International Management Exam 3
Chapter 9 Questions & Answers!!
Strategic Alliance Issues - ANSWER• They may be poorly designed or managed.
• Partnering with a company from a different nation compounds management difficulties.
• Partners may disagree on how to run the business.
• Even profitable alliances can be torn by conflict.
Strategic Alliance Benefits - ANSWER• Gain access to local partner's knowledge of market, meet
government requirements, share risks, share technology, economies of scale, access lower cost raw
materials or labor.
Alliances combining same value-chain activities gain what? - ANSWERefficiencies, merge talents, and
share risks.
What are the three main types of strategic alliances? - ANSWER• Informal international cooperative
alliances
• Formal international cooperative alliances (ICAs)
• International joint ventures (IJVs)
Both formal ICAs and IJV require a negotiated and signed contract.
• Negotiation issues include: - ANSWER• Products or services of the alliance
• Equity contributions (cash or other resources) • Management structure
• "Prenuptial" agreements regarding dissolution
Where to link in value chain depends on what? - ANSWERthe firm's strategic objective.
Criteria for Choosing a Partner - ANSWER• Seek strategic complementarity.
• Pick a partner with complementary skills.
• Seek those with compatible management styles.
• Seek a partner that will provide the "right" level of mutual dependency; partners must rely on each
other.
, • Avoid the "anchor" partner: a partner that holds back the strategic alliance because it cannot or
will not provide its share of the funding.
• Be cautious of the "elephant-and-ant" complex.
• This occurs when two companies are greatly unequal in size.
• Assess operating policy differences with potential partners.
• Assess the difficulty of cross-cultural communication with a likely partner.
Design of the organization depends on the what? - ANSWERtype of alliance chosen.
Informal ICAs often do not require what? - ANSWERformal design
Formal ICAs may require what? - ANSWERa separate organizational unit housed in one company,
with employees from both.
IJVs are separate legal entities, and require what? - ANSWERa separate organization to carry out the
alliance's objectives.
What are two major areas of decision making? - ANSWER• Operational decisions (daily running of
organization)
• Strategic decisions (strategy for long term survival)
IJVs' strategic decision-making takes place where? - ANSWERat the level of the IJV's board of
directors or top management.
In non equity ICAs, strategic decisions remain where? - ANSWERwith parent companies.
Management Structures for ICAs or IJVs - ANSWER• Dominant Parent:
• Shared Management:
• Split Control Management:
• Independent Management:
• Rotating Management:
Chapter 9 Questions & Answers!!
Strategic Alliance Issues - ANSWER• They may be poorly designed or managed.
• Partnering with a company from a different nation compounds management difficulties.
• Partners may disagree on how to run the business.
• Even profitable alliances can be torn by conflict.
Strategic Alliance Benefits - ANSWER• Gain access to local partner's knowledge of market, meet
government requirements, share risks, share technology, economies of scale, access lower cost raw
materials or labor.
Alliances combining same value-chain activities gain what? - ANSWERefficiencies, merge talents, and
share risks.
What are the three main types of strategic alliances? - ANSWER• Informal international cooperative
alliances
• Formal international cooperative alliances (ICAs)
• International joint ventures (IJVs)
Both formal ICAs and IJV require a negotiated and signed contract.
• Negotiation issues include: - ANSWER• Products or services of the alliance
• Equity contributions (cash or other resources) • Management structure
• "Prenuptial" agreements regarding dissolution
Where to link in value chain depends on what? - ANSWERthe firm's strategic objective.
Criteria for Choosing a Partner - ANSWER• Seek strategic complementarity.
• Pick a partner with complementary skills.
• Seek those with compatible management styles.
• Seek a partner that will provide the "right" level of mutual dependency; partners must rely on each
other.
, • Avoid the "anchor" partner: a partner that holds back the strategic alliance because it cannot or
will not provide its share of the funding.
• Be cautious of the "elephant-and-ant" complex.
• This occurs when two companies are greatly unequal in size.
• Assess operating policy differences with potential partners.
• Assess the difficulty of cross-cultural communication with a likely partner.
Design of the organization depends on the what? - ANSWERtype of alliance chosen.
Informal ICAs often do not require what? - ANSWERformal design
Formal ICAs may require what? - ANSWERa separate organizational unit housed in one company,
with employees from both.
IJVs are separate legal entities, and require what? - ANSWERa separate organization to carry out the
alliance's objectives.
What are two major areas of decision making? - ANSWER• Operational decisions (daily running of
organization)
• Strategic decisions (strategy for long term survival)
IJVs' strategic decision-making takes place where? - ANSWERat the level of the IJV's board of
directors or top management.
In non equity ICAs, strategic decisions remain where? - ANSWERwith parent companies.
Management Structures for ICAs or IJVs - ANSWER• Dominant Parent:
• Shared Management:
• Split Control Management:
• Independent Management:
• Rotating Management:
