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86) The main advantage of ________ is that it gives the firm a much greater ability to build the
kind of subsidiary company that it wants.
A) an acquisition
B) strategic alliances
C) greenfield investment
D) franchising
87) If a firm is trying to enter a market where there are already well-established companies, and
where global competitors are also interested in establishing a presence, the firm should choose
A) a franchise.
B) a greenfield investment.
C) a joint venture.
D) an acquisition.
88) Which of the following is true of establishing a greenfield venture in a foreign country?
A) Greenfield investments are less risky than acquiring an existing company in a foreign market.
B) A degree of uncertainty is associated with a greenfield venture because of future revenue and
profit prospects.
C) Greenfield investments virtually eliminate the possibility of a more aggressive global
competitor entering the market via acquisitions.
D) Greenfield investments are quick to establish.
89) ________ refer to cooperative agreements between potential or actual competitors.
A) Greenfield investments
B) Strategic alliances
C) Takeovers
D) Licensing agreements
90) Which of the following statements is true of strategic alliances?
A) The fixed costs and associated risks of developing new products or processes are borne by the
alliance partner.
B) They are a way to bring together complementary skills and assets that both companies develop.
C) They limit the entry of firms into foreign markets.
D) A firm risks giving away technological know-how and market access to its alliance partner.
91) Managing an alliance successfully requires building interpersonal relationships between the
firms' managers. This is sometimes referred to as
A) relational capital.
B) relational assets.
C) operational assets.
D) venture capital.
92) An advantage of forming a strategic alliance is that it helps firms
A) protect their procedures and technologies.
B) reduce the level of conflicts that occur within an organization.
C) share the risks of developing new products or processes.
D) increase the cultural similarities between employees.
93) Which of the following is true of strategic alliances?
A) Strategic alliances can make entry into a foreign market difficult.
B) Strategic alliances, while they have many benefits, do not allow firms to share the fixed costs of
developing new products or processes.
C) Strategic alliances allow firms to bring together complementary skills and assets that neither
company could easily develop on its own.
D) Strategic alliances, while beneficial to firms, make the establishment of technological standards
for an industry difficult.
94) ________ is a way to bring together complementary skills and assets that neither company
could easily develop on its own.
A) An alliance
B) A turnkey contract
C) A wholly owned subsidiary
D) A licensing agreement
95) ________ can be used to formalize arrangements to swap skills and technology in a strategic
alliance.
A) Modularization
B) Cross-licensing agreements
C) Structured transfer agreements
D) Contractual safeguards
96) ________ refers to the building of interpersonal relationships between the firms' managers in a
strategic alliance.
A) Alliance partnerships
B) Joint management
C) Relational capital
D) Team building
97) What are first-mover advantages? Discuss these advantages.
98) Explain the relationship between first-mover disadvantages and pioneering costs.
99) Discuss the trade-offs associated with large-scale entry versus small-scale entry.
