Chapter 8 Flashcards
Drew’s Cafe Inc. and Cuppa Corp., two local coffee chains, combine resources to enter the global market. They retain their individual ownership; however, they agree to share production facilities and manpower, and they also decide to market their products through combined promotional tools. The arrangement made by the two retail chains to combine resources and collaborate for a common objective refers to a _________.
a) mass-customization strategy
b) product-differentiation strategy
c) strategic alliance
d) standardization venture
c) strategic alliance
Victor Corp., a high-end mobile manufacturer that targets businesspeople, decides to increase its customer base. It forms a strategic alliance with Gray Inc. to produce new instruments designed to attract students. Gray helps design products that change how Victor is perceived by young customers. Which of the following is the primary objective of this strategic alliance?
a) To source inputs or activities that create more productivity
b) To source inputs or activities that reduce the total costs
c) To source inputs or activities that influence the brand
d) To source inputs or activities that increase productivity of existing products
c) To source inputs or activities that influence the brand
An organization enters into an alliance with a firm that is positioned at a different stage along the value chain. The alliance is formed to combine unique resources and lower transaction costs. In this case, which of the following alliances has been adopted by the organization?
a) A profit alliance
b) A horizontal alliance
c) A vertical alliance
d) A selling alliance
c) A vertical alliance
Sepia Inc., a fertilizer company, needs permission to test its new products on plantations owned by an agro-based industry. In return, Sepia is willing to pay a percentage of revenue to the agro-based industry. In this case, which of the following contractual alliances should be adopted by Sepia?
a) A licensing agreement
b) An input agreement
c) A distribution agreement
d) A supply agreement
a) A licensing agreement
Green Dye Inc., a manufacturing firm that produces organic products, is approached by Zoe, a leading clothes designer owning her own label. Together, they create a line of clothes using organic dye and fabric made from pure cotton. Which of the following is likely to be the primary value created by this alliance?
a) Combining unique resources along different stages of the value chain
b) Offering customized retail benefits to increase the sale of the products
c) Lowering the transaction costs at all stages of the value chain
d) Lowering distribution costs at all stages of the value chain
a) Combining unique resources along different stages of the value chain
The research and development department of a pharmaceutical company is in the process of developing a new drug to cure Parkinson’s disease. It requires additional resources to complete the process. To convince another pharmaceutical company to provide the necessary resources, it gives false information about how long the drug has been in the developmental pipeline and the guidelines followed in the production process. Which of the following is being exemplified in this case?
a) Profit stealing
b) Bondage
c) Hold-up
d) Misrepresentation
d) Misrepresentation
_________ are governance clauses in which joint ventures must specify what percentage of equity is owned by each of the partners.
a) Equity clauses
b) Residual rights clauses
c) Voting rights clauses
d) Dispute clauses
a) Equity clauses
Plateus Inc., a software company, has a website that gives detailed information about partnering processes for firms that seek collaboration with Plateus. Plateus describes the terms and conditions of different grades of partnership on its website, allowing potential partners to choose which level fits them best. Through this measure, Plateus seeks to primarily achieve _________.
a) increased external visibility
b) low transaction costs
c) organized alliance-management knowledge
d) increased profits
a) increased external visibility
A graphic design firm and an advertising firm form a contractual alliance. In the first clause, they specify how decisions will be made, how profits will be split, and how disputes will be resolved. In the second clause, they specify how intellectual property will be shared and protected. Which category of issues does the second clause address?
a) Operating issues
b) Exit issues
c) Governance issues
d) Termination issues
a) Operating issues
Which of the following inputs qualifies as “strategic” inputs that merit forming an alliance relationship?
a) Inputs that do not differentiate one’s product in the minds of customers
b) Activities that require a lot of unskilled manpower
c) Activities that require no coordination in order to achieve the desired quality
d) High value inputs that make up a high percentage of one’s total costs
d) High value inputs that make up a high percentage of one’s total costs
When do firms tend to opt for equity alliances?
a) When an alliance requires the joint creation of new resources and capabilities by the partners
b) When it is easy to specify the rewards that should come from meeting one’s obligations in the alliance
c) When an alliance requires less interdependence among the firms involved
d) When it is easy to specify what each party is supposed to do in the relationship
a) When an alliance requires the joint creation of new resources and capabilities by the partners
Alliances that create value through lower transaction costs are primarily trying to _________.
a) increase production costs
b) expand the available resources of all the partners
c) decrease administrative costs
d) lower the costs between transactions in the value chain
d) lower the costs between transactions in the value chain
A(n) ______ is a type of strategic alliance in which cooperation between firms is managed directly through contracts, without cross-equity holdings, or an independent firm being created.
nonequity
In the context of the alliance lifecycle, which of the following tools are used in alliance management?
a) Partner screening form, technology and patent domain maps, cultural fit evaluation form, due diligence team
b) Needs analysis checklist, make vs. buy vs. ally analysis, list of possible alliance partners with resources to meet needs
c) Decision making template, trust-building worksheet, work planning worksheet, alliance communication infrastructure
d) Relationship evaluation form, yearly status report, termination checklist, termination planning worksheet
c) Decision making template, trust-building worksheet, work planning worksheet, alliance communication infrastructure
