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Question
Multipoint competition exists when two or more diversified firms simultaneously compete in multiple markets, and multipoint competition can serve to facilitate a particular type of tacit collusion called mutual forbearance.
Answer
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________ measures of competitive advantage compare a firm's level of return to its cost of capital instead of to the average level of return in the industry.
A) Economic
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A competitive advantage that lasts a very short period of time is known as a ________ competitive advantage.
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The difference between the perceived benefits gained by a customer who purchases a firm's products or services and the full economic costs of these products or services is known as
A) accounting value.
B) comparative value.
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________ occurs when a firm adopts organizational policies and practices that are consistent with its strategy.
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The cost of equity is equal to the interest a firm must pay its debt holders in order to induce those debt holders to lend money to the firm.
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Identify the conditions under which a strategic alliance can be rare and discuss the role that complementary resources can play in the rarity of strategic alliances.
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________ collusion exists when firms coordinate their production and pricing decisions not by directly communicating with each other but by exchanging signals with other firms about their intent to cooperate.
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When one firm makes more transaction-specific investments in a strategic alliance than partner firms make, that firm may be subject to a form of cheating called ________ that occurs when a firm that has not made significant transaction-specific investments demands returns from an alliance that are higher than what the partners agreed to when they created the alliance.
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A) high.
B) low.
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A firm's ability to learn is known as its
A) competitive position.
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Strategic alliances can create economic value through helping firms improve their current operations by
A) facilitating the development of technology standards.
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Sometimes the value of cheating in a joint venture is sufficiently large that a firm cheats even though doing so hurts the joint venture and forecloses future opportunities.
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In general, contracts are sufficient to resolve all the problems associated with cheating in an alliance.
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The primary purpose of organizing a strategic alliance is to enable partners in the alliance to gain all the benefits associated with cooperation while minimizing the probability that cooperating firms will cheat on their cooperative agreements.
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In general, firms will prefer to go it alone rather than enter into a strategic alliance when the level of transaction-specific investment required to complete an exchange is low.
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Research on international joint ventures suggests that the existence of transaction-specific investments in their relationships makes these agreements relatively immune to holdup problems.
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In an alliance a holdup occurs when a firm that has not made significant transaction-specific investments demands returns from an alliance that are higher than what the partners agreed to when they created the alliance.