Deck 6: Engaging in Cross-Border Collaboration: Managing across Corporate Boundaries

Question 1

Pre-alliance analysis is sufficient to ensure the success of a collaborative agreement.

Answer 1

False
Certainly the quality of the pre-alliance analysis is important. However, many other factors also influence success. Solid pre-analysis activity is a necessary but not sufficient condition for success.

Question 2

Given that alliances are typically formed between two or more corporate entities that are also operating pre-existing businesses, alliance managers need to be flexible. These managers must accept that the alliance's performance objectives will necessarily be moderately ambiguous. But, these same managers can be assured that the formal, written agreement between the alliance partners can be frequently referenced as a type of "rule book" that can be used to resolve any disputes in the alliance.

Answer 2

False
When assessing the strategic logic of any potential alliance, the future partners must determine whether congruent measures of performance exist. Congruity is not only an inter-partner issue. It is also an intra-partner concern - it is essential for internal managers to speak and act from a common platform. Furthermore, while it is important for an alliance to be grounded upon solid legal agreements, most alliance managers would argue that it is the relationship and trust between the alliance partners that is of key importance in governing the alliance, rather than the legal agreements that were used to constitute the alliance.

Question 3

A vast majority of successful cross-border collaborations are founded and maintained by firms that acquire the other partner's knowledge without sharing their own knowledge.

Answer 3

False
Successful cross-border collaborations are based on mutual collaboration between the partners. As such, both partners must be willing to share their own knowledge and to use it in the best interests of the partnership.

Question 4

While the investment and growth benefits associated with partnering generally yield substantial benefit to smaller firms that are pursuing rapid growth with limited resources, these benefits diminish with size such that the very largest MNEs generally find that the benefits of "going it alone" exceed the costs associated with partnering.

Question 5

Cross-border collaborations have become increasingly important. While the size of an MNE's corporate allies is extremely important to the MNE's performance, the quality of its corporate allies is only marginally important to the MNE's performance.

Question 6

Equality between partners is essential, regardless of the governance structure.

Question 7

Entering collaborative relationships with other firms is one way for firms to meet the needs of an increasingly complex environment.

Question 8

Once an alliance is formed, the goals, tasks and management processes of the alliance must be constantly monitored and adapted to changing conditions.

Question 9

The risks associated with collaboration are limited to the inability of both firms to agree on the terms of the partnership.

Question 10

Which of the following is not a benefit of a strategic alliance?

A) Firms can transfer their technologies to new markets and increase their revenues from licensing fees.
B) Firms can transfer employees to other organizations to reduce operating costs and acquire new knowledge through the employees they transfer.
C) Firms can gain access to new markets for existing products and learn important new skills from the partner.
D) Firms can share costs and develop new technologies together without being fully integrated.

Question 11

Strategic alliances with customers are a form of collaboration that enable MNEs to increase their bargaining power and reduce their costs.

Question 12

Collaboration reduces the time and risk associated with the development of new products.

Question 13

A car manufacturer and a multinational computer technology corporation intend to combine their strengths to develop intelligent sound systems for cars. Assuming that both companies will have a moderate to high level of interaction, what would be the most suitable form of alliance to adopt?

A) The firms should develop an R&D consortium, combining teams from both companies.
B) The firms should create an equity joint venture, combining assets from both companies.
C) The firms should create a licensing agreement to exploit the new application.
D) The firms should develop production facilities to be shared between the partners.

Question 14

When a multinational adds a new alliance to its alliance portfolio, the multinational's managers should remain focused upon the standalone value that the new alliance can generate, rather than being distracted by an assessment of whether the new alliance creates value from a portfolio perspective.

Question 15

The objectives of an alliance are more difficult to achieve when there is a greater number of joint activities, equity cross-holdings and cross-functional coordination.

Question 16

Equity joint ventures are the preferred mode of arranging an alliance and should be employed whenever multiple companies are intending to collaborate.

Question 17

Formulating an agreement with respect to the termination of the venture at the outset of the collaboration demonstrates that the partners are not fully dedicated to the success of the alliance.

Question 18

Alliances are the only feasible way to develop a position in multiple countries and regions.

Question 19

Strategic alliances are only forged for long durations. Firms should not enter collaborative agreements with a short-term horizon.

Question 20

Interface managers should be well acquainted with the company's internal organizational processes and should have access to key managers in different parts of the organization.

Question 21

An effective interface manager is someone who

A) is very competent in the dominant functional area of the venture.
B) has a good understanding of the strategy of the firm and can advise the other partner of this strategy.
C) can influence the goals and objectives of the alliance for the benefit of his/her organization.
D) is the best user of the information / knowledge and can diffuse it to the right people within the organization.

Question 22

Robert is an operating manager for a large organization. Robert's organization will be engaging in a joint venture. He has been assigned the responsibility of overseeing his firm's participation in the joint venture. As such, Robert's supervisor has asked him to participate in the negotiation process. Even if Robert is not familiar with the negotiations, his presence at this stage is essential to

A) ensure that the definition and understanding of the alliance's goals are clear and consistent
B) give the joint venture partner an opportunity to accept or reject Robert's leadership of his firm's participation in the partnership.
C) communicate Robert's extensive familiarity with his own firm to the joint venture partner.
D) make him feel important and test his capacity to operate in a stressful situation.

Question 23

Parent companies assume an important role on the joint venture or alliance's board. Which of the following is not among the pivotal responsibilities of the board's members?

A) Reviewing performance.
B) Ensuring that employment practices do not impinge on cultural norms.
C) Overseeing capital allocation decisions.
D) Monitoring risk management practices and policies.

Question 24

When the alliance's tasks are characterized by extensive functional interdependencies

A) it is preferable to have a dominant partner that can assume the functional tasks.
B) it is preferable to merge both companies.
C) the development of clear operating rules is the only way to maintain boundaries between the functions.
D) the creation of a separate entity is the most effective way to manage the linkages between the various functions.

Question 25

Allan is the CEO of a large corporation that wants to partner with a competitor to develop a new technology. Explain the potential risks that Allan's company may encounter by collaborating with a rival.

Question 26

Managing knowledge flow is important for a firm that wants to get the most from its partnership with another company. What can a firm do to ensure it gets the most from its collaboration while preventing the outflow of information they do not wish to share with their alliance partner?

Question 27

The negotiation of an integrative equality agreement implies that

A) each committee in the alliance is structured with clear, co-shared leadership, but each company takes responsibility for different tasks.
B) each committee in the alliance is structured with clear, single-handed leadership, but tasks are developed internally within the joint venture.
C) each committee in the alliance is structured with clear, single-handed leadership, but each company takes responsibility for different tasks.
D) each committee in the alliance is structured with clear, co-shared leadership, but tasks are developed internally within the joint venture.

Question 28

A firm is entering a strategic alliance and the CEO is worried about managing the firm's boundaries. What would you recommend to the firm and why?

Question 29

Which of the following can inhibit a firm's ability to learn from the alliance?

A) The interface manager is not the target user of the knowledge.
B) The firm does not have an information system to diffuse the knowledge acquired.
C) The firm does not share its knowledge with the other partner.
D) The alliance knowledge is not codified.

Question 30

Sunny is the CEO of a large corporation that wants to enter a partnership with another organization. What should Sunny consider when choosing his partner?

Question 31

In an alliance, the success of an integrative equality agreement requires

A) the delegation of authority to individuals chosen by both partners.
B) the dispersal of decision-making on select issues to at least one of the partners.
C) the development of a code of conduct for conflict resolution.
D) the selection of individuals that report to both alliance partners.

Question 32

Oil & Gas Limited and Small Tech Inc. announced an agreement to develop a new technology for the extraction of gas. Oil & Gas Limited will contribute financial resources and its expertise in gas extraction, while Small Tech will provide its expertise in R&D. To ensure the success of the collaboration, prior to the alliance, both companies should

A) approach prospective clients to get their perspective on the agreement and ensure that there is a market for the new technology they want to develop.
B) verify the prospective partner's capabilities and assess its strengths and weaknesses.
C) adopt a code of conduct that will clarify the responsibilities of each partner and the ethical behavior that will be expected of each partner.
D) agree on the expected revenues and profit sharing.

Question 33

Most stable alliances often involve

A) two partners that are both motivated to acquire each other's knowledge.
B) two partners that are each satisfied with access to, rather than the acquisition of, each other's knowledge.
C) two partners providing resources that are significantly different.
D) one partner that is strong enough to dominate the other partner.

Question 34

Flexibility is often the key in a strategic alliance. Please comment.