SPP Strategic Partnerships & Alliances 2

Question 1

Which governance structure is most appropriate when two firms want to share resources without forming a separate legal entity?

Accepted Answer

Contractual alliance

Answer

A contractual alliance allows resource sharing through agreements without creating a new legal entity, unlike a joint venture.

Question 2

In alliance portfolio management, 'alliance density' refers to:

Accepted Answer

The number of alliances a firm manages simultaneously

Answer

Alliance density measures how many alliances a firm maintains at one time, which affects management complexity and resource allocation.

Question 3

A pharmaceutical company licenses its drug compound to a manufacturer in exchange for royalties. This arrangement is best classified as:

Accepted Answer

Licensing alliance

Answer

A licensing alliance grants a partner the right to use intellectual property in exchange for royalties without sharing equity.

Question 4

Which factor most directly increases the risk of opportunistic behavior by an alliance partner?

Accepted Answer

High asset specificity

Answer

High asset specificity creates dependency and lock-in, increasing vulnerability to opportunistic behavior by the partner holding leverage.

Question 5

The 'co-specialization' trap in alliances occurs when:

Accepted Answer

Partners invest in assets that only have value within the alliance

Answer

Co-specialization traps arise when alliance-specific investments lose value outside the partnership, creating dangerous exit barriers.

(SPP) Strategic Planning Professional Practice Test