Past paper Q

Question 1

What is a joint venture defined as?

Answer 1

‘a new corporate entity created and jointly owned by two or more parent companies’ (Peng, 2009)

Question 2

What are the three forms of joint ventures?

Answer 2

Joint ventures typically have three forms; Minority (less than 50% equity), 50/50 (equal equity) and majority (more than 50% equity).

Question 3

What are strategic alliances defined as?

Answer 3

as ‘a voluntary agreement of cooperation between firms’ (Peng,2009

Question 4

Are joint ventures equity or non equity based?

Answer 4

Equity based - higher commitment

Question 5

Are strategic alliances equity or non equity bases?

Answer 5

Non equity based

Question 6

What are examples of non-equity strategical alliances?

Answer 6

Tunrkey projects
R&D contracts
Co-marketing

Question 7

What are differences between strategic alliances and joint ventures?

Answer 7

1) Joint ventures combine two firms all in vs strategic alliances who remain independent

2) JV are equity based
SA- Non equity based

3) JV and legal entities vs SA commonly just hand shake agreements

Question 8

Why would a firm decide to enter a new market on its own rather than using a strategic alliance?

Answer 8

• SA suffer from the learning race
• Opportunism
• May pick the wrong partner
• Allows time to go in a decide how to approach the market before getting others involved

Question 9

Whats an example of a joint venture?

Answer 9

‘Sony Ericsson’ which was formed when Sony and Ericson decided to work together. They created a new entity.

Question 10

What is a location specific advantage?

Answer 10

‘the benefits that a firm reaps from the features specific to a place’ (Peng 2014).

Question 11

What are the local specific advantages?

Answer 11

1) natural geographic’s
2) agglomeration
3) market and efficiency seeking firms

Question 12

What is agglomeration?

Answer 12

• The clustering of economic activities in certain locations. -Due to agglomeration, certain countries are seen as having better innovative tendencies that others

Question 13

Whats an example of agglomeration?

Answer 13

• Dallas has the worlds largest concentration of telecom companies with US firms such as AT&T and foreign companies such as Fujitsu converging in this region

Question 14

Where do the agglomeration advantages stem from?

Answer 14

1) Knowledge spillovers

2) Industry demand

Question 15

How does agglomeration allow industries to meet their strategic goals?

Answer 15

• A firm that has the strategic goal of being an innovative seeking firm would typically go to Dallas due to the region being known for its world-class innovations.
• By being in Dallas, firms are surrounding themselves with the best resources, knowledge and workers within the industry which helps them to have an advantage over other firms.
• They are able to gather knowledge and potentially share resources which helps them to expand as a firm.

Question 16

Why is a geographical location of a firm beneficial and whats an example?

Answer 16

This is because certain locations simply possesses features that other countries can’t match .

• For example Miami has become known as the ‘Gateway of the Americans’(Peng, 2014), due it being located in the ideal place for both North American firms looking south and Latin Americans looking north.