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Exam 9: Cooperative Strategy

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Question 71

Multiple Choice

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Which of the following statements is FALSE?

A) Franchising is most appropriate in fragmented industries.
B) Franchising provides corporate growth with less risk than do mergers and acquisitions.
C) Successful franchising allows transfer of knowledge and skills from the franchisor to the franchisee.
D) Franchising agreements require more trust between firms than do other cooperative strategies.

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

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Question 72

Multiple Choice

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A ____ cooperative strategy helps the firm diversify in terms of products offered, markets served, or both.

A) corporate-level
B) business-level
C) national-level
D) industry-level

E) A) and D)
F) A) and C)

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Question 73

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The fact that the prices consumers pay for branded breakfast cereals are above the prices that would exist if there were true competition suggests that the cereal manufacturers are engaging in

International strategic alliances have played an important role in helping manufacturers of jet aircraft engines respond to increasing fuel prices and tougher environmental regulations.

A nonequity strategic alliance exists when

McDonald's, Hilton International, and Subway all heavily rely on the ____ strategy.

International strategic alliances are less risky than domestic strategic alliances because of diversification across countries.

BPM Corp. is a manufacturer of radar systems for regional-sized jet aircraft. The company has announced plans to enter into a joint venture with J3 Composites, a producer of advanced composite materials. The announced venture will produce a new, combined product consisting of the radar unit and protective composite cover. Which of the following ownership arrangements would be most typical for a joint venture?

The primary responsibility of the franchisor, such as McDonald's or Hilton International is to

In a cross-border alliance, the local partner is often a useful source of information about

Identify the three types of corporate-level cooperative strategies.

Case Scenario 1: Norning International Norning International (NI) states that both its past successes and future growth strategies are based on an evolving network of wholly owned businesses and joint ventures around its core competency in glass making. Through their alliances and owned divisions they compete in four global business sectors: Specialty Glass and Materials (including materials for HDTV and LCD displays), Consumer Housewares (including microwavable dishware), Laboratory Sciences Products and Services (test tubes, testing equipment, and drug trials testing), and Communications (fiber optics and related technologies). Per the company's annual report, "binding all four sectors together is the glue of a commitment to leading edge glass making technologies, shared resources, and dedication to total quality." Each sector is composed of divisions, subsidiaries and alliances. However, the central role played by alliances is demonstrated by the fact that the combined revenue of its 30-some alliances is more than double that of NI on its own. Most of the alliances provide NI with access to particular geographic markets, industries, or channels, although an increasing number of alliances involve both market access and technological development. -(Refer to Case Scenario 1) NI appears to be managing a large number of alliances. What criteria should it use to exit particular alliances?

Firms in ____ markets cooperate to pool resources and gain market power.

Some cooperative strategies fail when it is discovered that a firm has misrepresented the competencies it can bring to the partnership.

Case Scenario 1: Norning International Norning International (NI) states that both its past successes and future growth strategies are based on an evolving network of wholly owned businesses and joint ventures around its core competency in glass making. Through their alliances and owned divisions they compete in four global business sectors: Specialty Glass and Materials (including materials for HDTV and LCD displays), Consumer Housewares (including microwavable dishware), Laboratory Sciences Products and Services (test tubes, testing equipment, and drug trials testing), and Communications (fiber optics and related technologies). Per the company's annual report, "binding all four sectors together is the glue of a commitment to leading edge glass making technologies, shared resources, and dedication to total quality." Each sector is composed of divisions, subsidiaries and alliances. However, the central role played by alliances is demonstrated by the fact that the combined revenue of its 30-some alliances is more than double that of NI on its own. Most of the alliances provide NI with access to particular geographic markets, industries, or channels, although an increasing number of alliances involve both market access and technological development. -(Refer to Case Scenario 1) What risks arise from a strategy based on such a "network of alliances"?

Case Scenario 3: Bunnywac. Bunnywac is a global producer and seller of batteries for consumer electronics products (radios, flashlights, toys, etc.), and competes primarily with its larger rivals by providing battery products equal in performance at a lower price. The worldwide battery industry suffers from issues of overcapacity and commoditization, brand segmentation and proliferation, the growing strength of global retailers, and the low-cost threat of new entrants from Asia. Thus, the ability to provide dependable batteries at a very low cost is essential to survival in this industry. Bunnywac has grown quickly into one of the leading players in the battery industry primary through horizontal acquisitions financed by a recent successful IPO, and is now counted among the top four companies in North and Latin America. Its presence in Europe and Latin America is negligible. While its market presence and brand is generally strong and market share is growing, Bunnywac has entered into an alliance to obtain the core technologies of its batteries. Bunnywac does not actually own the technology that makes its batteries work. This approach has provided Bunnywac a cost advantage since it has not had to invest in basic R&D and has very little R&D infrastructure. This technology is licensed from Mats (which has 200 engineers dedicated to moving the technology forward), one of Japan's largest technology-based holding companies (like Sharp or Canon). Mats also sells batteries under the Pandemonium brand and commands over 50% of the market share of Asian countries. Mats' market share in other global markets is negligible and its efforts at growing its branded battery share in the North America, Latin America, and Europe has been severely frustrated in recent years. While Mats is very large compared to Bunnywac, the battery technology and battery business are relatively tiny relative to Mats' other technology-based businesses. Bunnywac's decade-long licensing agreement with Mats for the essential battery technology expires in one year; there are no obvious substitute providers of this technology. -(Refer to Case Scenario 3) What type of business-level cooperative strategy is primarily exemplified by Bunnywac's technology licensing arrangement with Mats?a. vertical business-level complementary strategic alliance b. horizontal business-level complementary strategic alliance c. competition reducing business-level strategic alliance d. competition response business-level strategic alliance

Acquisitions are the most common cooperative strategy used in standard-cycle markets.

Dynamic alliance networks work best in industries

The global airline industry is one in which

The Renault Nissan approach to managing its collaboration involves less reliance on contracts and more reliance on trust, respect, and transparency (i.e., the opportunity-maximization approach to managing cooperative strategies).