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1. Examples of equity-based alliances include strategic investment.
a. True
b. False
2. A non-JV, equity-based alliance can be regarded as two firms “getting married,” but not having “children.”
a. True
b. False
3. The term “strategic networks” is derived from the term “social networks” highlighting the social aspects of interfirm
relationships.
a. True
4. In regards to strategic alliances and networks, in the traditional industry-based view, firms are dependent players.
a. True
b. False
5. Strategic networks work against other groups, but not against traditional single firms
a. True
b. False
6. Cross-shareholding is a popular form of non-equity-based alliances
a. True
b. False
7. A joint venture is a strategic alliance that is closest to a merger/acquisition.
a. True
b. False
8. Decisions to form a strategic alliance are based primarily on resource-based considerations.
a. True
9. A horizontal alliance consists of members that are competitors.
a. True
b. False
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10. Keiretsu networks often consist of upstream vertical alliances.
a. True
11. A firm that does not exercise a real option faces punitive consequences.
a. True
12. Many governments tend to prefer alliances over the establishment of wholly owned subsidiaries.
a. True
b. False
13. From the view of industry structure, in oligopolistic industries, there are an above average number of available players
as potential partners.
a. True
14. From the perspective of network position, firms located in the center of interfirm networks accumulate less power and
influence.
a. True
b. False
15. Firms with a high degree of network centrality are likely to be more attractive partners.
a. True
b. False
16. Successful alliances and networks normally avoid socially complex relations among partners.
a. True
b. False
17. The ad hoc approach to organization allows firms to systematically learn from the experience.
a. True
b. False
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18. Since firms act to enhance or protect their legitimacy, copying other reputable organizations is not a way to gain
legitimacy.
a. True
b. False
19. In finding organizational partners, it is desirable to identify candidates that present both strategic fit and organizational
fit.
a. True
20. The more tacit the resources and capabilities are, the less likely firms will prefer equity involvement in establishing
relationships.
a. True
21. A firm would prefer equity relationships if it fears that its intellectual property may be expropriated by partners.
a. True
22. Because each firm is likely to have multiple interfirm relationships, it is important to not manage the relationships as a
corporate portfolio.
a. True
23. In alliance formation, the question of whether to cooperate or not cooperate is essentially answered by whether a firm
goes the route of market transactions/acquisitions or forms an alliance.
a. True
b. False
24. Contract- or non-equity-based approaches allow firms to have more direct control over joint activities.
a. True
b. False
25. The choice between contract and equity approaches to growth is highly dependent on institutional constraints.
a. True
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26. Opportunism is seldom an issue with members of an alliance.
a. True
b. False
27. To ward off potential opportunism, a firm may place its critical skills and technologies in a “black box’ sort of
arrangement to which the alliance partner has no access.
a. True
b. False
28. After the initial set of opportunities are exploited and exhausted by the partners to a joint venture, they tend to seek out
relationships with weak ties among a diverse set of players.
a. True
29. Detailed formalization of an alliance relationship is a sign of trust.
a. True
b. False
30. The marriage/divorce metaphor works if the alliance has only two partners, but not if it involves more than two.
a. True
31. Possible ways to minimize the threat of opportunism include swapping critical skills and technologies through credible
commitments.
a. True
32. In international alliances, setting up a parallel and reciprocal relationship in the foreign partner’s home country may
decrease the incentives for both partners to cooperate.
a. True
b. False
33. Weak ties excel at connecting with distant others who possess unique and novel information.
a. True
b. False
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34. Strong ties are more beneficial to environments conductive for exploitation whereas weak ties are more suitable for
exploration.
a. True
b. False
35. An increase in the experience of one partner may bring instability into the relationship as it reduces the need to rely on
the other partner.
a. True
b. False
36. Higher level shared technology is associated with lower profitability for parent firms.
a. True
b. False
37. Objective, rather than subjective, measures are used to judge the performance of strategic alliances.
a. True
38. Experience is typically used as a proxy for measuring the learning that results from an alliance.
a. True
b. False
39. Acquisitions work well when the ratio of soft to hard assets is relatively high, whereas alliances may be
preferred when such a ratio is low.
a. True
b. False
40. Like married individuals who work hard to stimulate and strengthen their ties, alliances require continuous nurturing.
a. True
41. Strategic alliances involve:
a. Obligatory agreements between firms.
b. Compromises between short-term transactions and long-term solutions.
c. Eventual acquisitions.
d. None of the above.
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42. Contractual alliances include all of the following except:
a. Licensing/franchising.
b. Research and development (R&D) contracts.
c. Cross-shareholding.
d. Turnkey projects.
43. A joint venture can be described as:
a. A special case of equity-based alliance.
b. A legally dependent entity.
c. An alliance based on contracts and does not involve the sharing of ownership.
d. A compromise between merger and acquisition.
44. Firm X and Firm Z become cross-shareholders, which means that they:
a. Participate in co-marketing.
b. Share in a turnkey project.
c. Engage in a market transaction.
d. Invest as strategic investors in each other.
45. In the context of strategic alliances, a constellation is:
a. An industry agreement in which firms compete against one another.
b. A two-firm equity-based partnership.
c. A strategic network.
d. All of the above.
46. Underlying the decision to engage in cooperative interfirm relationships is
a. A set of strategic considerations.
b. A comprehensive model based on formation, evolution, and performance.
c. Elements of the industry-, resource-, and institution-based considerations.
d. All of the above.
47. Three medical supply companies join together to bring a burn wound treatment to market more quickly. Their
collaboration is a:
a. Horizontal alliance.
b. Upstream vertical alliance.
c. Institution-based merger.
d. Downstream vertical alliance.
ANSWER: c
48. The high entry barriers in a given industry:
a. Preclude any alliance activity.
b. May result in alliances that can lower cost and risks to market entry.
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c. Prevent network ties from reaching an alliance level.
d. Tend to dilute the individual strength of any firm in the alliance.
49. In order to extract the most benefit from alliances, managers need to:
a. Focus on the social and psychological phenomenon of the relationship rather than the economic aspects.
b. Emphasize competition.
c. Foster trust with partners.
50. A way that many large MNEs typically deal with deal with the organizational issues of alliances is:
a. A way that many large MNEs typically deal with deal with the organizational issues of alliances is:
b. By developing a dedicated alliance function.
c. To focus primarily on firm-level organizational issues.
d. Through an alliance template and standard metrics and checklists.
51. Firm X is considering an alliance with Firm A. Which of the following institution-based consideration is most
important to Firm X’s decision?
a. High entry barriers discourage our competitors from making similar alliances.
b. The alliance will create an acceptable level of value for us.
c. Local content requirements are minimal.
d. The opportunity to learn from Firm A is significant.
52. Which represents an alliance with suppliers?
a. Horizontal alliances.
b. Upstream vertical.
c. Downstream vertical.
53. Which is not an advantage of strategic alliances and networks?
a. Reduce costs, risks and uncertainties.
b. Costs of negotiation and coordination.
c. Gain access to complementary assets and capabilities.
d. Possibilities to use alliances and networks as real options.
54. Which of the following are NOT true regarding managers involved in alliances and networks?
a. They require relationship skills which foster trust with partners.
b. They must guard against opportunism.
c. They must recognize that interests of the firms fully overlap.
d. They have to represent the interests of their respective firms.
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55. Institution-based considerations regarding organization include:
a. Collusion concerns.
b. Entry requirements.
c. The social pressures to find partners.
d. All of the above.
56. Cooperation between rivals is usually suspected of being:
a. Tacit collusion.
b. Explicit collusion.
c. Socialism.
d. All of the above.
57. Emerging trends concerning formal government policies on entry mode requirements include:
a. More conservative policies.
b. Imposing considerable requirements.
c. Banning joint ventures.
58. Which of the following is NOT involved in the stages of forming business relationships?
a. The decision to cooperate.
b. Positioning the relationship.
c. The choice of contract or equity.
d. All of the above.
59. The strategic choice concerning whether to form cooperative interfirm relationships or to rely on pure market
transactions or M&As to grow the firm is part of:
a. Stage One.
b. Stage Two.
c. Stage Three.
d. Stage Four.
60. In comparing M&As with alliances and networks, which of the following is NOT correct?
a. M&As are costly.
b. M&As have significant transaction costs.
c. Many M&As end up destroying value.
61. At Stage I of the alliance formation process, which of the following is a viable option?
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a. Engage in market transactions.
b. Pursue cooperative interfirm relationships.
c. Opt for merger or acquisition.
d. All of the above.
62. The first concern in determining whether a relationship should be based on contract or equity is:
a. The kind of resources and capabilities that are shared.
b. Direct monitoring and control.
c. Real options.
d. Institutional constraints.
63. A firm deciding to pursue an alliance relationship with another firm has already made which of the following
decisions?
a. Growth through market transactions is the best course of action.
b. Acquisition in this situation is risky.
c. Real options are not to be considered.
64. For equity-based alliances and networks, the nature of shared resources and the degree of tacitness and complexity
are:
a. Low.
b. Moderate.
c. High.
d. Irrelevant.
65. For non-equity-based alliances, the importance of direct organizational monitoring and control is:
a. Low.
b. Moderate.
c. High.
d. Irrelevant.
66. A firm in an alliance is likely to have other interfirm alliances as well, which makes it important to:
a. Close the door to additional alliances.
b. Insist on direct monitoring and control.
c. Manage the relationships as a corporate portfolio.
d. None of the above.
67. To protect against opportunism within an alliance relationship, a firm could minimize the threat by:
a. Walling off critical capabilities.
b. Swapping critical capabilities through credible commitments.
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c. Holding each other “hostage.”
d. All of the above.
68. Strong ties between alliance partners are:
a. Less costly to maintain than weak ties.
b. Better for exploring new opportunities.
c. The initial foundation of many strategic alliances.
d. Needed for greater flexibility.
69. The first step in the dissolution of an alliance is:
a. Going it alone.
b. Uncoupling.
c. Initiation.
70. Weak ties in organizational relationships:
a. Are more trustworthy and are cultivated over a long period of time.
b. Are associated with exchanging finer-grained information.
c. Provide an informal, social control mechanism.
d. Are less costly to maintain.
71. As a type of relationship tie, exploitation refers to such things as:
a. Selfishness.
b. Lack of choice.
c. Inefficiency.
72. In measuring the performance of strategic alliances and networks, subjective measures include:
a. Market performance.
b. Stability.
c. Longevity.
73. Which of the following is a subjective factor that affects the performance of alliances and networks?
a. Equity invested.
b. Learning and experience.
c. Profitability.
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74. The stock market responds favorably to alliance activities, but only under which circumstances?
a. Complementary resources.
b. Previous alliance experience.
c. Ability to manage the host country’s political risk.
d. All of the above.
75. International alliances tend to have:
a. More problems than domestic ones.
b. Greater longevity.
c. Experiences that affect performance in a linear way.
d. Easier-to-measure relational capabilities.
76. For parent firms, a higher level of collaboration and shared technology is often associated with:
a. Lower profitability and market share.
b. Better profitability and market share.
c. Poor stock market response.
77. The performance of an alliance can probably be best measured
a. By objective measures only.
b. Through an assessment of learning and experience.
c. Through an assessment of relational capabilities.
78. A lower level of ____contribution may indicate a firm’s relative lack of commitment:
a. Equity
b. Learning and experience
c. Nationality similarities.
79. Stock markets are more likely to respond favorably to companies that engage in alliance activities if the partners:
a. Are from countries with no political risk.
b. Have previous alliance experiences.
c. Possess similar resources.
80. Among the ways to improve the odds of a successful alliance, which of the following would be considered a “don’t”?
a. Rely on a detailed contract to ensure a successful relationship.
b. Identify symptoms of frequent criticisms.
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c. Continuously work on nurturing the relationship.
d. Avoid escalation of conflicts.
82. Why and how might a “real option” be useful in a joint venture?
83. A friend of yours stated: “I would never want to be dependent on an alliance. I prefer an acquisition so that everything
would be under my control.” How would you respond?
84. Why is the concept of “learning by doing” so important to forming alliances?
85. What is opportunism in the context of alliances, and what can be done to minimize its threat?
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86. Describe some objective measures and some subjective measures for measuring the level of an alliance’s
performance.
87. What can be done to maintain a successful alliance among global firms?
88. What are the drawbacks of forming an alliance? How does the learning race become a drawback?
89. Why might it be better to have a majority or minority position in a joint venture?
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90. What are the implications a strategist needs to keep in mind when considering strategic alliances?