When Toyota wanted to secure a long-term supply of lithium,it had to create a bond of trust with an Australian company,Orocobre Ltd.Orocobre wanted to establish the bond of trust before making huge investments in specialized equipment required to extract the high-quality lithium.What did Toyota do to instill this trust?
A) It offered Orocobre exposure to Toyota's proprietary information.
B) It made a credible commitment by taking an equity stake in Orocobre.
C) It acquired Orocobre as part of its backward vertical integration plans.
D) It offered Orocobre franchising opportunities to sell hybrid vehicles.

Question

Quizplus · Accepted Answer

In Strategy Highlight 8.1, it is discussed as to how Toyota took an equity stake, worth an estimated $120 million in this project, to mitigate Orocobre's concerns. Toyota made a credible commitment-a long-term strategic decision that is both difficult and costly to reverse.

When Toyota Wanted to Secure a Long-Term Supply of Lithium,it