Chapter 8 Multiple Choice Questions | Global Strategic Management by Philippe Lasserre

1. In a ‘global leverage alliance’ partners are looking at (choose both that apply):

Enhancing their sales by pooling their marketing resources Improving their competitiveness by seeking or establishing complementary capabilities Reducing costs by sharing facilities Sharing tasks according to their own specializations

2. Alliance AB is formed by Company A (60% share and Company B (40% share). The following data are available for year 1: Capital invested = 1000; Sales = 2000; Profits= 20%; Distributed profit = 50%; Management fees for A = 5% of sales; Sales of raw materials by B = 25% of sales, with a profit of 20%.
Which option gives the respective values captured by A and B?

A value = 400; B value =160 A value = 200; B value =80 A value = 220; B value =180 A value = 820; B value =580

3. In the following configurations of two partners’ strategic agendas, which ones represent a ‘problematic fit’ (choose both that apply)?

Partner A looks for the creation of a long-term business; partner B is looking at getting technological know-how from A Partner A looks for economies of scale through the sharing of resources; partner B is looking at getting technological know-how from A Partner A looks for economies of scale through the sharing of resources; partner B is looking at sharing resources Partner A wants to ‘wait and see’; partner B looks for a long-term alliance

4. If alliance partners have an ‘extractive agenda’ they are looking at:

Extracting the most value for themselves Maximizing the efficiency of the alliance Acquiring capabilities from the other partner Sharing resources to lower costs

5. How could cultural differences interfere with financial policy in an alliance?

Selection of a bank Distribution of profits or re-investment decisions Affect the way the partners communicate budgets and results Calculation of cash flow

6. What is a ‘plug-in’ integration in an alliance?

Integration is managed by a complex management system Tasks are managed by an ‘integration committee’ Tasks are defined precisely, managed separately and outputs are assembled with limited interactions One partner is the leader in managing operations, the other partner is ‘silent’

7. What is the ‘death valley’ phase in an alliance?

A difficult period of negotiation A period of financial losses A change in management A period of crisis due to adjusting to cultural and organizational differences between partners

8. Global firms enter a local joint venture because (choose all that apply):

They are forced to by local governments They don’t know the local context They don’t have enough resources to do business there by themselves To share risks

9. A local partner enters a joint venture in order to diversify. What does it contribute (choose both that apply)?

Good knowledge of the business Good knowledge of the government Good knowledge of management of operations Good reputation for attracting local personnel

10. Joint ventures often fail because (choose both that apply):

Staff have been badly prepared There are cultural differences Negotiations have been carried out hastily Local governments intervene too much in the management of the joint venture

Chapter 8: Global Strategic Alliances