True / False
1. A cooperative strategy is a means by which firms work together to achieve a shared objective.
a. True
b. False
2. According to the Chapter 9 Opening Case, in addition to their corporate-level alliance, Renault and Nissan have
each formed vertical complementary strategic alliances with other companies.
a. True
b. False
3. Strategic alliances are cooperative strategies between firms that combine their resources and capabilities to create
a competitive advantage.
a. True
b. False
4. Although growing in popularity with small and medium-sized firms because they can gain economies of scale, large
companies tend to avoid strategic alliances.
a. True
b. False
5. Strategic alliances have become the cornerstone of many firms’ competitive strategy, particularly large global
competitors.
a. True
b. False
6. If a large Asian cosmetics firm was to engage in a 50–50 partnership with a large American chemical company to
form a new company focused on creating advanced skin care products, this would be considered a joint venture.
a. True
b. False
7. One area in which joint ventures are effective is the transfer of tacit knowledge as illustrated in the Chevron/China
National Petroleum joint venture.
a. True
b. False
8. Nonequity strategic alliances exist when two or more firms join together to create an independent firm.
a. True
b. False
9. Nonequity strategic alliances are formed when one partner owns a much larger (or inequitable) share of the joint
venture than do the remaining partner(s).
a. True
b. False
10. Cooperation in slow-cycle markets is extremely rare because these industries are declining.
a. True
b. False
11. Firms in slow-cycle markets can use alliances to enter restricted markets or to establish franchises in new markets.
a. True
b. False
12. The joint venture among BuzzFeed, CNN, and YouTube was formed to develop new sources of competitive
advantages in the fast-cycle entertainment business.
a. True
b. False
13. Acquisitions are the most common cooperative strategy used in standard-cycle markets.
a. True
b. False
14. Firms in standard-cycle markets seek to gain economies of scale through cooperative alliances.
a. True
b. False
15. In a vertical complementary alliance, firms share some of their resources and capabilities from the same stage of
the value chain to create a competitive advantage.
a. True
b. False
16. Horizontal complementary strategic alliances are designed so that each partner realizes equal benefits from equal
investments in the alliance.
a. True
b. False
17. A cooperative agreement between a hotel chain and a casino operator would be viewed as a horizontal
complementary strategic alliance because as separate entities, the two firms would compete for the same
customer.
a. True
b. False
18. Using business-level strategic alliances to hedge against risk and uncertainty is most common in the slow-cycle
markets.
a. True
b. False
19. Collusion is a form of cooperative strategy.
a. True
b. False
20. Tacit collusion is not explicitly illegal in the United States even though it results in higher prices for consumers.
a. True
b. False
21. Tacit collusion tends to be least used as a business-level, competition-reducing strategy in highly concentrated
industries such as airlines and breakfast cereals even though it results in higher prices for consumers.
a. True
b. False
22. Research in the airline industry suggests that tacit collusion reduces service quality and on–time performance.
a. True
b. False
23. Mutual forbearance is a form of explicit collusion between firms in which competitors avoid attacking rivals they
meet in multiple markets.
a. True
b. False
24. Although governments in free-market economies allow rivals to collaborate to improve competitiveness, the
challenge is to make sure the alliance does not lead to price fixing.
a. True
b. False
25. Horizontal business-level strategic alliances have greater probability of creating sustainable competitive advantage
than do vertical business-level strategic alliances.
a. True
b. False
26. Of the four business-level cooperative strategies, the competition-reducing strategy has the lowest probability of
creating a sustainable advantage.
a. True
b. False
27. The advantages of alliances designed to respond to competition and to reduce uncertainty are more temporary than
those developed through complementary alliances, such as vertical and horizontal strategic alliances.
a. True
b. False
28. An alliance can be used to test whether the partners would benefit from a future merger.
a. True
b. False
29. Because of U.S. legal restrictions concerning large foreign acquisitions, American firms can only enter into
diversifying alliances with other U.S. firms.
a. True
b. False
30. Synergistic strategic alliances such as the Renault-Nissan alliance discussed in the Opening Case focus on
economies of scope by sharing their resources and capabilities to develop manufacturing platforms that can be used
to Renault or Nissan cars.
a. True
b. False
31. Franchising is most attractive in concentrated industries.
a. True
b. False
32. Franchising is an alternative to pursuing growth through mergers and acquisitions.
a. True
b. False
33. The primary responsibility of the franchiser is to transfer capital to the franchisee.
a. True
b. False
34. The probability of alliance success is increased when partnering firms internalize successful alliance experiences.
a. True
b. False
35. A firm creates a competitive advantage when it develops and manages corporate-level cooperative strategies in a
way that is valuable, rare, imperfectly imitable, and nonsubstitutable.
a. True
b. False
36. Firms consider entering international alliances because multinational firms outperform firms operating only in their
home markets.
a. True
b. False
37. International strategic alliances are less risky than domestic strategic alliances because of diversification across
countries.
a. True
b. False
38. When a firm is in the early stages of geographic diversification, cross-border alliances may be a good learning step
before other forms of international expansion.
a. True
b. False
39. A network strategy involves a series of horizontal acquisitions by firms that are committed to dominating a
particular industry.
a. True
b. False
40. Network cooperative strategies among Silicon Valley firms have been successful, in part, because they are
geographically close together.
a. True
b. False
41. A stable alliance network is used in industries characterized by frequent product innovations and short product life
cycles.
a. True
b. False
42. A major risk of a network cooperative strategy is that firms gain access to their partner’s partners thus exposing
their proprietary processes to loss or theft.
a. True
b. False
43. Some cooperative strategies fail when it is discovered that a firm has misrepresented the competencies it can bring
to the partnership.
a. True
b. False
44. Failure of a partner to contribute needed resources and capabilities to a cooperative venture is a particular risk in
international ventures especially in emerging economies.
a. True
b. False
45. Only about 50 percent of cooperative strategies succeed.
a. True
b. False
46. The cost minimization approach of managing alliances is more expensive to put into place and to use than is the
opportunity maximization management approach.
a. True
b. False
47. In the cost minimization approach to managing competitive strategies, the relationship between the firms is based on
trust of the other partner.
a. True
b. False
48. The alliance between BP Plc and OAO Rosneft to extract oil from Russia’s Arctic Ocean was managed using
contracts, i.e., the cost minimization approach.
a. True
b. False
49. The Renault Nissan approach to managing its collaboration involves less reliance on contracts and more reliance on
trust, respect, and transparency (i.e., the opportunity-maximization approach to managing cooperative strategies).
a. True
b. False
50. Close monitoring, formal contracts, and constant vigilance against opportunism increase the probability of alliance
success.
a. True
b. False
51. High levels of trust allow less formal contracts to govern the relationship between alliance partners and increases
the likelihood of alliance success.
a. True
b. False
52. The Renault Nissan alliance (Chapter 9 Opening Case) is an example of a
scope by sharing resources and capabilities.
a. diversifying strategic alliance
b. vertical complementary alliance
c. synergistic strategic alliance
d. nonequity-based horizontal complementary alliance
created to gain economies of
53. Within the Renault Nissan alliance (Chapter 9 Opening Case), both Renault and Nissan have each formed
strategic alliances at the business-unit level with other companies.
a. vertical complementary
b. horizontal complementary
c. synergistic
d. diversifying
54. A cooperative strategy
a. is an integrated and coordinated set of commitments and actions designed to exploit core competencies and
gain a competitive advantage.
b. is a strategy in which firms work together to achieve a shared objective.
c. is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive
advantage by exploiting core competencies in specific product markets.
d. specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different
businesses competing in different product markets.
55. A strategy in which firms work together to achieve a shared objective is a
a. functional-level strategy.
b. business-level strategy.
c. corporate-level strategy.
d. cooperative strategy.
56. When using cooperative strategies, firms most frequently develop strategic alliances that
a. enhance the firm’s reputation in the marketplace.
b. are long-lived.
c. will reduce the firm‘s political risk.
d. create a competitive advantage.
57. The use of strategic alliances
a. is unlikely to yield success if partnering firms are headquartered in the same country.
b. may be too restrictive to facilitate entry into new markets.
c. usually increases the investment necessary to introduce new products.
d. is more frequent than other types of cooperative strategies.
58. In a(n) , two or more firms create a legally independent company to share some of their resources and
capabilities to develop a competitive advantage.
a. equality-based strategic alliance
b. non–equity strategic alliance
c. joint venture
d. equity strategic alliance
59. A competitive advantage that is developed through a cooperative strategy is called a collaborative or a(n)
advantage.
a. economic
b. collusive
c. alliance
d. relational
60. Which type of strategic alliance is best at passing tacit knowledge between firms?
a. primary cooperative strategic alliances
b. joint ventures
c. equity strategic alliances
d. nonequity strategic alliances
61. Moon Flower cosmetics company executives are aware that their Asian customer base is interested in advanced
skin care treatments beyond Moon Flower’s traditional herbal and organic compounds. Moon Flower and a large
American chemical company are in discussions to create a 50–50 partnership in a new firm, which would create
skin care treatments based on innovative chemical formulations that would be marketed both in Asia and in the
United States. Beyond being a cross-border alliance, this partnership can be called a(n)
a. nonequity strategic alliance.
b. joint venture.
c. horizontal complementary alliance.
d. equity strategic alliance.
62. Fujitsu Siemens Computers is a legally independent company of which Fujitsu and Siemens each own 50 percent.
This collaboration is an example of a , which is effective at transferring
a. nonequity strategic alliance; explicit knowledge.
b. joint venture; tacit knowledge.
c. joint venture; explicit knowledge.
d. equity strategic alliance; tacit knowledge.