Chapter 9 International Strategic Alliances: Management and Design
MULTIPLE CHOICE
1. There are several issues to consider in picking a partner for a strategic alliance. One of these is
a.
Go for the biggest partner possible because they have the most assets.
b.
Seek strategic complementarity.
c.
Make sure your partner will be dependent on you and not vice versa.
d.
All of the above
2. According to the text, all of the following are true about strategic alliances EXCEPT
a.
They are inherently unstable and provide significant management challenges.
b.
Estimates of failure rates range from 30 to 60 percent.
c.
They are among the most popular choice to go international.
d.
They are used mostly as a means to share technology.
3. The most important decision in setting up a strategic alliance is usually about
a.
Working out the proportions of ownership.
b.
Decision on the proper management structure.
c.
Developing a detailed contract.
d.
Selecting the right partner.
4. In operations alliances, multinational companies
a.
Use research and development to merge different technical skills.
b.
Share the risk of developing new or costly technology.
c.
Gain access to new markets.
d.
Combine manufacturing to reach a profitable volume of activity.
5. The anchor partner in a strategic alliance refers to
a.
A partner that is very stable and anchors the relationship.
b.
The strongest partner in the relationship.
c.
The partner who initiates the relationship.
d.
A partner that fails to deliver their share of funding.
6. The best level of dependency recommended for a strategic alliance is
a.
Balanced.
b.
Home country dominated.
c.
Host country dominated.
d.
It does not matter if there are more than two companies.
7. The elephant-and-the-ant complex refers to
a.
Difficulties that come with two different size organizations in a strategic alliance.
b.
Problems that arise when one side feels inferior to the other.
c.
Strategic alliances between developed and developing countries.
d.
An unbalanced management structure.
8. An agreement not legally binding between companies to cooperate on any value-chain activity is a (an)
a.
Formal international cooperative alliance.
b.
International joint venture.
c.
Informal international joint venture.
d.
International cooperative alliance.
9. When a large number of companies form a joint venture, the international joint venture is a
a.
Multi-partner joint venture.
b.
Consortium.
c.
Informal cooperative alliance.
d.
Equity joint venture.
10. All of the following are typically part of a negotiated joint venture agreement EXCEPT
a.
Management loyalty.
b.
Equity contributions.
c.
Provisions for dissolving the IJV.
d.
Contracts for the IJV.
11. In the split control management structure
a.
Companies share all decision making.
b.
Managers of the strategic alliance split from and act independently from their parent
companies.
c.
Partners divide decision making control by functional areas.
d.
Each company takes a turn providing the operational managers.
12. In the independent control management structure
a.
Strategic alliance managers have nearly complete autonomy for operational decisions.
b.
Partners act independently of each other except when necessary.
c.
Partners focus only on their special areas of expertise.
d.
None of the above
13. When partners share strategic decision making but make decisions independently at the functional
level (e.g., marketing, production), they are using which of the following management structures?
a.
Dominant partner
b.
Independent management structure
c.
Rotating management
d.
Split-control management structure
14. If partners have similar technologies or know-how and they contribute this knowledge equally to the
alliance, they prefer
a.
A shared management structure.
b.
A split management structure.
c.
A dominant management structure.
d.
A rotating management structure.
15. Strategic alliance partners prefer a dominant management structure
a.
If partners have similar technologies or know-how and they contribute this knowledge
equally to the alliance.
b.
If partners have different technologies or know-how and they contribute this knowledge
equally to the alliance.
c.
If partners have different technologies or know-how and they contribute this knowledge
differently to the alliance.
d.
If the alliance has more strategic importance to one partner.
16. Which management structure is popular in developing countries?
a.
Dominant
b.
Shared
c.
Split
d.
Rotating
17. As their management team gains more expertise, mature joint ventures move to what type of structure?
a.
Independent
b.
Interdependent
c.
Local partner dominance
d.
Shared
18. Equity in a strategic alliance implies
a.
Labor skills.
b.
Ownership.
c.
Domination.
d.
None of the above
19. Suggested ways to build and sustain commitment in strategic alliances include
a.
Go slowly.
b.
Be the dominant partner.
c.
Keep your goals secret so your partner does not get nervous about your intentions.
d.
Use extensive written documentation.
20. When applied to a strategic alliance relationship, the concept of trust includes
a.
Confidence that the partner will deliver.
b.
Confidence that the partner will behave with good will.
c.
Confidence that the partner will engage in fair exchange.
d.
All of the above
21. The confidence that the partner will behave with goodwill and trust is
a.
Commitment.
b.
Credibility trust.
c.
Benevolent trust.
d.
Calculative commitment.
22. Trust in strategic alliance relationships
a.
Usually builds in cycles.
b.
Either exists at the beginning of the relationship or will never be there.
c.
Can really only evolve with partners from similar cultures.
d.
Can never exist in high technology relationships since the risk of losing the technology is
too great.
23. In strategic alliance relationships, high levels of trust often
a.
Retard organizational functioning due to excessive emotional reactions.
b.
Cause excessive loyalty to the strategic alliance.
c.
Are irrelevant if the strategic alliance is projected to have a high financial return.
d.
Facilitate the exchange of tacit knowledge.
24. The best method of assessing strategic alliance performance is
a.
Total sales revenue.
b.
ROI.
c.
ROA.
d.
There is no one best method.
25. Indirect strategic benefits for entering a strategic alliance include
a.
Immediate improved performance on profit ratios.
b.
Learning a new market.
c.
Developing management loyalty.
d.
None of the above
26. __________ means that companies rely on each other to contribute to the relationship.
a.
Shared management
b.
Balanced management
c.
The norm of reciprocity
d.
Mutual dependency
27. Contracts for strategic alliances may include _____________ if the relationship dissolves before the
negotiated time.
a.
Penalties for early termination of the contract by each side
b.
Restrictions on future business growth
c.
A promise to try future joint ventures
d.
All of the above
28. In dealing with cross-cultural communication in a strategic alliance, managers should expect
a.
Communication difficulties to disappear when operational managers are fluent in each
other’s language.
b.
Slower communication and more errors.
c.
No communication problems if all managers were educated in the US.
d.
No communication difficulties if all parties agree on a common language of the strategic
alliance.
29. Understanding a new market and developing a new technology may be used as performance criteria
for which of the following?
a.
Organizational learning
b.
Management processes
c.
Competitive advantage
d.
Commitment
30. Strategic complementarity in a strategic alliance means that
a.
Both sides must have similar strategic objectives for the strategic alliance to succeed.
b.
Objectives can be different if they are not in conflict.
c.
Cultural differences must be dealt with first.
d.
Parent companies must leave the strategic alliance management to develop their own
strategic goals.
31. Which of the following type of strategic alliances allows the multinational to combine manufacturing
or assembly activities to achieve a profitable volume of activity?
a.
Operations alliances
b.
Output alliances
c.
Upstream-downstream alliances
d.
Marketing alliances
32. All of the following are true about international joint venture (IJV) EXCEPT
a.
An IJV is a separate legal entity owned by parent companies from different countries.
b.
IJVs can have more than two partners.
c.
IJVs require that companies have equal ownership to form the venture.
d.
IJVs require legal contracts that bind partners.
33. If strategic alliance partners have different technologies or know-how and they contribute this
knowledge equally, they often prefer
a.
Shared management structure.
b.
Dominant management structure.
c.
Split management structure.
d.
Rotating management structure.
34. The psychological identification with a relationship in a strategic alliance and the pride of association
with the partner and the alliance is known as
a.
Calculative commitment.
b.
Credibility trust.
c.
Benevolent trust.
d.
Attitudinal commitment.
35. The confidence that a strategic alliance partner has the intent and ability to meet their obligations and
make their promised contribution to a strategic alliance is known as
a.
Credibility trust.
b.
Benevolent trust.
c.
Calculative trust.
d.
Attitudinal trust.
36. According to the text, which of the following is NOT a key criterion used in picking an alliance
partner?
a.
Pick a partner who provides strategic complementarity.
b.
Pick a partner who provides financial security.
c.
Pick a partner who has complementary skills.
d.
Pick a partner who provides the right level of mutual dependency.
37. According to the text, which of the following DOES NOT represent a form of strategic alliance?
a.
Informal cooperative alliances
b.
Formal cooperative alliances
c.
International joint ventures
d.
Informal partnerships
38. Which of the following statements regarding international joint ventures is FALSE?
a.
International joint ventures usually have two or more partners.
b.
International joint ventures are usually not legally binding.
c.
International joint ventures with a large number of partners are known as consortiums.
d.
Companies do not need equal ownership to form an international joint venture.
39. The confidence that a partner has the intent and ability to meet its obligations and make its promised
contribution to the strategic alliance is known as
a.
Calculative trust.
b.
Calculative commitment.
c.
Credibility trust.
d.
Benevolent trust.
40. Which of the following describes the situation where companies stay in a strategic alliance despite
strong evidence that the alliance won’t work?
a.
Calculative commitment
b.
Credibility commitment
c.
Attitudinal commitment
d.
Escalation of commitment
ESSAY
1. What are the characteristics of a good partner in a strategic alliance? Why do these partner traits help
make a strategic alliance successful?
2. What are some of the common value chain links companies use to gain strategic benefits from
alliances? Pick two of these links and describe some of the benefits partners gain from pursuing these
links.
3. Under what conditions should a firm choose one of the various management structures available for a
strategic alliance?
4. What are the different kinds of commitment needed in a strategic alliance? Explain.
5. What are some of the difficulties of assessing IJV or ICA performance? How do these differ for
companies with different strategic goals?
6. What are the different management structures possible for strategic alliances? Pick two of these
management structures and discuss when they are most appropriate.
7. Compare and contrast the three main types of strategic alliances.
ANS:
8. Discuss some of the things multinational managers can do to build and sustain trust and commitment.
9. If an alliance fails to meet strategic goals, what two options do top managers have to choose from to
resolve the situation? How can an alliance be improved?