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Chapter 6
Engaging in Cross-Border Collaboration:
Managing across Corporate Boundaries
True/False
1. Entering collaborative relationships with other firms is one way for firms to meet the needs
of an increasingly complex environment.
2. Strategic alliances with customers are a form of collaboration that enable MNEs to increase
their bargaining power and reduce their costs.
3. Strategic alliances are only forged for long durations. Firms should not enter collaborative
agreements with a short-term horizon.
4. Cross-border collaborations have become increasingly important. While the size of an
MNE’s corporate allies is extremely important to the MNE’s performance, the quality of its
corporate allies is only marginally important to the MNE’s performance.
2
Page: 356
Topic: Building and Managing Collaborative Ventures
5. Collaboration reduces the time and risk associated with the development of new products.
6. Alliances are the only feasible way to develop a position in multiple countries and regions.
7. While the investment and growth benefits associated with partnering generally yield
substantial benefit to smaller firms that are pursuing rapid growth with limited resources,
these benefits diminish with size such that the very largest MNEs generally find that the
benefits of “going it alone” exceed the costs associated with partnering.
8. The risks associated with collaboration are limited to the inability of both firms to agree on
the terms of the partnership.
3
Difficulty: Easy
Page: 352-354
Topic: The risks and costs of collaboration
9. A vast majority of successful cross-border collaborations are founded and maintained by
firms that acquire the other partner’s knowledge without sharing their own knowledge.
10. Once an alliance is formed, the goals, tasks and management processes of the alliance must
be constantly monitored and adapted to changing conditions.
11. Pre-alliance analysis is sufficient to ensure the success of a collaborative agreement.
12. Equity joint ventures are the preferred mode of arranging an alliance and should be
employed whenever multiple companies are intending to collaborate.
4
Topic: Building Cooperative Ventures (subtopic: Alliance Scope: Striving for Simplicity and
Flexibility)
13. The objectives of an alliance are more difficult to achieve when there is a greater number of
joint activities, equity cross-holdings and cross-functional coordination.
14. Interface managers should be well acquainted with the company’s internal organizational
processes and should have access to key managers in different parts of the organization.
15. Equality between partners is essential, regardless of the governance structure.
5
16. Formulating an agreement with respect to the termination of the venture at the outset of the
collaboration demonstrates that the partners are not fully dedicated to the success of the
alliance.
17. International joint ventures continue to be a primary means to enter foreign markets.
18. In industries in which there is a dominant worldwide market leader, joint ventures, strategic
alliances, and networks allow coalitions of smaller partners to compete more effectively
against a global “common enemy” rather than one another.
19. Partners should be selected on the basis of comfort rather than competence.
Multiple Choice
20. Which of the following is not a benefit of a strategic alliance?
a. Firms can transfer their technologies to new markets and increase their revenues from
licensing fees.
b. Firms can transfer employees to other organizations to reduce operating costs and acquire
new knowledge through the employees they transfer.
c. Firms can gain access to new markets for existing products and learn important new skills
from the partner.
d. Firms can share costs and develop new technologies together without being fully integrated.
21. A car manufacturer and a multinational computer technology corporation intend to combine
their strengths to develop intelligent sound systems for cars. Assuming that both companies
will have a moderate to high level of interaction, what would be the most suitable form of
alliance to adopt?
a. The firms should develop an R&D consortium, combining teams from both companies.
b. The firms should create an equity joint venture, combining assets from both companies.
c. The firms should create a licensing agreement to exploit the new application.
d. The firms should develop production facilities to be shared between the partners.
22. Oil & Gas Limited and Small Tech Inc. announced an agreement to develop a new
technology for the extraction of gas. Oil & Gas Limited will contribute financial resources
and its expertise in gas extraction, while Small Tech will provide its expertise in R&D. To
ensure the success of the collaboration, prior to the alliance, both companies should
a. approach prospective clients to get their perspective on the agreement and ensure that there
is a market for the new technology they want to develop.
b. verify the prospective partner’s capabilities and assess its strengths and weaknesses.
c. adopt a code of conduct that will clarify the responsibilities of each partner and the ethical
behavior that will be expected of each partner.
d. agree on the expected revenues and profit sharing.
7
Topic: Building Cooperative Ventures (subtopic: Partner Selection: Strategic and Organizational
Analysis)
23. Robert is an operating manager for a large organization. Robert’s organization will be
engaging in a joint venture. He has been assigned the responsibility of overseeing his firm’s
participation in the joint venture. As such, Robert’s supervisor has asked him to participate
in the negotiation process. Even if Robert is not familiar with the negotiations, his presence
at this stage is essential to
a. ensure that the definition and understanding of the alliance’s goals are clear and consistent
b. give the joint venture partner an opportunity to accept or reject Robert’s leadership of his
firm’s participation in the partnership.
c. communicate Robert’s extensive familiarity with his own firm to the joint venture partner.
d. make him feel important and test his capacity to operate in a stressful situation.
24. When the alliance’s tasks are characterized by extensive functional interdependencies
a. it is preferable to have a dominant partner that can assume the functional tasks.
b. it is preferable to merge both companies.
c. the development of clear operating rules is the only way to maintain boundaries between the
functions.
d. the creation of a separate entity is the most effective way to manage the linkages between
the various functions.
25. Parent companies assume an important role on the joint venture or alliance’s board. Which
of the following is not among the pivotal responsibilities of the board’s members?
a. Reviewing performance.
b. Ensuring that employment practices do not impinge on cultural norms.
c. Overseeing capital allocation decisions.
d. Monitoring risk management practices and policies.
26. Which of the following can inhibit a firm’s ability to learn from the alliance?
a. The interface manager is not the target user of the knowledge.
b. The firm does not have an information system to diffuse the knowledge acquired.
c. The firm does not share its knowledge with the other partner.
d. The alliance knowledge is not codified.
27. An effective interface manager is someone who
a. is very competent in the dominant functional area of the venture.
b. has a good understanding of the strategy of the firm and can advise the other partner of this
strategy.
c. can influence the goals and objectives of the alliance for the benefit of his/her organization.
d. is the best user of the information / knowledge and can diffuse it to the right people within
the organization.
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28. The negotiation of an integrative equality agreement implies that each committee in the
alliance is structured with clear:
a. co-shared leadership, but each company takes responsibility for different tasks.
b. single-handed leadership, but tasks are developed internally within the joint venture.
c. single-handed leadership, but each company takes responsibility for different tasks.
d. co-shared leadership, but tasks are developed internally within the joint venture.
29. In an alliance, the success of an integrative equality agreement requires
a. the delegation of authority to individuals chosen by both partners.
b. the dispersal of decision-making on select issues to at least one of the partners.
c. the development of a code of conduct for conflict resolution.
d. the selection of individuals that report to both alliance partners.
30. Most stable alliances often involve
a. two partners that are both motivated to acquire each other’s knowledge.
b. two partners that are each satisfied with access to, rather than the acquisition of, each other’s
knowledge.
c. two partners providing resources that are significantly different.
d. one partner that is strong enough to dominate the other partner.
31. Too much enthusiasm by those involved in alliance planning and negotiations can sometimes
cause:
a. Realistic expectations and right choices
b. Unrealistic expectations and wrong choices
c. Unrealistic expectations and right choices
d. Realistic expectations and wrong choices.
32. Alliances that are more complex require:
a. More management attention to succeed and tend to be more difficult to manage
b. Less management attention to succeed and tend to be less difficult to manage
c. More management attention to succeed and tend to be less difficult to manage
d. Less management attention to succeed and tend to be more difficult to manage
Essay
33. Alexa is the CEO of a large corporation that wants to partner with a competitor to develop a
new technology. Explain the potential risks that Alexa’s company may encounter by
collaborating with a rival.
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The most common risk associated with collaborating with competitors is the possibility that one
of the venture partners will use the other partner’s knowledge to develop a competitive edge.
Alternatively, the benefits resulting from the partnership may be asymmetrical, leading to a
change in the relative competitive positions of the firms. This asymmetry may be the result of the
motivation or incapacity of one partner to learn from the other. Other risks include one partner
using the partnership to erode the other’s competitive position, the externalization of learning by
sharing tasks and the risk that the partnership is a precursor to a takeover by one of the partners.
Difficulty: Moderate
Page: 352-354
Topic: The Risks and Costs of Collaboration (subtopic: The Risks of Competitive Collaboration)
34. Sunny is the CEO of a large corporation that wants to enter a partnership with another
organization. What should Sunny consider when choosing his partner?
35. A firm is entering a strategic alliance and the CEO is worried about managing the firm’s
boundaries. What would you recommend to the firm and why?
12
Topic: Managing Cooperative Ventures (subtopic: Managing the Boundary: Structuring the
Interface)
36. Managing knowledge flow is important for a firm that wants to get the most from its
partnership with another company. What can a firm do to ensure it gets the most from its
collaboration while preventing the outflow of information they do not wish to share with
their alliance partner?
37. Flexibility is often the key in a strategic alliance. Please comment.
