Question 1

Which statement is true regarding joint ventures?

Accepted Answer

A)   You might also need to consider the market image, reputation and the customer association of your partner
B)   In selecting partners, companies must pay attention to the cultural compatibility
C)   Without market knowledge, joint venture partnership with a local partner can be a viable option to establish a presence
D)   All of the above D

Question 2

What are the motives for joint venture?

Accepted Answer

Joint ventures are strategic alliances where two or more parties, usually businesses, form a partnership to share markets, intellectual property, assets, knowledge, and profits. Joint ventures are undertaken by companies for several reasons, and the motives behind forming a joint venture can vary depending on the strategic objectives of the participating entities. Here are some of the primary motives for entering into a joint venture:

1. **Access to New Markets and Distribution Networks**: Companies may enter into joint ventures to gain entry into a market where they currently do not have a presence. By partnering with a local company, they can leverage the partner's existing distribution networks and customer relationships.

2. **Sharing of Resources**: Joint ventures allow companies to pool their resources, such as technology, capital, and personnel, which can lead to cost savings and improved efficiency. This is particularly beneficial when the required investment is substantial and risky.

3. **Risk Sharing**: Entering a new market or developing a new product can be risky. By forming a joint venture, companies can share the risks and liabilities associated with the venture.

4. **Combining Expertise and Know-How**: Companies often enter joint ventures to combine their expertise in specific areas. This can include technical know-how, management expertise, or industry-specific knowledge that is complementary.

5. **Speed to Market**: A joint venture can accelerate the process of entering a market or developing new products by combining the capabilities and resources of the partnering companies.

6. **Regulatory Compliance**: In some countries, local laws may restrict foreign companies from operating independently. A joint venture with a local partner can provide a way to comply with these regulations while still benefiting from the local market.

7. **Strategic Realignment**: Companies may use joint ventures to strategically realign their business focus. This could involve diversifying into new areas or shedding non-core activities to another entity.

8. **Innovation and New Product Development**: Joint ventures can foster innovation by bringing together diverse perspectives and expertise. This can lead to the development of new products and services that might not have been possible by a single company alone.

9. **Cost and Investment Efficiency**: By sharing costs and investments, companies can undertake projects that would be too expensive or risky to tackle on their own. This can lead to economies of scale and more efficient use of capital.

10. **Overcoming Legal and Trade Barriers**: In some cases, joint ventures are formed to overcome legal and trade barriers that a foreign company might face when trying to enter a market independently.

11. **Building Relationships and Networks**: A joint venture can be a way to build strategic relationships and networks that can be beneficial for future business opportunities.

12. **Exit Strategy**: For some businesses, a joint venture is a step towards a gradual exit strategy from a particular market or industry. It allows them to transfer knowledge and operations in a controlled manner.

In summary, the motives for forming a joint venture are diverse and can include strategic growth, cost reduction, risk mitigation, and leveraging synergies between the partner companies. The specific reasons will depend on the goals and circumstances of the businesses involved.

Question 3

What type of factor influences the increase of franchising in foreign markets due to increased educational levels of the local population, technological advancement that facilitate travel overseas, the ability of the younger generation to try new, foreign products, rapid development of rural areas and concentration of population in urban and industrial areas.

Accepted Answer

A)   Increased travel and tourism for business and pleasure
B)   Technological advancement
C)   Demographic trends
D)   Expanded market C

Question 4

What does management contract refer to?

Accepted Answer

The answer of What does management contract refer to?...

Question 5

A joint venture can be defined as the participation of two or more companies in an enterprise in which each party contributes assets, and shares ownership as well as risk in the entity.

Accepted Answer

A) True 
 B)False

Question 6

Strategic alliances are often defined as agreements between only two partners to share both tangible and intangible resources, risks, and profits.

Accepted Answer

A) True 
 B)False

Question 7

Strategic alliance agreements can also be classified as:

Accepted Answer

A)   Formal or informal
B)   Joint ventures, collaborations, management contracts, franchising
C)   Equity based or non-equity based
D)   All of the above

Question 8

Under a management contract the owner(s) must commit to not interfering in the management of the business, since the provider of the management services has the expertise and responsibility to perform this task.

Accepted Answer

A) True 
 B)False

Question 9

International strategy is appropriate in those markets where there is a need for local responsiveness but it is not urgent.

Accepted Answer

A) True 
 B)False

Question 10

What are the pros and cons of franchising?

Accepted Answer

The answer of What are the pros and cons of...

Question 11

Franchising emerged as a powerful way of facilitating the growth of H&T organizations.

Accepted Answer

A) True 
 B)False

Question 12

The saturated, dynamic, and competitive global environment of today motivates organisations to join forces and benefit from financial and non-financial pooling of resources.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following steps should occur before selecting from potential candidates for a strategic alliance?

Accepted Answer

A)   Formulating firm's strategy;
B)   Eliminating and selecting promising business sectors
C)   Developing partnership benchmark;
D)   All of the above

Question 14

What are the advantages of management contracts for hotel operators?

Accepted Answer

The answer of What are the advantages of management contracts...

Question 15

An international strategic alliance partner should be selected based on their expertise in operations; if the desired expertise exists a poor cultural fit is not terribly important.

Accepted Answer

A) True 
 B)False

Question 16

What are the motives for management contracts?

Accepted Answer

The answer of What are the motives for management contracts?...

Question 17

A wholly owned subsidiary involves the ownership and management an enterprise by setting up a business either from scratch or by developing resources and competences by taking over another organization.

Accepted Answer

A) True 
 B)False

Question 18

Under a management contract who is responsible for hiring, training, and retaining staff and management?

Accepted Answer

A)   The owner(s) 
B)   The operator
C)   Both the owner and operator
D)   An outside payroll company

Question 19

What defines a H&T organization as a good candidate for expansion by management contract?

Accepted Answer

A)   A strong financial position
B)   An established reputation for being an excellent manager
C)   Decreased profit margins
D)   None of the above

Question 20

Because strategic alliances foster the learning of new skills and core competencies, there are no significant drawbacks to this growth strategy.

Accepted Answer

A) True 
 B)False

Exam 9: Network-Level Strategies

Which statement is true regarding joint ventures?

What are the motives for joint venture?

What does management contract refer to?

A joint venture can be defined as the participation of two or more companies in an enterprise in which each party contributes assets, and shares ownership as well as risk in the entity.

Strategic alliances are often defined as agreements between only two partners to share both tangible and intangible resources, risks, and profits.

Strategic alliance agreements can also be classified as:

Under a management contract the owner(s) must commit to not interfering in the management of the business, since the provider of the management services has the expertise and responsibility to perform this task.

International strategy is appropriate in those markets where there is a need for local responsiveness but it is not urgent.

What are the pros and cons of franchising?

Franchising emerged as a powerful way of facilitating the growth of H&T organizations.

The saturated, dynamic, and competitive global environment of today motivates organisations to join forces and benefit from financial and non-financial pooling of resources.

Which of the following steps should occur before selecting from potential candidates for a strategic alliance?

What are the advantages of management contracts for hotel operators?

An international strategic alliance partner should be selected based on their expertise in operations; if the desired expertise exists a poor cultural fit is not terribly important.

What are the motives for management contracts?

A wholly owned subsidiary involves the ownership and management an enterprise by setting up a business either from scratch or by developing resources and competences by taking over another organization.

Under a management contract who is responsible for hiring, training, and retaining staff and management?

What defines a H&T organization as a good candidate for expansion by management contract?

Because strategic alliances foster the learning of new skills and core competencies, there are no significant drawbacks to this growth strategy.