Strategic Management Chapter 9

Chapter 9—Cooperative Strategy


TRUE/FALSE

1. A cooperative strategy is a means by which firms work together to achieve a shared objective.

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2. According to the chapter Opening Case, IBM has specific performance-related objectives (such as
developing leading-edge chip technology) that it wants to accomplish as it engages in an array of
cooperative arrangements.

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3. According to the chapter Opening Case, IBM used internal means to facilitate its change from solely
producing hardware to adding services and software.

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4. Although growing in popularity with small and medium-sized firms because they can gain economies
of scale, large companies tend to avoid strategic alliances.

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5. If a large Asian cosmetics firm was to engage in a 50-50 partnership with a large American chemical
company to form a new company focused on creating advanced skin care products, this would be
considered a joint venture.

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6. Strategic alliances are cooperative strategies between firms that combine their resources and
capabilities to create a competitive advantage.

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, 7. Nonequity strategic alliances exist when two or more firms join together to create an independent firm.

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8. Nonequity strategic alliances are formed when one partner owns a much larger (or inequitable) share
of the joint venture than do the remaining partner(s).

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9. Cooperation in slow-cycle markets is extremely rare because these industries are declining.

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10. Firms in slow-cycle markets can use alliances to enter restricted markets or to establish franchises in
new markets.

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11. Acquisitions are the most common cooperative strategy used in standard-cycle markets.

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12. Firms in standard-cycle markets seek to gain economies of scale through cooperative alliances.

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13. In a vertical complementary alliance, firms share some of their resources and capabilities from the
same stage of the value chain to create a competitive advantage.

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