SPP Strategic Partnerships & Alliances 4 — Questions and Answers
Question 1: Which of the following represents a 'scale alliance' as opposed to a 'link alliance'?
- Two airlines sharing routes to enter new geographies
- Two airlines jointly purchasing aircraft to reduce unit costs (Correct answer)
- A retailer partnering with a logistics firm for last-mile delivery
- A tech firm partnering with a bank to offer fintech services
Correct answer: Two airlines jointly purchasing aircraft to reduce unit costs
Scale alliances combine similar resources from partners to achieve economies of scale, whereas link alliances combine complementary resources.
Question 2: When evaluating whether to terminate an alliance, the primary strategic question is:
- What are the sunk costs already invested in the alliance?
- Do the anticipated future benefits outweigh the future costs of continuation? (Correct answer)
- Has the alliance met all contractual milestones to date?
- Is the partner willing to renegotiate financial terms?
Correct answer: Do the anticipated future benefits outweigh the future costs of continuation?
Alliance continuation decisions should be forward-looking, weighing projected future benefits against future costs while ignoring sunk costs as irrelevant.
Question 3: A 'hub-and-spoke' alliance network structure gives the hub firm which primary advantage?
- Reduced governance complexity across the network
- Structural advantage through information brokerage and coordination control (Correct answer)
- Equal power distribution among all network members
- Lower dependency on any single spoke partner
Correct answer: Structural advantage through information brokerage and coordination control
The hub firm gains brokerage power by controlling information flows and coordination among spoke partners, creating structural competitive advantage.
Question 4: Which condition most strongly justifies forming an alliance rather than pursuing internal development?
- The capability can be built internally within 6 months
- The required capability exists in a potential partner and time-to-market is critical (Correct answer)
- Internal teams have excess capacity to develop the capability
- The firm prefers to maintain full control over the new capability
Correct answer: The required capability exists in a potential partner and time-to-market is critical
When a partner already possesses the needed capability and speed matters, alliances outperform internal development on time and risk dimensions.
Question 5: In cross-sector alliances (e.g., corporate + NGO), the greatest source of tension typically arises from:
- Currency exchange risk between the organizations
- Differing success metrics and organizational value systems (Correct answer)
- Incompatible accounting software systems
- Disagreements about geographic territory
Correct answer: Differing success metrics and organizational value systems
Corporate and NGO partners often measure success differently — profit vs. social impact — creating fundamental tensions that require explicit alignment.
Question 6: Alliance 'scope creep' is best prevented by:
- Limiting communication between partner teams to formal meetings
- Defining clear boundaries and change-control procedures at alliance formation (Correct answer)
- Assigning a single relationship manager from each partner
- Negotiating a shorter initial alliance term
Correct answer: Defining clear boundaries and change-control procedures at alliance formation
Explicit scope boundaries and a formal change-control process prevent informal expansion of alliance activities that dilutes focus and strains resources.
Question 7: A firm with a large alliance portfolio should establish a dedicated Alliance Management Office (AMO) primarily to:
- Negotiate all alliance contracts on behalf of business units
- Codify best practices, track performance, and build organizational alliance capability (Correct answer)
- Reduce the number of active alliances to a manageable level
- Ensure compliance with government regulations on partnerships
Correct answer: Codify best practices, track performance, and build organizational alliance capability
An AMO institutionalizes alliance know-how, standardizes processes, and builds organizational capability that improves outcomes across the entire portfolio.
SPP Strategic Partnerships & Alliances 4
Which of the following represents a 'scale alliance' as opposed to a 'link alliance'?