Question

1. If a firm pursues a strategic alliance in order to reduce industry overcapacity, that firm most likely operates in what type of market?

Group of answer choices

Slow-cycle

Moderate-cycle

Standard-cycle

Fast-cycle

2. Of the various business-level strategic alliances, __________ alliances have the most probability of creating sustainable competitive advantage, and __________ have the lowest.

Group of answer choices

horizontal complementary; vertical complementary

vertical complementary; competition-reducing

3. In a franchising strategy, the franchisee __________ to the franchisor.

Group of answer choices

licenses its trademark

pays an initial franchise fee and ongoing royalties

licenses its method of doing business

pays an ongoing franchise fee

competition-reducing; horizontal complementary

uncertainty-reducing; competition-reducing

4. What might be a reason that the number of cross-border alliances are continuing to increase?

Group of answer choices

They are relatively easy to manage.

They can occur in virtually all industries.

They create value in the home market.

They are riskier than mergers, but not as risky as acquisitions.

Answer 1

1. Correct option is: Standard-cycle

In standard cycle markets, quality is continuously improved in order to sustain competitive advantage & in such markets, the aim is to serve large number of customers in order to gain larger market share. Strategic alliances in standard cycle market take place in order to gain market power or reduce industry overcapacity, overcome trade barriers, gain access to complementary resources, learn new business techniques, etc.

2. Correct option is: vertical complementary; competition-reducing

Vertical alliances helps to create sustainable competitive advantage. In vertical complementary strategic alliances, firms aim to create competitive advantage by sharing their resources & capabilities from different stages of the value chain. While in competition reducing alliances firms directly negotiate with each other & jointly agree on the quantity to be produced & prices to be charged.

3. Correct option is: pays an initial franchise fee and ongoing royalties

By paying initial franchise fee and ongoing royalties to the franchisor, a franchisee gains ongoing support from the franchisor, gains the use of trademark & is able to use the franchisor's way of doing business & sell its product & services.

4. Correct option is: They can occur in virtually all industries.

Cross border alliances allows firms in different countries to share some of their resources and capabilities in order to gain competitive advantage. Firms are engaging in cross border alliances & avoiding mergers & acquisitions. Such alliances are formed with the aim to benefit all the partners. Cross border alliances allows firms to share the costs of research & development, to gain access to markets that favor domestic firms, etc.