BUS 401 Test 3 || 100% Correct Answers.
Strategic alliance correct answers A cooperative agreement in which two or more firms combine
their resources and capabilities to create new value; sometimes referred to as a partnership
"Two heads are better than one"
Choosing an alliance correct answers Make
Buy
Ally
Four kinds of inputs and activities might qualify as "strategic" inputs that merit forming an
alliance relationship. correct answers 1. Inputs that can differentiate your product in the minds of
customers
2. Inputs that influence your brand or reputation
3. High-value inputs or activities that make up a high percentage of your total costs
4. Inputs or activities that require significant coordination in order to achieve the desired fit,
quality, or performance
Types of Strategic Alliances correct answers Contractual alliance
equity alliance
joint venture
Contractual alliance (nonequity) correct answers cooperation between firms is managed directly
through contracts, without cross-equity holdings or an independent firm being created
Less complex
Equity alliance correct answers Cooperative contracts are supplemented by equity investments
by one or both partners into the other partner
Sometimes these equity investments are reciprocated
, Joint venture correct answers Cooperating firms combine resources to form an independent firm
in which they invest
Profits from this independent firm compensate partners for their investment
Types of contractual alliances correct answers Licensing agreements
Supply agreements
Distribution agreements
Licensing agreements correct answers one firm allows others to use its brand name to sell
products
Supply agreements correct answers a supplier might agree to develop certain customized inputs
for a customer
Distribution agreements correct answers a distributor or retailer might agree to provide certain
customized services in order to help sell a product
Vertical alliance correct answers An alliance between firms that are positioned at different stages
along the value chain, such as a supplier and a buyer
Horizontal alliance correct answers an alliance between two firms that do not have a supplier-
buyer relationship and are typically positioned at a common stage of the value chain
Ways to Create Value in Alliances correct answers 1. Combine Unique Resources.
2. Pool Similar Resources
3. Create New Alliance-specific Resources
4. Lower Transaction Costs (Build Trust)
Risks of alliance correct answers Hold-Up
Strategic alliance correct answers A cooperative agreement in which two or more firms combine
their resources and capabilities to create new value; sometimes referred to as a partnership
"Two heads are better than one"
Choosing an alliance correct answers Make
Buy
Ally
Four kinds of inputs and activities might qualify as "strategic" inputs that merit forming an
alliance relationship. correct answers 1. Inputs that can differentiate your product in the minds of
customers
2. Inputs that influence your brand or reputation
3. High-value inputs or activities that make up a high percentage of your total costs
4. Inputs or activities that require significant coordination in order to achieve the desired fit,
quality, or performance
Types of Strategic Alliances correct answers Contractual alliance
equity alliance
joint venture
Contractual alliance (nonequity) correct answers cooperation between firms is managed directly
through contracts, without cross-equity holdings or an independent firm being created
Less complex
Equity alliance correct answers Cooperative contracts are supplemented by equity investments
by one or both partners into the other partner
Sometimes these equity investments are reciprocated
, Joint venture correct answers Cooperating firms combine resources to form an independent firm
in which they invest
Profits from this independent firm compensate partners for their investment
Types of contractual alliances correct answers Licensing agreements
Supply agreements
Distribution agreements
Licensing agreements correct answers one firm allows others to use its brand name to sell
products
Supply agreements correct answers a supplier might agree to develop certain customized inputs
for a customer
Distribution agreements correct answers a distributor or retailer might agree to provide certain
customized services in order to help sell a product
Vertical alliance correct answers An alliance between firms that are positioned at different stages
along the value chain, such as a supplier and a buyer
Horizontal alliance correct answers an alliance between two firms that do not have a supplier-
buyer relationship and are typically positioned at a common stage of the value chain
Ways to Create Value in Alliances correct answers 1. Combine Unique Resources.
2. Pool Similar Resources
3. Create New Alliance-specific Resources
4. Lower Transaction Costs (Build Trust)
Risks of alliance correct answers Hold-Up
