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Chapter 9 - Strategic Alliances

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Quiz on Chapter 9 - Strategic Alliances, created by Strategy IO on 12/11/2016.
Strategy IO
Quiz by Strategy IO, updated more than 1 year ago
Strategy IO
Created by Strategy IO about 8 years ago
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Resource summary

Question 1

Question
A(n) ________ exists whenever two or more independent organizations cooperate in the development, manufacture, or sale of products or services
Answer
  • vertical market
  • strategic alliance
  • initial public offering
  • market transaction

Question 2

Question
A ________ is a form of nonequity alliance that exists when one firm allows another to use its brand name to sell its products.
Answer
  • supply agreement
  • distribution agreement
  • licensing agreement
  • joint venture

Question 3

Question
In a ________, cooperating firms create a legally independent firm in which they invest and from which they share any profits that are created.
Answer
  • licensing agreement
  • supply agreement
  • distribution agreement
  • joint venture

Question 4

Question
Strategic alliances can create economic value through helping firms improve their current operations by
Answer
  • facilitating the development of technology standards.
  • facilitating tacit collusion.
  • exploiting economies of scale.
  • managing uncertainty.

Question 5

Question
When both parties to an alliance are seeking to learn something from that alliance, a ________ can evolve.
Answer
  • learning race
  • dynamic race
  • learning dynamic
  • learning curve

Question 6

Question
Network industries are characterized by
Answer
  • increasing diseconomies of scale.
  • increasing returns to scale.
  • decreasing returns to scale.
  • decreasing economies of scale.

Question 7

Question
A firm's ability to learn is known as its
Answer
  • competitive position.
  • competitive advantage.
  • distinctive competence.
  • absorptive capacity.

Question 8

Question
________ exist(s) when firms directly communicate with each other to coordinate their levels of production and/or their prices.
Answer
  • Economies of scale
  • Explicit collusion
  • A learning race
  • Tacit collusion

Question 9

Question
________ exist(s) when firms coordinate their production and pricing decisions not by directly communicating with each other but by exchanging signals with other firms about their intent to cooperate.
Answer
  • Economies of scale
  • Explicit collusion
  • A learning race
  • Tacit collusion

Question 10

Question
Strategic alliances are particularly valuable in facilitating market entry and exit when the value of market entry or exit is
Answer
  • high
  • low
  • moderate
  • uncertain

Question 11

Question
Although joint ventures between firms in the same industry ________ collusive implications, research has shown that these kinds of joint ventures are ________.
Answer
  • may have; relatively rare
  • are not likely to have; relatively rare
  • may have; relatively common
  • are not likely to have; relatively common

Question 12

Question
As long as the cost of ________ to enter a new industry is less than the cost of ________, an alliance can be a valuable strategic opportunity.
Answer
  • vertically integrating; learning new skills and capabilities
  • learning new skills and capabilities; using an alliance
  • using an alliance; learning new skills and capabilities
  • learning new skills and capabilities; vertically integrating

Question 13

Question
Consistent with a real options perspective, firms in new and uncertain environments are likely to
Answer
  • avoid using strategic alliances.
  • develop numerous strategic alliances.
  • develop few strategic alliances.
  • engage in vertical integration.

Question 14

Question
If TeleCo were to enter into a strategic alliance with a partner that promised it could deliver a high quality wireless infrastructure when in fact the potential partner had neither the skills nor abilities to provide this infrastructure, TeleCo could be said to be impacted by
Answer
  • moral hazard.
  • adverse selection.
  • holdup
  • tacit collusion.

Question 15

Question
Adverse selection in a strategic alliance is likely only when
Answer
  • it is difficult or costly to observe the resources or capabilities that a partner brings to an alliance.
  • a potential partner can easily see the resources and capabilities that a firm is bringing to an alliance.
  • it is difficult or costly to know how competitors will react to the strategic alliance.
  • there are significant transaction-specific assets devoted to the alliance.

Question 16

Question
In general, the ________ tangible the resources and capabilities that are to be brought to a strategy alliance, the ________ costly it will be to estimate their value before an alliance is created, and the ________ likely it is that adverse selection will occur.
Answer
  • more; more; more
  • less; more; less
  • less; more; more
  • more; more; less

Question 17

Question
________ occurs when partners in an alliance possess high-quality resources and capabilities of significant value in an alliance but fail to make those resources and capabilities available to alliance partners.
Answer
  • Moral hazard
  • Adverse selection
  • Holdup
  • Explicit collusion

Question 18

Question
Often both parties in a failed alliance accuse each other of
Answer
  • adverse selection.
  • tacit collusion.
  • moral hazard.
  • holdup.

Question 19

Question
When one firm makes more transaction-specific investments in a strategic alliance than partner firms make, that firm may be subject to a form of cheating called ________ that occurs when a firm that has not made significant transaction-specific investments demands returns from an alliance that are higher than what the partners agreed to when they created the alliance.
Answer
  • adverse selection
  • holdup
  • moral hazard
  • noncompliance

Question 20

Question
Research suggests that ________ are the type of alliance where existence of transaction-specific investments often leads to holdup problems.
Answer
  • licensing agreements
  • equity alliances
  • joint ventures
  • distribution agreements

Question 21

Question
The rarity of strategic alliances
Answer
  • depends solely on the number of competing firms that have already implemented an alliance.
  • depends solely on whether or not the benefits that firms obtain from their alliances are not common across firms in the industry.
  • depends not only on the number of competing firms that have already implemented an alliance but also on whether or not the benefits that firms obtain from their alliances are common across competing firms in the industry.
  • depends solely on the number of substitutes available for alliances.

Question 22

Question
One of the reasons why the benefits that accrue from a particular strategic alliance may be rare is that
Answer
  • relatively few firms may have the complementary resources and abilities needed to form an alliance.
  • there is a relatively large number of alliance partners available.
  • relatively many firms may have the complementary resources and abilities needed to form an alliance.
  • there may be a relatively low amount of transaction-specific assets to enter into similar alliances.

Question 23

Question
Research indicates that the most common reason that alliances fail to meet the expectations of partner firms is
Answer
  • the lack of financial resources.
  • the necessity of transaction-specific investments.
  • the lack of transaction-specific investments.
  • the partners' inability to trust one another.

Question 24

Question
To the extent that a strategic alliance is based on ________ relations, it will make the alliances costly to imitate.
Answer
  • socially complex
  • tacit collusion
  • explicit collusion
  • moral hazard

Question 25

Question
Two possible substitutes for strategic alliances include
Answer
  • going it alone and tacit collision.
  • going it alone and acquisitions.
  • acquisitions and explicit collusion.
  • explicit collusion and tacit collusion.

Question 26

Question
Firms ________ when they attempt to develop all the resources and capabilities they need to exploit market opportunities and neutralize market threats by themselves.
Answer
  • engage in tacit collusion
  • form joint ventures
  • go it alone
  • engage in explicit collusion

Question 27

Question
Alliances will be preferred to going it alone when
Answer
  • the level of transaction-specific investments required to complete an exchange is low.
  • there are no transaction-specific investments required to complete an exchange is low.
  • when there is low uncertainty about the future value of an exchange.
  • the level of transaction-specific investments required to complete an exchange is moderate

Question 28

Question
________ theory suggests that under conditions of high uncertainty, firms may be unwilling to commit to a particular course of action by engaging in an exchange with a firm and will choose, instead, the strategic flexibility associated with alliances.
Answer
  • Capabilities
  • Real options
  • Transaction cost economics
  • Resource-based

Question 29

Question
Alliances will be preferred to acquisitions when
Answer
  • alliances limit a firm's flexibility under conditions of high uncertainty.
  • there is minimal unwanted organizational "baggage" in an acquired firm.
  • there are legal constraints on acquisitions.
  • the value of a firm's resources and capabilities does not depend on its independence.

Question 30

Question
An example of a contractual clause that deals with operating issues would be a
Answer
  • noncompete clause.
  • minority protection clause.
  • put options clause.
  • termination clause.

Question 31

Question
All of the following are methods firms can use to reduce the threat of cheating in strategic alliances except
Answer
  • contracts.
  • equity investments.
  • joint ventures.
  • tacit collusion.

Question 32

Question
Which of the following is a limitation of the reputational control of cheating in a strategic alliance?
Answer
  • Subtle cheating in an alliance is likely to become public knowledge.
  • Even if one firm is clearly cheating in an alliance, the other firm may not be sufficiently tied into a network of firms to make this information public.
  • The effect of a tarnished reputation forecloses future opportunities for a firm and it helps reduce the current losses of the firm that was cheated.
  • The reputation of the firm that was impacted by the cheating may be impacted as significantly as the firm that committed the cheating.

Question 33

Question
When the probability of cheating in a cooperative relationship is greatest, a(n) ________ is the preferred form of cooperation.
Answer
  • equity agreement
  • licensing agreement
  • joint venture
  • distribution agreement

Question 34

Question
________ may enable partners to explore exchange opportunities that they could not explore if only legal and economic organizing mechanisms were in place.
Answer
  • Trust
  • Joint ventures
  • Reputational effects
  • Equity investments

Question 35

Question
While it is often the case that there will be important information asymmetries between firms in an alliance, these asymmetries are likely to be ________ when alliances partners come from different countries.
Answer
  • much less
  • about the same as
  • much greater
  • marginally greater

Question 36

Question
eBay's agreement with the U.S. Postal Service is most accurately classified as a(n)
Answer
  • joint venture.
  • equity agreement.
  • licensing agreement.
  • nonequity agreement.

Question 37

Question
eBay's agreement with MBNA is most accurately characterized as a(n)
Answer
  • supply agreement.
  • licensing agreement.
  • equity alliance.
  • joint venture.

Question 38

Question
eBay's agreement with the Korean online auction company is best characterized as a(n)
Answer
  • supply agreement.
  • licensing agreement.
  • equity alliance.
  • joint venture.

Question 39

Question
eBay's former agreement with ecorp is best characterized as a(n)
Answer
  • joint venture.
  • equity alliance.
  • licensing agreement.
  • nonequity alliance.

Question 40

Question
If eBay's agreements with their Korean and Australian partners were intended to increase the number of buyers and sellers and thereby increase the value of eBay's online auction services for every eBay user, this would imply that the online auction industry is an example of a ________ industry.
Answer
  • declining
  • network
  • commodity
  • mature

Question 41

Question
If eBay entered into the cooperative agreement with its Australian partner for the purpose of testing the attractiveness of the Australian and New Zealand auction industries prior to making a more significant investment in these industries, this would be an example of
Answer
  • transaction cost economics.
  • tacit collusion.
  • explicit collusion.
  • real options.

Question 42

Question
If, prior to entering the cooperative agreement with eBay, eBay's Korean partner stated that it had the technological capabilities to facilitate eBay's Korean auction business when, in fact, the Korean company did not have these capabilities, this would be an example of
Answer
  • adverse selection.
  • explicit collusion.
  • moral hazard.
  • holdup.

Question 43

Question
If eBay's Australian partner agreed to provide marketing and technological skills to help eBay compete in the Australian and New Zealand auction industries but provided skills that were significantly lower than promised, this would be an example of
Answer
  • holdup.
  • moral hazard.
  • adverse selection.
  • tacit collusion.

Question 44

Question
eBay's agreement with ________ is the most likely to be susceptible to holdup.
Answer
  • the Australian partner
  • the Korean partner
  • MBNA
  • the U.S. Postal Service

Question 45

Question
Which of the following reasons helps explain why eBay may have preferred to enter into an alliance to enter the Korean online auction industry rather than going it alone?
Answer
  • eBay's Korean partner possesses capabilities that are valuable and rare but not costly to imitate.
  • The level of transaction-specific investments required to enter the Korean online auction industry is low.
  • There is little uncertainty about the future of the Korean online auction industry.
  • The level of transaction-specific investments required to enter the Korean online auction industry is moderate.
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