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Exam 8: Strategic Alliances

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Question 1

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J.L.Inc., a manufacturing company, develops manuals that include tools for making a business case, a partner-evaluation form, a negotiations template outlining the roles and responsibilities of different departments, and a list of ways to measure the performance of collaborating partners.Through this measure, J.L.primarily seeks to achieve _____.

A) organized alliance-management knowledge
B) increased external visibility
C) low transaction costs
D) increased profits

E) A) and C)
F) A) and B)

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Question 2

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Which of the following statements is true about how an arm's-length relationship is used in strategic alliance?

A) Firms cannot buy inputs from multiple sources using the arm's-length relationship.
B) Firms typically use the arm's-length relationship between internal departments.
C) Firms that use the arm's-length relationship acquire the production facilities of other firms.
D) Firms use the arm's-length relationship to purchase inputs at the lowest price.

E) None of the above
F) A) and B)

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Question 3

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Velara Inc., a healthcare company, owns 35% stake in the firm that supplies most of its raw materials.This encourages the supplier to align its incentives with Velara's needs.Which of the following is being exemplified in this case?

An organization enters into an alliance with a firm that is positioned at a different stage along the value chain.The alliance is formed to combine unique resources and lower transaction costs.In this case, which of the following alliances has been adopted by the organization?

What are the ways in which strategic partners can build trust in alliance relationships?

_____ occurs when one partner tries to exploit the alliance-specific investments made by another partner.

_____ are governance clauses in which joint ventures must specify what percentage of equity is owned by each of the partners.

Which of the following statements is true about firms in a joint venture?

Zeal Inc., a software firm, decides to enter the publishing industry.While it has the financial resources required to enter the new market, it lacks the expertise and technical knowledge required to establish itself in the new industry.So, Zeal Inc.enters into strategic alliance with Chrome Corp., a leading e-publisher.Which of the following is likely to be true in this case?

An air conditioner manufacturer, Hues Corp., decides to form a strategic alliance with a firm to source components that make up the highest percentage of total costs.Which of the following suppliers is it most likely to choose as a partner?

Explain the different ways through which a firm can create value in an alliance.Support your answer with suitable examples.

Stylink Inc.and Plateus Inc.formed an alliance to create and own a legally independent company.However, Stylink tried to exploit the alliance-specific investments made by Plateus.Which of the following is being exemplified in this case?

_____ occurs when one partner in an alliance creates false expectations about the resources it brings to the relationship or fails to deliver what it originally promised.

Two firms that produce industrial machinery decide to form a strategic alliance.The objective of this collaboration is to combine their manufacturing facilities to achieve economies of scale during production.Which of the following is the primary value they aim to create through this alliance?

Marcel, the CEO of an automobile company, considers extending his research and development facility by collaborating with a multinational company.He believes that a contractual alliance will be ideal for this collaboration, but other senior members of the management oppose a contractual alliance.Which of the following statements is likely to strengthen Marcel's argument?

John requires 500 shirts of a particular fabric and quality.He partners with Loumang Inc., a fabric manufacturing company, to develop certain customized inputs.Which of the following is being exemplified in this scenario?

_____ are governance clauses in which parties often specify how profits or assets created from alliances are to be split among partners.

An organization wants to form a strategic alliance with another firm.The second firm is at the same level along the value chain.It cannot contribute the same level of financial resources, although it can contribute an extensive level of knowledge.In order to accommodate these factors, they decide to start a legally independent firm.Which of the following alliances will be best suited for the organization?

Which of the following statements is true about strategic alliances?

What are the three types of strategic alliances based on governance arrangement? Also, briefly explain how alliances can also be categorized based on the stages of the value chain.