Deck 13: International Strategic Alliances

Question 1

Nestle and General Mills created Cereal Partners Worldwide to compete effectively in the European market. Cereal Partners Worldwide is owned equally by the two firms, so CPW is an example of a(n) ________.

A) franchising arrangement
B) acquisition strategy
C) joint venture
D) FDI

Answer 1

C

Question 2

What is the primary difference between a joint venture and a non-joint venture strategic alliance?

A) level of political, cultural, and financial risk for each firm
B) formation of a third, legally separate business entity
C) amount of financial investment required
D) geographic location of the alliance

Answer 2

B

Question 3

Why would a firm establish a non-joint venture strategic alliance instead of a joint venture? What are the characteristics of a non-joint venture strategic alliance?

Answer 3

A formal management organization allows a joint venture to be broader in purpose, scope (or range of operations), and duration than other types of strategic alliances. A non-joint venture strategic alliance may be formed merely to allow the partners to overcome a particular hurdle that each faces in the short run. A joint venture will be more helpful if the two firms plan a more extensive and long-term relationship. A typical non-joint venture strategic alliance has a narrow purpose and scope, such as marketing a new smartphone in Canada. A joint venture might be formed if firms wanted to cooperate in the design, production, and sale of a broad line of telecommunications equipment in North America. Non-joint venture strategic alliances are often
formed for a specific purpose that may have a natural ending. Because of their narrow mission and lack of a formal organizational structure, non-joint venture strategic alliances are relatively less stable than joint ventures.

Question 4

Joint ventures tend to have a longer duration than non-joint venture strategic alliances.

Question 5

Non-joint venture strategic alliances are often formed for general purposes and exist in perpetuity.

Question 6

Which of the following advantages might an organization gain by participating in a strategic alliance?

A) the elimination of government regulations
B) achieving economies of scale
C) minimizing import tariffs
D) increasing costs

Question 7

Feldman Insurance wants to enter the Brazilian market but is concerned about hostile government regulations in Brazil. Which of the following would most likely help Feldman overcome this problem?

A) forming a joint venture with a local firm
B) identifying the potential market share
C) hiring only local employees
D) appealing to the WTO

Question 8

A joint venture is a type of strategic alliance.

Question 9

Although unequal ownership is common, many joint ventures are owned equally by the founding firms.

Question 10

Cross-licensing of proprietary technology, sharing of production facilities, cofounding research projects, and the marketing of each other's products using existing distribution networks is known as ________.

A) a joint venture
B) a merger
C) an acquisition
D) a strategic alliance

Question 11

Furman Furnishings wants to expand its international operations in cooperation with another firm. Which of the following methods would be most appropriate for Furman?

A) exporting
B) licensing
C) joint venture
D) foreign direct investment

Question 12

IMAX, the entertainment firm, recently entered into a joint venture with Wanda Cinema Line, a Chinese theater chain. What was IMAX primarily seeking by forming this arrangement?

A) easing entry into the Chinese market
B) acquiring technology from the Chinese firm
C) reducing economies of scale in China
D) obtaining a growing, niche Chinese market

Question 13

How was General Mills able to gain 25 percent of the European cereal market?

A) selling organic products
B) sharing facilities with Kellogg
C) marketing its products online
D) forming a joint venture with Nestle

Question 14

Strategic alliances include cooperation between international firms such as cross-licensing of proprietary technology.

Question 15

A ________ is a special type of strategic alliance in which two or more firms join together to create a new business entity that is legally separate and distinct from its parents.

A) joint venture
B) licensing agreement
C) franchising arrangement
D) greenfield strategy

Question 16

A formal management organization allows a joint venture to be broader in purpose, scope, and duration than other types of strategic alliances.

Question 17

Advanced Audio and EQ Electronics recently established a joint venture for the purpose of cooperating in the design, production, and sale of a line of audio equipment. Executives at the two firms must now decide the best way to manage the joint venture. Which of the following choices would defeat the purpose of the joint venture?

A) hiring an independent management team
B) jointly sharing management responsibilities
C) assigning one firm all management responsibilities
D) continuing completely separate management activities

Question 18

Company X and Company Z have established a business arrangement whereby the two firms will cooperate for their mutual benefit. Which of the following has most likely been established?

A) competitive advantage
B) licensing agreement
C) franchising arrangement
D) strategic alliance

Question 19

What are the various forms that strategic alliances can take? What are the benefits of strategic alliances?

Question 20

What is a strategic alliance? What is the relationship between a joint venture and a strategic alliance?

Question 21

Why have strategic alliances become so important to the international airline industry? What is the scope of such alliances? How do such alliances benefit both the airlines and their customers?

Question 22

PepsiCo and Thomas J. Lipton Co. established a joint venture. PepsiCo supplied an extensive distribution network, and Lipton provided manufacturing expertise and brand recognition in teas. What benefit of strategic alliances were they most likely seeking?

A) ease of market entry
B) shared risk
C) shared knowledge
D) synergy

Question 23

Kodak's strategic alliance with its Japanese competitors reduced its risks, but perhaps negatively affected its profits.

Question 24

Why does a company always seek local partners when it expands into new markets?

Question 25

Why do governments engage in public-private ventures in the oil industry? How do such alliances benefit international businesses?

Question 26

________ refers to the value achieved through the combination of market entry, risk sharing, and learning potential that is greater than what the firm could have done alone.

A) Shared risk
B) Shared knowledge
C) Synergy
D) Scale economy

Question 27

Sharing risk in a strategic alliance is most important for a firm that is entering a(n) ________ market.

A) competitive
B) established
C) high-tech
D) new

Question 28

Firms can avoid hostile government regulations by partnering with local firms.

Question 29

A company strives to enter emerging markets before competitors and works with local partners to minimize risks.

Question 30

Toyota wanted an opportunity to learn about U.S. labor practices and GM wanted to learn about Japanese management practices when they created NUMMI. What benefit were both partners seeking?

Question 31

What benefits may accrue to firms participating in strategic alliances?

Question 32

A marketing alliance is a type of ________.

A) business-level alliance
B) operational alliance
C) corporate-level alliance
D) functional alliance

Question 33

The degree of collaboration in a strategic alliance primarily depends on the ________ of each partner firm.

A) history
B) available resources
C) basic goals
D) leadership

Question 34

Most comprehensive alliances are organized as ________.

A) joint ventures
B) licensing agreements
C) management contracts
D) turnkey projects

Question 35

Toyota and GM created a joint venture called NUMMI because Toyota wanted to learn about how to deal with labor and parts suppliers in the U.S. market while GM wanted to observe Japanese management practices. What benefit of strategic alliances were Toyota and GM primarily seeking?

A) ease of market entry
B) shared risk
C) shared knowledge
D) synergy

Question 36

Winston Foods and O'Toole's Soda have agreed to perform multiple stages of the process together by which products are brought to the market. The two firms have most likely formed a ________.

A) joint venture
B) production alliance
C) process alliance
D) comprehensive alliance

Question 37

Why did Boeing establish a strategic alliance with several Japanese partners to help develop its 777 jet? What was the scope of the alliance?

Question 38

Strategic alliances can be used to limit risk.

Question 39

Boeing collaborated in a strategic alliance with Fuji, Mitsubishi, and Kawasaki in the development and production of the Boeing 777 to minimize Boeing's financial exposure. What benefit of strategic alliances was Boeing seeking?

A) ease of market entry
B) shared risk
C) shared knowledge
D) synergy

Question 40

Countries concerned about the influence of foreign firms on their economies may require MNCs to work with a local partner to enter the market.

Question 41

If Sony and Samsung create an alliance to manufacture 3-D televisions in a shared facility, then the two firms have most likely formed a ________ alliance.

A) production
B) marketing
C) financial
D) research and development

Question 42

Bayer AG formed alliances with smaller biotechnology companies like Millennium Pharmaceuticals and MophoSys to develop miracle drugs. What type of alliance is this an example of?

A) production
B) marketing
C) financial
D) research and development

Question 43

A(n) ________ alliance occurs when partners share expertise or services related to distribution, pricing, and communications.

A) production
B) marketing
C) financial
D) R&D

Question 44

A(n) ________ alliance is a functional alliance of firms that want to reduce financial risks associated with a project.

A) production
B) marketing
C) financial
D) R&D

Question 45

Marketing alliances are relatively common in the international airline industry.

Question 46

A ________ is a confederation of organizations that band together to research and develop new products and processes for world markets.

A) research and development alliance
B) functional alliance
C) research and development consortium
D) joint venture

Question 47

The Japanese company Bandai and the U.S. toymaker Mattel entered into a strategic alliance. Bandai agreed to distribute Mattel products like Barbie dolls in Japan while Mattel agreed to distribute Power Rangers in Latin America. What type of alliance is this an example of?

A) production
B) marketing
C) financial
D) research and development

Question 48

Which of the following best explains the growing number of research and development alliances?

A) laws regarding intellectual property rights
B) expansion among emerging economies
C) decreasing costs of high technology
D) rapid technological changes

Question 49

In a marketing alliance, the established firm assists the newcomer with ________.

A) management and metrics
B) promotion and distribution
C) financing and production
D) research and development

Question 50

An alliance in which two or more firms each manufacture products is an R&D alliance.

Question 51

Simmons Semiconducter and Rapid Electronics have formed a strategic alliance to develop a tool that will facilitate computer chip manufacturing. The two firms will work together only to design the tool. Which term best describes this strategic alliance?

A) financial alliance
B) functional alliance
C) manufacturing alliance
D) comprehensive alliance

Question 52

A production alliance is formed when ________.

A) two or more firms each manufacture products or provide services in a shared or common facility
B) two or more firms share marketing services or expertise for a short-term development
C) firms form an alliance to reduce the financial risks associated with a project
D) partners agree to undertake joint research to develop new products

Question 53

A comprehensive alliance is formed when two or more firms ________.

A) agree to perform multiple stages of the process together to bring goods or services to market
B) manufacture products or provide services in a shared or common facility
C) share marketing services or expertise
D) reduce their financial risks

Question 54

Comprehensive alliances are usually organized as non-joint venture strategic alliances.

Question 55

Functional alliances are legally organized as joint ventures.

Question 56

Chrysler and BMW formed a joint venture to build engines in South America. Which term best describes this type of alliance?

A) franchise agreement
B) financial alliance
C) licensing agreement
D) production alliance

Question 57

Avia Battery and Simon Battery both manufacture batteries in a shared facility. The two firms have most likely established a(n) ________ alliance.

A) production
B) marketing
C) financial
D) R&D

Question 58

A financial alliance is formed primarily for the purpose of ________.

A) performing multiple tasks as quickly as possible
B) sharing a common manufacturing facility
C) generating technological change
D) reducing investment risks

Question 59

How does the Star Alliance primarily benefit customers?

A) coordinating service inquiries
B) supporting airport construction
C) facilitating airline transfers
D) easing government restrictions

Question 60

General Mills and Nestle created a joint venture which fully integrated all facets of conducting business necessary to compete against Kellogg in the European cereal market. This is an example of a(n) ________ alliance.

A) functional
B) comprehensive
C) production
D) international

Question 61

Under a(n) ________, one partner assumes primary responsibility for the operations of the alliance.

A) shared management agreement
B) assigned arrangement
C) delegated arrangement
D) consensual arrangement

Question 62

General Mills and Nestle formed a functional alliance that allowed the joint venture, Cereal Partners Worldwide, to achieve synergy through its size and resources.

Question 63

What is a functional alliance?

Question 64

GM, with a 67-percent stake in a joint venture with Raba, a Hungarian truck, engine, and tractor manufacturer, has assumed management control over the venture's operations. What management form is this an example of?

A) shared management agreement
B) assigned arrangement
C) delegated arrangement
D) consensual arrangement

Question 65

Which of the following is a benefit of the corporate form for joint ventures?

A) development of a centralized hierarchy
B) protection of assets
C) implementation of high-performance work systems
D) continuation of same identities

Question 66

The government of Abu Dhabi formed a joint venture with Exxon Mobil in 2006. What type of joint venture is this an example of?

A) limited partnership
B) partnership
C) corporation
D) public-private venture

Question 67

What types of functional alliances exist?

Question 68

Which of the following factors is the most relevant to a firm in the process of selecting a partner for a strategic alliance?

A) partner's wage scale for employees
B) partner's use of e-commerce
C) nature of potential partner's products
D) learning potential of the consumer

Question 69

In which of the following industries is a public-private venture most likely?

A) oil
B) banking
C) technology
D) pharmaceutical

Question 70

Under a(n) ________, each partner in the joint venture fully and actively participates in managing the alliance.

A) shared management agreement
B) assigned arrangement
C) delegated arrangement
D) consensual arrangement

Question 71

Partnerships should be formed between firms whose products ________.

A) compete directly
B) complement one another
C) compete indirectly
D) are in different product categories

Question 72

Star Alliance, which includes United Airlines, US Air, Air Canada, and Singapore Airlines, is a marketing alliance that encourages consistent customer service policies and high service standards.

Question 73

A public-private venture is a joint venture that involves a partnership between a privately owned firm and a ________.

A) financial institution
B) rival corporation
C) board of directors
D) government

Question 74

Which of the following most likely explains why some firms form limited partnership arrangements instead of joint ventures?

A) stringent local restrictions
B) equal division of financial resources
C) government control of natural resources
D) decreased risk for the managing partner

Question 75

Why was it important for General Mills and Nestle to form a comprehensive joint venture in Europe, rather than a marketing alliance?

Question 76

Which action below is permissible by the dominant partner in an assigned arrangement?

A) set agendas
B) make decisions
C) overrule partner's decisions
D) all of the above

Question 77

What form does a joint venture usually take?

A) limited partnership
B) partnership
C) corporation
D) public-private venture

Question 78

Which type of venture is the most difficult to maintain?

A) assigned arrangement
B) shared management agreement
C) delegated arrangement
D) split venture arrangement

Question 79

Research suggests that strategic alliances are more likely to be successful if the skills and resources of the partners are ________.

A) nearly identical
B) complementary
C) incompatible
D) observable

Question 80

What is a comprehensive alliance?