Chapter 07 - Strategic Relationships

Chapter 07
Strategic Relationships

True / False Questions

1. (p. 207) The opportunities for a firm to enhance value offerings to customers create a need to
establish cooperative strategic relationships with other organizations.
TRUE

Difficulty: Moderate

. (p. 209) !nvironmental diversit" ma#es it eas" to lin# bu"ers and the goods and services that
meet bu"ers$ needs and wants in the mar#etplace.
FALSE

Difficulty: Moderate

%. (p. 211) &orizontal relationships have often been established between competing firms to
access global mar#ets not served b" the cooperating firms.
TRUE

Difficulty: Moderate

'. (p. 214) Strategic suppliers have no impact the focal firm$s abilit" to deliver value to its
customers.
FALSE

Difficulty: Moderate

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Chapter 07 - Strategic Relationships
(. (p. 216) The )third shift) refers to an overseas contractor ma#ing unauthorized products based
on the customer$s designs* which are then sold as counterfeits* threatening the position of the
genuine brand.
TRUE

Difficulty: Moderate

+. (p. 216) ,alue chain relationships do not provide access to consumer and organizational end-
users.
FALSE

Difficulty: Moderate

7. (p. 217) Some believe that the future of competition lies in co-creation initiatives with
customers - onl" b" letting individual corporate customers and consumers shape products and
service can a real fit with customer needs be achieved.
TRUE

Difficulty: Moderate

.. (p. 220) The success of an alliance never depends on effectivel" matching the capabilities of
the participating organizations and on achieving the full commitment of each partner to the
alliance.
FALSE

Difficulty: Moderate

/. (p. 224) Comprehensive planning is not necessar" when combining the s#ills and resources of
two independent organizations to achieve one or more strategic ob0ectives.
FALSE

Difficulty: Easy

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Chapter 07 - Strategic Relationships
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Chapter 07 - Strategic Relationships
10. (p. 225) Collaboration barriers between 1aimler and Chr"sler were associated with culture
differences in individualism 2high for 3S managers and much lower for 4ermans5 and
uncertaint" avoidance 2high for 4erman e6ecutives and much lower for 7mericans5.
TRUE

Difficulty: Easy


Multiple Choice Questions

11. (p. 207) 7ccording to the te6t* strategic relationships among organizations relate to three #e"
elements of overall competitive strength. 3nli#e tactical relationships* the effectiveness of
these strategic agreements among companies can affect their long-term performance and even
survival of the firms. The three #e" elements are 88888.
7. 9ar#eting* technolog" and organization
:. 9ar#eting* costs and organization
C. Technolog"* resources and mar#eting
D. Technolog"* costs and mar#eting

Difficulty: Calle!"i!"

1. (p. 207) 7ccording to the te6t* there are four factors that create the need to establish strategic
relationships with outside firms. These four drivers of inter organizational relationships are
88888.
A. ;pportunities to enhance value* environmental comple6it"* competitive strateg"* s#ills and
resource gaps
:. ;pportunities to enhance value* environmental comple6it"* tactical #now-how* s#ills gaps
C. Compan" management* environmental comple6it"* competitive strateg"* s#ills and
resource gaps
1. 7dvertising benefits* environmental comple6it"* tactical #now-how* s#ills and resource
gaps

Difficulty: Calle!"i!"

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Chapter 07 - Strategic Relationships
1%. (p. 209) 1iversit" refers to differences between the elements in the environment* including
people* organizations and social forces affecting resources. The increase in diversit" creates
greater 88888.
7. ;pportunities to enhance value b" combining the competencies of two or more
organizations
. !nvironmental comple6it"
C. Competitive strateg"
1. S#ills and resource gaps

Difficulty: Moderate

1'. (p. 209) The 88888 competes primaril" through its relationships with other organizations
where the organization itself owns little more than its brand* networ# and <nternet site ---
engineering and maintenance services are outsourced* sales and distribution channels are
online.
7. ,ertical organization
:. &orizontal organization
C. &ollow organization
1. =le6ible organization

Difficulty: Moderate

1(. (p. 210) 7ccess to technolog"* specialization advantages and the opportunit" to enhance
product value are important motivations for establishing relationships among organizations to
fill their 88888.
7. ;pportunities to enhance value b" combining the competencies of two or more
organizations
:. !nvironmental comple6it"
C. Competitive strateg"
D. S#ills and resource gaps

Difficulty: Calle!"i!"

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Chapter 07 - Strategic Relationships
1+. (p. 2#1) 9an" companies must see# partners in order to fill their 888888 to spread the ris#s
of financial loss with another firm.
7. ;pportunities to enhance value b" combining the competencies of two or more
organizations
:. !nvironmental comple6it"
C. Competitive strateg"
D. S#ills and resource gaps

Difficulty: Calle!"i!"

17. (p. 211) Commercial air travel provides an interesting e6ample also of the creation of new
corporate 88888 through strategic alliances* where the alliance becomes the identit" such as
the one world alliance* separate from the names of the two alliance partners* :ritish 7irwa"s
and 7merican 7irlines.
7. Resource
. :rands
C. Strateg"
1. ;rganization

Difficulty: Calle!"i!"

1.. (p. 21#) 88888 is the result of two organizations wor#ing together toward a common
ob0ective such as sharing technologies* mar#et access or compressing new product
development time.
7. Transactional bu"ing
. >artnering
C. Competing
1. Transactional suppl"ing

Difficulty: Moderate

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Chapter 07 - Strategic Relationships
1/. (p. 215) 9oving products through various stages in the value-added process often involves
lin#ing suppliers* manufacturers* distributors and consumer and business end-users of goods
and services into 88888 relationships among the firms.
A. ,ertical
:. &orizontal
C. 1iagonal
1. =ront-loading

Difficulty: Moderate

0. (p. 215) 1ell <nc and !9C have a successful strategic relationship. !9C manufactures
storage products and 1ell is a re-seller. The alliance pairs a leading computer s"stems
compan" 21ell5 with the leader in networ#ed information storage s"stems 2!9C5. 1ell is able
to address a broader range of customer needs for storage products* while !9C increases its
presence in the rapidl" growing ?indows-based storage mar#ets. The compan" has a 888888
relationship.
A. ,ertical
:. &orizontal
C. 1iagonal
1. =ront-loading

Difficulty: Moderate

1. (p. 216) 7 particular concern is 88888 when an overseas contractor ma#es unauthorized
products based on the customer$s designs* which are then sold as counterfeits* threatening the
position of the genuine brand.
7. ;utsourcing
. The third shift
C. >artnering
1. Transactional suppl"ing

Difficulty: Moderate

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Chapter 07 - Strategic Relationships
. (p. 217) Some believe that the future of competition lies in co-creation initiatives with
customers - onl" b" letting individual corporate customers and consumers shape products and
service can real fit with customer needs be achieved. =or e6ample* Summerset &ouseboats
<nc. in @entuc#" custom builds boats* engaging each individual customer in a dialogue
through design and construction. Summerset &ouseboats are engaged in 88888.
7. ;utsourcing relationships
:. <ntermediate customer relationships
C. !nd-user customer relationships
1. Transactional customer relationships

Difficulty: Easy

%. (p. 21$) >rocter and 4amble$s 00 person team to manage its relationship with ?al-9art* its
biggest retailer customer illustrates 88888.
7. ;utsourcing
. >articipation
C. Ao"alt" programs
1. StrategicB#e" account management

Difficulty: Moderate

'. (p. 219) Collaborative relationships between companies that are competitors or in related
industries are 88888.
7. ;utsources
. 7lliances
C. Coint ventures
1. <nternal partnerships

Difficulty: Moderate

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Chapter 07 - Strategic Relationships
(. (p. 221) 7greements between two or more firms to establish a separate entit" are 88888.
7. ;utsources
:. 7lliances
C. Coint ventures
1. <nternal partnerships

Difficulty: Moderate

+. (p. 221) 88888 ma" occur between business units* functional departments and individual
emplo"ees to encourage and facilitate cross-functional cooperation rather than specialization.
7. ;utsources
:. 7lliances
C. Coint ventures
D. <nternal partnerships

Difficulty: Moderate

7. (p. 2#0) Corporate alliances must demonstrate that their 0oint activities do not lead to price
fi6ing or other forms of 88888.
A. 9ar#et manipulation
:. :o"cotts
C. :enefits
1. Comfort letters

Difficulty: Moderate

.. (p. 2#0) <ndustr" alliances for an" purpose must avoid 88888* the codes of conduct must be
voluntar" and companies must address issues of breach of the code b" suppliers.
7. 9ar#et manipulation
. :o"cotts
C. :enefits
1. Comfort letters

Difficulty: Moderate

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Chapter 07 - Strategic Relationships
/. (p. 2#0) 7n alliance should demonstrate the low ris# of anti-competitive harm and pro-
competitive 888888 and efficiencies to be gained.
7. 9ar#et manipulation
:. :o"cotts
C. :enefits
1. Comfort letters

Difficulty: Moderate

%0. (p. 2#0) 7lliances can see# official 88888 from bodies li#e the 3S Custice 1epartment stating
the authorit" does not intent to challenge the activities of the alliance.
7. 9ar#et manipulation
:. :o"cotts
C. :enefits
D. Comfort letters

Difficulty: Moderate


Essa! Questions

%1. (p. 215) <dentif" three problems or ris#s companies ma" encounter in collaborative
relationships with suppliers.
The use of collaborative relationships with suppliers has e6panded in man" industries.
&igh levels of dependence on a strategic supplier are an important concern. <f the supplier
decides to stop suppl"ing critical components the customers must invest in establishing their
own components$ production in-house or searching for other supplies or ris# being unable to
compete.
;ther problems and ris#s from the collaborative supplier relationships includeD
Sharing industrial secrets with competitors
Aabor ob0ections
Aoss of control

Difficulty: Calle!"i!"

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Chapter 07 - Strategic Relationships
%. (p. 216) 1iscuss a benefit and a ris# from outsourcing parts of the value chain such as
manufacturing.
7 considerable amount of outsourcing of manufacturing to low cost countries occurred.
;utsourcing parts of the value chain process to partners is a form of leveraged growth - it
allows a compan" to e6pand sales without capital investment.
There are strategic ris#s in outsourcing #e" activities li#e manufacturing to third parties.
?hile there are attractions in reducing manufacturing costs b" outsourcing and focusing on
RE1* product design and mar#eting* contract manufacturers ma" become competitors or
share information with rivals. <t ma" be difficult to Fuic#l" replace contract manufacturers
under these conditions. 7 particular concern is the )third shift)* when an overseas contractor
ma#es unauthorized products based on the customer$s designs* which are then sold as
counterfeits* threatening the position of the genuine brand.

Difficulty: Calle!"i!"

%%. (p. 217) ?hat is the driving force underl"ing strategic relationshipsG 4ive an e6ample.
The driving force underl"ing strategic relationships is that a compan" ma" enhance its abilit"
to satisf" customers and cope with a rapidl" changing business environment through
partnering.
=or e6ample* :oeing involves airlines and even passengers in design choices for its airframesH
9arriott partners with corporate customers to add value to corporate travelH and &arle"-
1avidson has a &arle" ;wners 4roup with more than 100*000 members.

Difficulty: Calle!"i!"

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Chapter 07 - Strategic Relationships
%'. (p. 21$) ?hat is the rationale for Strategic 7ccount 9anagement 2S795 and what are the
ris#s of S79G
The rationale for S79 is that a supplier$s most important customers reFuire dedicated
resources and special value-adding activities 2such as* 0oint product development* business
planning* consulting services5 in the value offering. S79 is seen as new business model that
goes be"ond conventional bu"er-seller relationships to establish partnership and 0oint decision
ma#ing between the customer and supplier.
Ionetheless* there are substantial ris#s in high levels of dependence on strategic customers.
<nvestments should be weighed against the ris#s of customer dislo"alt" and strategic change*
as well as the perception of strategic customer privileges b" the rest of the customer base. The
attraction of S79 ma" rest on a degree of mar#et and relationship stabilit" which ma" not
e6ist.

Difficulty: Calle!"i!"

%(. (p. 221) ?hat is a 0oint venture and in what wa"s ma" 0oint ventures be usedG
Coint ventures are agreements between two or more firms to establish a separate entit". These
relationships ma" be used in several wa"sD to develop a new mar#et opportunit"H to access an
international mar#etH to share costs and financial ris#sH to gain a share of local manufacturing
profitsH or* to acFuire #nowledge or technolog" for the core business.

Difficulty: Easy

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