Deck 7: Global Alliances and Strategy Implementation

Question 1

Trout Corp., Kirgo Ltd., and Sturgeon Inc., three of the leading construction companies in the United States, have decided to join hands and create a new cement manufacturing company.According to their agreement, Trout Corp.will have 50 percent equity, Kirgo Ltd.will have 20 percent equity, and Sturgeon Inc.will have 30 percent equity.In this given scenario, Sturgeon Inc.is referred to as a ________.

A)minority JV partner
B)majority JV partner
C)sole proprietor
D)franchisor

Answer 1

A

Question 2

What is an equity alliance?

A)a collaborative arrangement in which at least one collaborating company takes an ownership position in the other
B)a collaboration in which each contributor receives an equitable return based on relative contribution
C)a collaboration in which partners agree to share technology with each other
D)a wholly owned acquisition to prevent appropriation of intellectual property

Answer 2

A

Question 3

Which of the following types of alliances can be formed between a company and a foreign government?

A)international joint venture
B)equity strategic alliance
C)non-equity strategic alliance
D)global strategic alliance

Answer 3

D

Question 4

Wholly owned operations abroad inhibit a company's ability to pursue a global strategy.

Question 5

Alliances that are carried out through contract rather than ownership sharing are called ________.

A)cultural strategic alliances
B)equity strategic alliances
C)non-equity strategic alliances
D)transmodal strategic alliances

Question 6

France's Thomson Electronics combined with China's TCL to form TCL-Thomson Electronics.Thomson owns 33% and TCL owns the remaining 67% of TCL-Thomson Electronics.This is best described as a(n)________.

A)turnkey operation
B)acquisition
C)international licensing agreement
D)equity strategic alliance

Question 7

Working partnerships between two or more companies across national boundaries and increasingly across industries are referred to as global strategic alliances.

Question 8

A ________ is a new independent entity that is collectively created and owned by two or more parent companies.

A)subsidiary
B)joint venture
C)greenfield investment
D)turnkey operation

Question 9

Which of the following is NOT a typical reason for forming cross-border alliances?

A)to avoid import barriers
B)to share R&D costs and risks
C)to gain access to specific markets
D)to test marketing campaigns overseas

Question 10

Alliances are also known as ________.

A)competitive strategies
B)cooperative strategies
C)relational strategies
D)virtual strategies

Question 11

Runnerz Inc., a leading manufacturing and retail company that designs and develops footwear and apparel, has signed a contract with a particular courier service for managing the delivery process.The courier service is required to deliver goods from the factory to the warehouse, to customers, and also to collect customer payments for the goods.This is a typical example of a(n)________.

A)non-equity strategic alliance
B)turnkey operation
C)greenfield investment
D)international licensing agreement

Question 12

A joint venture is a situation in which two or more partners have different relative ownership shares in the new venture.

Question 13

All of the following would be examples of international joint ventures EXCEPT ________.

A)two Japanese companies sharing ownership of a company in Canada
B)a Danish company sharing ownership with a South African company in South Africa
C)a government-owned company from China sharing ownership with an Australian company in Panama
D)two Venezuelan companies sharing ownership of a company in Venezuela

Question 14

________ are transition mechanisms that propel the partners' strategies forward in a turbulent environment faster than would be possible for each company alone.

A)Cooperative strategies
B)Entry strategies
C)Options strategies
D)Competitive strategies

Question 15

Most global manufacturers have equity alliances with suppliers, sub-assemblers, and distributors-forming a network of internal family and financial links.Risk-sharing is often the motive behind equity alliances.

Question 16

A merger is a transition mechanism that propels the partner's strategies forward in a turbulent environment faster than would be possible for each company alone.

Question 17

A(n)________ refers to a JV among companies in different countries.

A)international joint venture
B)equity joint venture
C)global joint venture
D)transnational joint venture

Question 18

Which of the following is the most beneficial aspect of an international joint venture?

A)the international partner receives the entire profit
B)the responsibility of risks is solely taken by the international partner
C)the partner's local contacts and markets will be utilized
D)the entire cost of production will be borne by the local partner

Question 19

Alliances can be formed for various purposes, e.g., sharing technology, marketing, or production joint ventures.

Question 20

________ are partnerships between two or more firms that decide they can better pursue their mutual goals by combining their resources as well as their existing distinctive competitive advantages.

A)Greenfield investments
B)Strategic alliances
C)Foreign subsidiaries
D)Turnkey operations

Question 21

Why should a company seek a global alliance over other forms of market entry?

Question 22

All of the following are cooperative aspects of strategic alliances, EXCEPT ________.

A)creating economies of scale in tangible assets
B)forming upstream-downstream divisions of labor
C)limiting investment risks through shared resources
D)learning new intangible skills from alliance partners

Question 23

One major advantage of cross-border alliances is that there is a potential loss of a company's technology and knowledge.

Question 24

Globe Cars, a leading automobile ancillary firm in China, has decided to form a global alliance with Fulda, a German tire manufacturing company.Which of the following is a primary challenge that Globe Cars is most likely to face in this alliance?

A)existing competitors
B)risk of investment
C)extreme trade barriers in China
D)differences in national cultures

Question 25

A major benefit of cross-border alliances is that they facilitate the access to specific markets where regulations favor domestic companies.

Question 26

Which of the following is a cooperative aspect of strategic alliances?

A)creating economies of scale in tangible assets
B)accelerating diffusion of industry standards to erect barriers to entry
C)learning new intangible skills from alliance partners
D)denying technological and learning initiative to partners

Question 27

Which of the following is a pitfall of cross-border alliances?

A)increase in the number of existing competitors
B)disputes over management
C)convincing expatriates
D)finding local skilled employees

Question 28

Cross-border alliances are used to gain rapid entry into a new or consolidating industry and to take advantage of synergies.

Question 29

What are some of the challenges in implementing global alliances?

Question 30

The dual role of strategic alliance refers to the ________.

A)constant requirement of resources and markets
B)process of finding skilled personnel and training them to work efficiently
C)conflict between cooperation and competition
D)differences between home and host governments

Question 31

According to David Lei, the single greatest impediment managers face when seeking to learn or renew sources of competitive advantage is that ________.

A)good venture partners are hard to find
B)technologies change very rapidly
C)partners can become competitors
D)governments can be fickle

Question 32

Which of the following factors has the maximum influence on the success of multinational firm alliances?

A)form of governance chosen
B)introduction of new competition
C)differing national cultures
D)cumulative learning of partner

Question 33

In a highly competitive environment, alliances are a slow and risky route to globalization, and therefore, are likely to be avoided.

Question 34

Which of the following is a competitive aspect of strategic alliances?

A)sharing resources to limit investment risk when entering new markets or uncertain technological fields
B)lowering exit barriers in mature industries, therefore, assisting short-term corporate restructurings
C)accelerating diffusion of industry standards and new technologies to create barriers to entry
D)creating a critical mass to develop new technologies to protect domestic, strategic industries

Question 35

A major advantage of global and cross-border alliances is that they share the cost and risk of research and development of new products.

Question 36

Cross-border allies usually collaborate effectively, and are most often associated with long lasting trust and loyalty.

Question 37

Cross-border allies often have difficulty collaborating effectively, especially in competitively sensitive areas.This generally leads to ________.

A)mistrust and secrecy
B)limitation of investment
C)short-term corporate restructuring
D)lowering of exit barriers

Question 38

What motivates a company to develop a cross-border alliance?

Question 39

Which of the following motivates a company to form cross-border alliances?

A)to regulate and favor domestic companies
B)to gain rapid entry into a new and consolidating market
C)to remove exporting barriers for domestic companies
D)to allow local companies to gain access to international products and services

Question 40

Joint ventures are often the chosen form of multinational firm alliances because they ________.

A)provide greater control of proprietary technology
B)increase the level of competition between partner firms
C)enhance the specific skills of the personnel
D)enhance the rewards of the firm

Question 41

Barton & Green is an MNC based in the United States that provides a wide range of software development products.Executives at the firm are considering the idea of outsourcing the company's IT infrastructure.Which of the following best supports the argument that Barton & Green should outsource its IT infrastructure to TMC Enterprises, one of the best IT infrastructure maintenance firms in India?

A)The main competitor of Barton & Green outsources all IT functions.
B)Outsourcing will enhance Barton & Green's competitiveness.
C)Barton & Green's employees frequently need IT support, so it is best to outsource the IT infrastructure.
D)Barton & Green has proprietary technology and processes.

Question 42

________ refers to the processes that management puts in place in order to direct the success of the joint venture's goals.

A)IJV control
B)Knowledge management
C)Turnkey operations
D)Offshoring

Question 43

Which of the following is NOT a characteristic of strategic implementation of the McDonald's corporation?

A)minimizing autonomy
B)hiring locals whenever possible
C)forming paradigm-busting arrangements with suppliers
D)making minor changes to the standard menu based on location

Question 44

According to Dovev Lavie, which of the following is a value-creation strategy?

A)setting organizational buffers between competing partners
B)allying with multiple partners in one industry to limit power
C)assimilating network resources to acquire new skills and capabilities
D)aligning organizational units to create coherent interfaces

Question 45

Which of the following is a strategic implementation used by McDonald's?

A)keeping prices low to build market share
B)altering menu items significantly to match cultural norms
C)using American managers to run international franchises
D)forming joint ventures with foreign restaurants to enter new markets

Question 46

How can firms increase the likelihood of forming a successful global alliance?

Question 47

Which of the following most likely provides a strategic advantage during the implementation of a global alliance?

A)non-collaboration in competitively sensitive areas
B)unified technology infrastructure
C)centralized decision making by one partner
D)high levels of competition between the partners

Question 48

Parent companies use the IJV control process in order to ensure that the management of the joint venture conforms to ________.

A)international accounting standards
B)qualitative standards
C)its own interests
D)industry standards

Question 49

Opening its own subsidiaries in the host country may be better than contracting with an outside firm in the host country, if it is crucial for the firm to ________.

A)produce gains in efficiency, productivity, and quality
B)keep control of proprietary technology and processes
C)minimize job losses in the home country
D)market its products in the host country

Question 50

Which of the following factors most significantly affects all other variables necessary for the successful implementation of a global alliance?

A)organizational policies
B)organizational structure
C)employee leadership
D)product performance

Question 51

Barton & Green is an MNC based in the U.S.that makes a wide range of software development products.Executives at the firm are considering the idea of outsourcing the company's IT infrastructure.Which of the following questions is the most relevant to Barton & Green's decision to outsource its IT infrastructure to TMC Enterprises, a firm in India?

A)Which type of operating system is primarily used by TMC Enterprises?
B)What is the attitude of U.S. consumers about TMC Enterprises?
C)What is the financial health of TMC Enterprises?
D)Which other firms have outsourced their processes to TMC Enterprises?

Question 52

Organizational design as a mechanism for factoring international joint venture control refers to the ________.

A)human resource plans and policies of the joint venture
B)market share and profitability ratios of the organization
C)geographic location of the joint venture's facilities
D)amount of decision-making power that the joint venture holds

Question 53

What is the "dual nature" of strategic alliances?

Question 54

Which of the following terms suggests that global sourcing can produce gains in efficiency, productivity, quality, and profitability by fully leveraging talent around the world?

A)transformational outsourcing
B)business process reengineering
C)inverted sourcing
D)lean integration

Question 55

MNCs often partner with local small enterprises to capture new ideas and innovations.

Question 56

What are the benefits of outsourcing abroad? What should firms do when implementing a global sourcing strategy?

Question 57

MNCs often partner with local SMEs in order to ________.

A)capture new innovations and ideas
B)reduce the potential risks of the company
C)ensure international expansion
D)maximize the autonomy of the partners

Question 58

In order to minimize potential problems in alliances, companies should most likely choose partners with ________.

A)competitively sensitive technology
B)complementary products and skills
C)significant control of the target market
D)superior bargaining power in the same industry

Question 59

According to Dovev Lavie, which of the following is a caution given to global companies by value capture strategies?

A)Set organizational and technological buffers between competing partners.
B)Avoid partners that compete in your industry if they enjoy superior bargaining power.
C)Learn and assimilate network resources in order to develop new skills and capabilities.
D)Align organizational units and create a coherent interface with each partner in the alliance.

Question 60

Transformational outsourcing refers to the view that global sourcing can produce gains in efficiency and profitability by fully leveraging talent around the world.

Question 61

Which of the following primarily determines the extent of control exercised over an IJV by its parent company?

A)staffing choices for top IJV positions
B)policies of the smaller firm
C)cultural background
D)IJV industry

Question 62

Which of the following is NOT a knowledge management process?

A)transferring existing knowledge
B)transforming and creating of knowledge
C)harvesting knowledge from the IJV to the parents
D)distributing knowledge to clients and media outlets

Question 63

According to Berdrow and Lane, the process of transformation can be defined as ________.

A)transforming the existing knowledge of parents and managing the flow of this transformed knowledge between parents
B)managing the transformation and creation of knowledge within the IJV through its independent activities
C)capturing and keeping knowledge that exists within the local partners confidential
D)managing the flow of transformed and newly created knowledge from the IJV back to the parents

Question 64

________ is the conscious and active management of creating, disseminating, evolving, and applying facts, information, or skills acquired through experience or education, to strategic ends.

A)Business continuity management
B)Employee value proposition
C)Knowledge management
D)Employee retention

Question 65

Strategic alliances are partnerships between two or more firms that decide they can better pursue their mutual goals by combining their resources-financial, managerial, and technological-as well as their existing distinctive competitive advantages.

Question 66

What is international joint venture control? Why is it important?

Question 67

The need for knowledge management in IJVs primarily stems from ________.

A)employee concerns regarding job security and benefits
B)cultural and system differences between partners
C)local government regulations and restrictions
D)proprietary information legalities

Question 68

According to Berdrow and Lane, the process of harvest can be defined as ________.

A)managing the flow of existing knowledge between parents and from the parents to the IJV
B)managing the flow of transformed and newly created knowledge from the IJV back to the parents
C)capturing knowledge of local partners and keeping it confidential
D)managing the transformation and creation of knowledge within the IJV through its independent activities

Question 69

International joint ventures are less likely to break up when ________.

A)issues are settled before the merger
B)new policies are created after the merger
C)one partner has all the decision-making autonomy and the other has none
D)each firm explicitly states its actions and requirements after the merger

Question 70

According to Berdrow and Lane, the process of transfer can be defined as ________.

A)managing the flow of existing knowledge between parents and from the parents to the IJV
B)managing the transformation and creation of knowledge within the IJV through its independent activities
C)managing the flow of transformed and newly created knowledge from the IJV back to the parents
D)capturing and keeping knowledge confidential that exists among the local partners

Question 71

Where ownership is divided among several partners, the parent organizations are more likely to delegate the operational running of the IJV to ________.

A)local IJV management
B)parent company management
C)middle managers at the parent company level
D)management teams from the largest company in the joint venture

Question 72

With regard to less-developed countries, most problems with international joint ventures involve ________.

A)the parent corporation
B)the local partner
C)differences in accounting standards between nations
D)differences in control system information management between nations

Question 73

International joint ventures are like a marriage because ________.

A)the firms cannot be separated into single entities after the merging
B)each firm will have access to all of the others' proprietary technologies and competitively sensitive information
C)the more issues that can be settled before the merger, the less likely it will be to break up
D)each firm will have equal decision-making powers

Question 74

The least important single factor determining International Joint Venture success or failure is the choice of a partner.

Question 75

The term International Joint Venture (IJV)control refers to the processes that management puts in place so as to direct the success of the firm's goals.

Question 76

Which of the following terms refers to the process by which the firm integrates and benefits from the experiences and skills learned by its employees?

A)knowledge management
B)employee value proposition
C)employee retention
D)business process outsourcing

Question 77

All of the following are examples of IJV control mechanisms used by parent firms EXCEPT ________.

A)staffing policies
B)legal contracts
C)regional authorities
D)organizational design

Question 78

The most important single factor determining IJV success or failure is the ________.

A)percentage of equity share held by each partner
B)choice of a partner
C)proprietary technologies held by a partner
D)amount of decision-making control given to each firm

Question 79

In spite of the potential problems with local partners, many firms rush the process of partner selection because ________.

A)they want to reduce the amount spent on establishing subsidiaries abroad
B)they want to take advantage of the local partner's technological innovations
C)they mostly aim at increasing the number of equity shares within a short period of time
D)they are anxious to get into an attractive market

Question 80

Which of the following human resource problems can be simplified by increasing the autonomy of the IJV?

A)workplace deviance
B)employment discrimination
C)staffing friction
D)employee silence