Exam 8: Strategic Alliances

Borpon Inc. and Biocolog Corp. are well-established biotechnology companies. They enter into a strategic alliance in which they create and own a legally independent company. The new company is created from resources and assets contributed by the parent firms. Revenues, expenses, and profits are equally shared by both firms. Which of the following strategic alliances is adopted by Borpon and Biocolog?

Which of the following statements is true about strategic alliances?

With respect to categories of issues, ___ issues deal with how decisions will be made, how profits will be split, and how disputes will be resolved.

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

A(n)___ is a cooperative arrangement in which two or more firms combine their resources and capabilities to create new value.

Pearltech Inc., an information technology company, decides to establish a business alliance in order to differentiate its products. The manager of research and development, Sanah, is willing to form an alliance only with individuals she has known for a long time or a company within Pearltech's business network. Nate, the operations head, suggests extending the prospects by looking outside their usual network. Which of the following statements strengthens Sanah's argument?

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?

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?

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

An alliance is likely to rely most on relationships between individuals when it is based on _________.

Companies have three choices-make, buy, or ally-when it comes to conducting any particular activity that needs to be done to offer a product or service to a customer. Explain the three choices and the process involved in each.

An organization forms an alliance contract. It specifies in detail the duties and obligations of each of the partners, how the profits are to be split by the partners, and the process by which disputes will be resolved. Which of the following clauses is likely to cover the duties and obligations of the partners, including warranties and minimum output levels required to satisfy the contract?

Teal Inc. forms a strategic alliance with White Corp. In their contract, they specify how governance issues, operating issues, and termination issues would be resolved. Which of the following is likely to be covered under the clause that deals with governance issues?

A graphic design firm and an advertising firm form a contractual alliance. In the first clause, they specify how decisions will be made, how profits will be split, and how disputes will be resolved. In the second clause, they specify how intellectual property will be shared and protected. Which category of issues does the second clause address?

Victor Corp., a high-end mobile manufacturer that targets business people, decides to increase its customer base. It forms a strategic alliance with Gray Inc. to produce new instruments designed to attract students. Gray helps design products that change how Victor is perceived by young customers. Which of the following is the primary objective of this strategic alliance?

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

Two organizations that are positioned at different stages along the value chain form an alliance. The contract includes the conditions under which the contract will be closed and the consequences of closure for each partner. Which of the following clauses specifies the above conditions?

What are the different types of nonequity alliances?

In an equity alliance, _________.

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?