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MGMT 466 > MGMT 466 Exam 3 - FLASHCARDS - Chapter 9 > Flashcards

MGMT 466 Exam 3 - FLASHCARDS - Chapter 9

1
Q

What are the three major types of strategic alliances that firms use?

A
  1. Joint ventures
  2. Equity strategic alliances
  3. Nonequity strategic alliances
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2
Q

What is a cooperative strategy in which firms combine some of their resources to create a competitive advantage?

A

Strategic alliance

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3
Q

What involves firms with some degree of exchange and sharing of resources to jointly develop, sell, and service goods or services?

A

Strategic alliances

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4
Q

True or false: strategic alliances are used by firms to leverage their existing resources while working with partners to develop additional resources as the foundation for new competitive advantages?

A

true

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5
Q

What is a strategic alliance in which two or more firms create a legally independent company to share some of their resources to create a competitive advantage?

A

Joint venture

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6
Q

True or false: joint ventures have partners who typically, but not always, own equal percentages and contribute equally to the venture’s operations?

A

true

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7
Q

Can joint ventures be effective in building long term relationships?

A

Yes

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8
Q

Can joint ventures be effective in transferring tacit knowledge between partners?

A

Yes

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9
Q

What is tacit knowledge learned through?

A

Learned through working closely

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10
Q

What is an advantage of joint ventures?

A

strong ties, trust and commitment can develop between partners

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11
Q

If an alliance doesn’t work out, is undoing a joint venture expensive?

A

Yes and it can take time

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12
Q

What is a risk of a joint venture?

A

knowledge shared with the new partner could be misappropriated by opportunistic behavior

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13
Q

Must any rewards from the collaboration in a joint venture be shared among the partners?

A

Yes

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14
Q

What is an example of a joint venture?

A

the partnership between Starbucks and PepsiCo, where they created the “North American Coffee Partnership” to produce and distribute ready-to-drink coffee beverages like Starbucks Frappuccino, allowing both companies to expand their market reach and brand awareness; essentially combining their strengths to create a new product line

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15
Q

What is an alliance in which a firm purchases equity in another firm, (Becomes a partial owner), and sharing of new resources?

A

Equity strategic alliance

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16
Q

What strategic alliance helps when there are opportunities that are too expensive, complex, or risky to be pursued by one firm on its own?

A

Equity strategic alliance

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17
Q

Why do companies form equity strategic alliances?

A

Companies commonly form equity alliances because they want to ensure that they have control over assets that they commit to the alliance

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18
Q

True or false: equity strategic alliances offer a window into new technology?

A

true

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19
Q

True or false: equity alliances tend to produce strong ties and greater trust between partners?

A

true

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20
Q

True or false: with equity alliances, the amount of investment can be high?

A

true

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21
Q

What is an alliance in which two or more firms develop a contractual relationship to share some of their resources to create a competitive advantage?

A

Non equity strategic alliance

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22
Q

Are non equity alliances less formal than equity alliances?

A

Yes

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23
Q

True or false: non equity strategic alliances demand fewer partner commitments than do joint ventures and equity strategic alliances?

A

true

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24
Q

Are non equity alliances easy to initiate and terminate?

A

Yes

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25
Q

True or false: non equity strategic alliances generally do not foster an intimate relationship between partners?

A

true

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26
Q

True or false: The informality and lower commitment levels make nonequity strategic alliances unsuitable for complex projects where success depends on the transfer of tacit knowledge between partners?

A

true

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27
Q

What are types of non equity strategic alliances?

A

• supply agreements
• distribution agreements
• licensing agreements

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28
Q

Does outsourcing commonly occur through non equity strategic alliances?

A

Yes

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29
Q

What are the two main reasons firms form strategic alliances?

A

−To create value they couldn’t generate by acting independently and entering markets more rapidly.
−Because most companies lack the full set of resources needed to pursue all identified opportunities and reach their objectives on their own.

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30
Q

Why does a firm form a strategic alliance in a slow cycle market?

A

• To gain access to a restricted market
• Establish a franchise in a new market
• Maintain market stability

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31
Q

Why does a firm form a strategic alliance in a fast cycle market?

A
  1. Speed up development of new good or services
  2. Maintain market leadership
  3. Share risky R&D expenses
  4. overcome uncerainty
  5. Maintain market leadership
  6. Form an industry technology standard
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32
Q

Why does a firm form a strategic alliance in a standard cycle market?

A
  1. Gain market power
  2. Gain access to complementary resources
  3. Establish better economies of scale
  4. Overcome trade barriers
  5. Meet competitive challenges from competitors
  6. Learn new business techniques
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33
Q

Are fast cycle markets hypercompetitive?

A

yes

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34
Q

True or false: with standard cycle markets, alliances are more likely to be made by partners that have complementary resources?

A

true

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35
Q

What is a strategy through which firms combine some of their resources to create a competitive advantage by competing in one or more product markets?

A

Business level cooperative strategy

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36
Q

What are the four business level cooperative strategies?

A
  1. Complementary strategic alliances
  2. Competition response strategy
  3. Uncertainty-reducing strategy
  4. Competition-reducing strategy
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37
Q

What are business-level alliances in which firms share some of their resources in complementary ways to create a competitive advantage?

A

Complementary strategic alliances

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38
Q

What are the two dominant types of complementary strategic alliances?

A

Vertical and horizontal complementary strategic alliances

39
Q

What type of strategic alliance is where firms share some of their resources from different stages of the value chain to create a competitive advantage?

A

Vertical complementary strategic alliance

40
Q

What type of strategic alliance is where firms share some of their resources from the same stage (or stages) of the value chain for creating a competitive advantage?

A

Horizontal complementary strategic alliance

41
Q

What are formed to respond to competitors’ actions, especially strategic actions?

A

Competition response strategies

42
Q

True or false: Because they are difficult to reverse and expensive to operate, strategic alliances are formed to take strategic rather than tactical actions?

A

true

43
Q

What are used to hedge against the risks created by the conditions of uncertain competitive environments (such as new product markets)?

A

Uncertainty-reducing strategies

44
Q

What are used to avoid excessive competition while the firm marshals its resources to improve its strategic competitiveness?

A

Competition-reducing strategies

45
Q

What is collusion used for?

A

to reduce competition

46
Q

How do collusive strategies differ from strategic alliances?

A

Collusive strategies differ from strategic alliances in that collusive strategies are often an illegal cooperative strategy

47
Q

True or false: collusion is often illegal?

A

true

48
Q

What are the two types of collusive strategies?

A
  1. Explicit collusion
  2. Tacit collusion
49
Q

What exists when two or more firms negotiate directly to jointly agree about the amount to produce as well as the prices for what is produced?

A

Explicit collusion

50
Q

What exists when several firms in an industry indirectly coordinate their production and pricing decisions by observing each other’s competitive actions and responses?

A

Tacit collusion

51
Q

True or false: Tacit collusion tends to take place in industries dominated by a few large firms?

A

true

52
Q

True or false: Tacit collusion can lead to less competition in markets in which both firms operate?

A

true

53
Q

What is a form of tacit collusion in which firms do not take competitive actions against rivals they meet in multiple markets?

A

Mutual forbearance

54
Q

What is a strategy through which a firm collaborates with one or more companies to expand its operations?

A

Corporate level cooperative strategy

55
Q

When are corporate level cooperative strategic alliances attractive?

A

When a firm seeks to diversify into markets in which the host nation’s government prevents mergers and acquisitions

56
Q

True or false: compared to mergers and aquisitions, corporate level strategic alliances require fewer resource commitments?

A

true

57
Q

True or false: compared to mergers and aquisitions, corporate level strategic alliances permit greater flexibility in terms of efforts to diversify partners’ operations?

A

true

58
Q

What are commonly used corporate level cooperative strategies?

A

– Diversifying alliances
– Synergistic alliances
– Franchising

59
Q

What is a strategy in which firms share some of their resources to engage in product and/or geographic diversification?

A

diversifying strategic alliance

60
Q

How do companies using a diversifying strategic alliance seek to enter new markets?

A

with existing products or with newly developed products

61
Q

What is a strategy in which firms share some of their resources to create economies of scope?

A

Synergistic strategic alliance

62
Q

True or false: synergistic strategic alliances create synergy across multiple functions or multiple businesses between partner firms?

A

true

63
Q

What is a strategy in which a firm (the franchisor) uses a franchise as a contractual relationship to describe and control the sharing of its resources with its partners (the franchisees)?

A

Franchising

64
Q

What is a business arrangement where an individual or group is granted the right to market a company’s products or services in a specific area?

A

Franchise

65
Q

What is the difference between a franchisor and franchisee?

A

The franchisor licenses the use of the trade-mark and business model to the franchisee

66
Q

How is the effetiveness of franchising measured?

A

Franchising’s effectiveness is a product of how well the franchisor can replicate its success across multiple partners in a cost-effective way

67
Q

True or false: compared to business- level cooperative strategies, corporate-level cooperative strategies commonly are broader in scope?

A

true

68
Q

True or false: compared to business- level cooperative strategies, corporate-level cooperative strategies commonly are less complex?

A

false

69
Q

True or false: compared to business- level cooperative strategies, corporate-level cooperative strategies commonly are less challenging?

A

false

70
Q

True or false: compared to business- level cooperative strategies, corporate-level cooperative strategies commonly are more costly to use?

A

true

71
Q

What is a strategy in which firms with headquarters in different countries decide to combine some of their resources to create a competitive advantage?

A

Cross border strategic alliance

72
Q

Are cross border strategic alliances increasing in number?

A

Yes

73
Q

Are cross border strategic alliances as risky as mergers or acquisitions?

A

No

74
Q

Can cross border strategic alliances be complex?

A

Yes

75
Q

Can cross border strategic alliances be difficult to manage?

A

Yes

76
Q

What is a strategy by which several firms agree to form multiple partnerships to achieve shared objectives?

A

Network cooperative strategy

77
Q

What is the set of strategic alliance partnerships that firms develop when using a network cooperative strategy called?

A

alliance network

78
Q

True or false: Alliance networks can be stable or dynamic?

A

true

79
Q

True or false: Alliance networks vary by industry characteristics?

A

true

80
Q

True or false: In mature industries, what are stable alliance networks used for?

A

Used to extend competitive advantages into new areas

81
Q

Evidence shows that how much of cooperative strategies have serious problems in their first two years, and as many as _____ of them fail?

A

Two thirds; 50%

82
Q

What are two risks with cooperative strategy?

A

– A firm may act in a way that its partner thinks is opportunistic
– A firm misrepresents the resources it can bring to the partnership

83
Q

True or false: In general, opportunistic behaviors surface either when formal contracts fail to prevent them and when an alliance is based on a false perception of partner trustworthiness?

A

true

84
Q

Is a risk of cooperative strategy that a firm may fail to make available to its partners the resources that it committed to the cooperative strategy?

A

Yes

85
Q

Is a risk of cooperative strategy that one firm may make investments that are specific to the alliance while
its partner does not?

A

Yes

86
Q

True or false: Assigning managerial responsibility for a firm’s cooperative strategies to a high- level executive or to a team improves the likelihood that the strategies will be well managed?

A

true

87
Q

What actions should the person responsible for managing the firm’s cooperative strategies take?

A

− Coordinate activities.
− Categorize knowledge learned from previous experiences.
− Make certain that what the firm knows about how to effectively form and use cooperative strategies is in the hands of the right people at the right time.
− Learn how to manage both tangible and intangible assets

88
Q

What are the two approaches a firm uses to manage cooperative strategies?

A

– Cost minimization approach
– Opportunity maximization approach

89
Q

What happens in the cost minimization approach?

A

Firm develops agreements with partners that specify how the cooperative strategy is to be monitored and how partner behavior is to be controlled?

90
Q

What happens in the opportunity maximization approach?

A

the firm develops less formal contracts, with fewer constraints on partners’ behaviors, which makes it possible for partners to explore how their resources can be shared in multiple value-creating ways

91
Q

True or false: trust is an important part of cooperative strategies?

A

true

92
Q

What is the belief that a firm will not do anything to exploit its partner’s vulnerabilities, even if it has an opportunity to do so?

A

Trust

93
Q

True or false: Trust between partners increases the likelihood of success when using alliances?

A

true

94
Q

True or false: when partners trust each other, there is less need to write detailed formal contracts to specify each firm’s behaviors?

A

true

MGMT 466 (9 decks)

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