inc. non-exclusive rights to supply component parts to Pristine Autos Inc. best illustrates a non-equity alliance. Non-equity alliances are partnerships based on contracts between firms. The most frequent forms of non-equity alliances are supply agreements, distribution agreements, and licensing agreements.

Question 20

In the New United Motor Manufacturing, Inc.(NUMMI)joint venture, why did Toyota enter into a strategic alliance with General Motors (GM)?

Accepted Answer

In the NUMMI joint venture, each partner was motivated to learn new capabilities: GM entered the strategic alliance to learn the lean manufacturing system pioneered by Toyota in order to produce high-quality, fuel-efficient cars at a profit. Toyota entered the alliance to learn how to implement its lean manufacturing program with an American work force.

Quiz 9: Corporate Strategy: Strategic Alliances, Mergers and Acquisitions