Quiz 13: International Strategic Alliances

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

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

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

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

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

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

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

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

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

A joint venture is a type of strategic alliance.

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

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

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

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

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

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?

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

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

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

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

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

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

________ 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

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

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

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

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

Strategic alliances can be used to limit risk.

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

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

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

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?

What benefits may accrue to firms participating in strategic alliances?

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

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?

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

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

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

Most comprehensive alliances are organized as ________. A) joint ventures B) licensing agreements C) management contracts D) turnkey projects

A marketing alliance is a type of ________. A) business-level alliance B) operational alliance C) corporate-level alliance D) functional alliance

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

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

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

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

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

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

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

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

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

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

How does the Star Alliance primarily benefit customers? A) coordinating service inquiries B) supporting airport construction C) facilitating airline transfers D) easing government restrictions

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

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

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

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

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

Functional alliances are legally organized as joint ventures.

Marketing alliances are relatively common in the international airline industry.

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

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

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

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.

What is a comprehensive alliance?

What is a functional alliance?

What types of functional alliances exist?

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

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

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

Partnerships should be formed between firms whose products ________. A) compete directly B) complement one another C) compete indirectly D) are in different product categories

What form does a joint venture usually take? A) limited partnership B) partnership C) corporation D) public-private venture

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

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

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

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

In which of the following industries is a public-private venture most likely? A) oil B) banking C) technology D) pharmaceutical

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

Which type of venture is the most difficult to maintain? A) assigned arrangement B) shared management agreement C) delegated arrangement D) split venture arrangement

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

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

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

Under the agreement between Coca-Cola and Danone each company supplies three members of the joint venture's board of directors. What management form is this an example of? A) shared management agreement B) assigned arrangement C) delegated arrangement D) consensual arrangement

Under which management form are managers less accountable to managers in the partner firms? A) shared management agreement B) assigned arrangement C) delegated arrangement D) consensual arrangement

Boeing controls the overall operation of its strategic alliance with Fuji, Mitsubishi, and Kawasaki. This is an example of a(n) ________. A) shared management agreement B) assigned arrangement C) delegated arrangement D) consensual arrangement

What is the most likely problem associated with an assigned arrangement? A) product incompatibility B) management complexity C) earnings distributions D) conflict potential

Which of the following is responsible for making day-to-day decisions and strategy implementation in a delegated arrangement? A) both alliance partners B) joint venture executives C) one of the alliance partners D) shareholders and stockholders

Which type of arrangement is limited to joint ventures? A) assigned arrangement B) delegated arrangement C) joint-partnership arrangement D) shared-management arrangement

Having a partner with products that are complementary to, but not directly competitive with its own, increases a firm's chance of a successful alliance.

Research suggests that strategic alliances are more likely to be successful if the partners compete, but in different geographic markets.

Mutual trust is an important component of compatibility.

In a limited partnership, both firms assume full financial responsibility for the venture, regardless of the amount each has invested.

Firms are more likely to pursue public-private ventures when a country does not allow wholly-owned foreign operations.

Public-private ventures are typical in the oil industry.

Public-private ventures are most important in market-driven economies.

Shared management agreements are the most prone to conflict among partners.

Under a delegated arrangement, partner firms are highly involved in the day-to-day operations of the venture.

In a delegated arrangement, joint venture management has little to no autonomy.

What factors should be considered prior to selecting a strategic alliance partner? What factors threaten the success of a strategic alliance?

In a brief essay, discuss the problems associated with forming a strategic alliance with a competitor.

What is a public-private venture?

What are the three types of management agreements used for strategic alliances?

How does a shared management agreement work?

How does an assigned arrangement work?

How does a delegated arrangement work?

Explain the three possible methods for managing a joint venture.

How does the party secretary of the Chinese Communist Party affect the management of joint ventures between MNCs and Chinese firms?

Which of the following is considered one of the primary pitfalls of strategic alliances? A) mutual trust B) more autonomy C) partner compatibility D) changing circumstances

Of the potential pitfalls of strategic alliances, which one is the primary cause of failure? A) partner incompatibility B) loss of autonomy C) access to information D) conflicts over distributing earnings

What has been the primary problem associated with the joint venture between VW and Suzuki? A) conflicts over earnings distributions B) partner incompatibility C) competing goals D) unclear objectives

AT&T and Olivetti announced a strategic alliance. They could not reach an agreement on a marketing strategy for the alliance. What type of problem is this an example of? A) incompatibility B) information access C) distribution of earnings D) loss of autonomy

When a firm involved in a strategic alliance wants to maintain confidential information about its operations, which pitfall of strategic alliances is likely to occur? A) incompatibility of management styles B) limited access to information C) unequal distribution of earnings D) loss of autonomy

A strategic alliance between Ford and Mazda experienced problems when Mazda refused to allow Ford officials to visit the Mazda research laboratory. What was the source of this problem? A) incompatible cultures B) limited information access C) unfair distribution of earnings D) loss of autonomy for both partners

Rubbermaid ended a joint venture in Europe when the partner firm refused to reinvest its profits into the development of new products. What was the source of this problem? A) incompatibility among managers B) inadequate access to information C) conflicts over earnings distribution D) loss of autonomy within the organization

Firms involved in joint ventures experience the pitfalls of ________ when they realize that their decision-making powers are limited. A) incompatibility B) information access C) distribution of earnings D) loss of autonomy

________ affect(s) the viability of strategic alliances when the conditions that first motivated the arrangement no longer exist. A) Incompatibility B) Information access C) Distribution of earnings D) Changing circumstances

When technological advances render an agreement obsolete, it is an example of ________. A) incompatibility B) information access C) distribution of earnings D) changing circumstances

Which pitfall of alliances exists when the economic circumstances that motivated the alliance no longer exist? A) changing circumstances B) loss of autonomy C) distribution of earnings D) information access

Conflict over the distribution of earnings is the primary cause for failures among strategic alliances.

Incompatibility among partners can be anticipated through discussion and due diligence prior to forming a strategic alliance.

Conflict over distributing earnings can be avoided by negotiating such issues as part of the original contract agreement.

What factors are likely to trigger incompatibility among partners in a strategic alliance? How can incompatibility issues be avoided?

What types of financial conflicts are likely to occur in a strategic alliance? How can many of these disagreements be avoided?

What are the five primary pitfalls of strategic alliances? Describe each and explain which one you think is most difficult to avoid.