Strategic Marketing 10th Edition

Cravens Test Bank

Visit to download the full and correct content document: https://testbankdeal.com/dow
nload/strategic-marketing-10th-edition-cravens-test-bank/
Chapter 07 - Strategic Relationships

Chapter 07
Strategic Relationships

True/False Questions

1. Environmental diversity increases the capacity of an organization to respond quickly to

customer needs and new product development.
Answer: False
Difficulty: Easy
Page: 189

2. Environmental diversity makes it difficult to link buyers and the goods and services that
meet buyers' needs and wants in the marketplace.
Answer: True
Difficulty: Moderate
Page: 189

3. Competence in specialized technology can give smaller firms extensive bargaining power
with larger firms.
Answer: True
Difficulty: Moderate
Page: 190

4. Marketing intermediaries such as wholesalers and retailers are horizontal channels of

distribution.
Answer: False
Difficulty: Easy
Page: 191

5. Horizontal relationships have often been established between competing firms to access
global markets not served by the cooperating firms.
Answer: True
Difficulty: Moderate
Page: 191

6. Opportunity costs should be considered when assessing and comparing costs in an alliance.
Answer: True
Difficulty: Easy
Page: 195

7. Value chain relationships provide access to consumer and organizational end-users.

Answer: True
Difficulty: Moderate
Page: 199

7-1
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Strategic Relationships

8. Strategic account management primarily deals with customers who do not directly invest
time or resources in their relationship with the firm.
Answer: False
Difficulty: Easy
Page: 201

9. Alliances are agreements between two or more firms to establish a separate entity.
Answer: False
Difficulty: Easy
Page: 203

10. A disengagement plan should consider detailed description of the rights of each partner to
alliance assets and products on disengagement.
Answer: True
Difficulty: Easy
Page: 209
Page: 210

Multiple Choice Questions

11. _____ consists of “building a complex product or process from smaller subsystems that
can be designed independently yet function together as a whole.”
A. Sifting
B. Modularity
C. Scaffolding
D. Encoding
Answer: B
Difficulty: Easy
Page: 189

12. _____ reduces the capacity of an organization to respond quickly to customer needs and
new product development.
A. Market-sensing
B. Organizational learning
C. Environmental diversity
D. Vertical integration
Answer: C
Difficulty: Easy
Page: 189

13. An organization that primarily competes through its relationships with other organizations
to deliver value to end-users is referred to as a _____.
A. memory organization
B. knowledge organization
C. horizontal organization
D. hollow organization

7-2
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Strategic Relationships

Answer: D
Difficulty: Easy
Page: 190

14. Which of the following relationships is an example of an intermediate customer

relationship of a firm?
A. Relationship to the distributors of the firm’s products
B. Relationship to the consumers of the firm’s products
C. Relationship to the suppliers of the firm
D. Relationship to the employees of the firm
Answer: A
Difficulty: Easy
Page: 196

15. Which of the following is considered as an end-use customer of a firm?

A. Competitor
B. Supplier
C. Distributor
D. Consumer
Answer: D
Difficulty: Easy
Page: 196

16. Which of the following is an example of lateral relationships?

A. Relationship with suppliers
B. Relationship with customers
C. Relationship with competitors
D. Relationship with functional departments
Answer: C
Difficulty: Easy
Page: 196

17. Supplier relationships are similar to customer relationships in that they are both
considered as _____ to the firm.
A. horizontal relationships
B. vertical relationships
C. internal relationships
D. lateral relationships
Answer: B
Difficulty: Moderate
Page: 196

18. Moving products through various stages in the value-added process often involves linking
suppliers, manufacturers, distributors, and consumer and business end-users of goods and
services into _____ channels.
A. lateral

7-3
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Strategic Relationships

B. vertical
C. horizontal
D. parallel
Answer: B
Difficulty: Easy
Page: 197

19. Which of the following is true of strategic alliances?

A. It is a type of acquisition by one firm of another.
B. It does not involve joint purchasing of stocks of another company.
C. It is not a merger between two independent firms.
D. It does not involve the sharing of existing distribution channels between the firms.
Answer: C
Difficulty: Moderate
Page: 202

20. A _____ between two organizations is an agreement to cooperate to achieve one or more
common important objectives without forming a separate entity.
A. joint venture
B. merger
C. divestiture
D. strategic alliance
Answer: D
Difficulty: Easy
Page: 202

21. Collaborative relationships between companies that are competitors or in related

industries are referred to as _____.
A. outsources
B. alliances
C. joint ventures
D. internal partnerships
Answer: B
Difficulty: Easy
Page: 202

22. _____ are agreements between two or more firms to establish a separate entity.
A. Franchises
B. Consortiums
C. Strategic alliances
D. Joint ventures
Answer: D
Difficulty: Easy
Page: 203

23. Which of the following relationships would be considered an internal partnership?

7-4
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Strategic Relationships

A. Relationships between functional units and employees of a firm

B. Relationships between a firm and a competitor
C. Relationships between a firm and its supplier
D. Relationships between a firm and its customers
Answer: A
Difficulty: Easy
Page: 204

24. Strategic leadership of a partnership can be achieved by:

A. developing an interdependent leadership structure.
B. assigning the responsibility to one of the partners.
C. efficient outsourcing.
D. initiating independent value chain functions.
Answer: B
Difficulty: Easy
Page: 207

25. Companies may miss opportunities to reduce costs and generate additional income by:
A. assessing the venture’s strategic fit for continuing the alliance.
B. generating extensive restructuring options.
C. assigning accountability for making changes.
D. failing to launch a process.
Answer: D
Difficulty: Easy
Page: 209

26. Which of the following should be considered for a successful alliance disengagement
plan?
A. Identifying and agreeing on the events that will trigger exit from the alliance
B. Design of the engagement process
C. Restructuring and cost-reduction
D. Developing new markets and building market position
Answer: A
Difficulty: Easy
Page: 210

27. Corporate alliances must demonstrate that their joint activities do not lead to price fixing
or other forms of _____.
A. boycotts
B. market limitation
C. benefits
D. comfort letters
Answer: B
Difficulty: Easy
Page: 214

7-5
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Strategic Relationships

28. Industry alliances for any purpose must avoid _____, treat codes of conduct as voluntary
while issues of breach of the code by suppliers must be addressed by individual companies.
A. market manipulation
B. benefits
C. boycotts
D. comfort letters
Answer: C
Difficulty: Easy
Page: 214

29. An alliance should demonstrate the low risk of anticompetitive harm and pro-competitive
_____ and efficiencies to be gained.
A. market manipulation
B. boycotts
C. benefits
D. comfort letters
Answer: C
Difficulty: Easy
Page: 214

30. Alliances can seek official _____ from bodies like the US Justice Department stating the
authority does not intent to challenge the activities of the alliance.
A. patents
B. copyrights
C. laurels
D. comfort letters
Answer: D
Difficulty: Easy
Page: 214

Essay Questions

31. Mention the factors that create a need to establish cooperative strategic relationships
between organizations.
Answer: The various drivers of relationships fall into four broad categories: (1) opportunities
to enhance value by combining the competencies of two or more organizations, (2)
environmental complexity, (3) competitive strategy, and (4) skills and resource gaps.
Difficulty: Easy
Page: 187

32. Describe the different forms of organizational relationships.

Answer: The types of organizational relationships that may be formed by a firm are supplier
and customer partnerships (vertical relationships), lateral (horizontal relationships), and
internal relationships. Relationships are both interorganizational (between organizations) and
intraorganizational (internal relationships). Supplier relationships include those companies
providing goods and services, some of which may be regarded as strategic suppliers or

7-6
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Strategic Relationships

outsourcers, because they impact on the focal firm’s ability to deliver value to its customers.
Customer partnerships include both intermediate customers (e.g., distributors) and end-use
customers (consumers of the product). Lateral relationships may be with competitors,
unrelated companies at the same stage of the value chain, or governmental organizations.
Internal partnerships include relationships with strategic business units, functional
departments, and employees within the business.
Difficulty: Moderate
Page: 196

33. What are the advantages and disadvantages of outsourcing firm activities?
Answer: The outsourcing of activities, such as transportation, repair and maintenance
services, information systems, and human resources functions has become widely used.
Outsourcing parts of the value chain process to partners is a form of leveraged growth—it
allows a company to expand sales without capital investment in all stages of the value chain.
The suppliers and buyers of a vast array of raw materials, parts and components, equipment,
and services (e.g., consulting, maintenance) are linked together in vertical channels of
distribution. In recent years a considerable amount of outsourcing activity has located
manufacturing and systems like call centers in emerging markets with very low costs.
While there are attractions in reducing manufacturing costs by outsourcing and focusing on
R&D, product design, and marketing, contract manufacturers may become competitors or
share information with rivals. It may be difficult to quickly replace contract manufacturers
under these conditions.
Difficulty: Moderate
Page: 198
Page: 199

34. What is the rationale for Strategic Account Management (SAM) and what are the risks of
SAM?
Answer: The rationale for SAM is that a supplier's most important customers require
dedicated resources and special value-adding activities (such as, joint product development,
business planning, and consulting services) in the value offering. SAM is seen as a new
business model that goes beyond conventional buyer-seller relationships to establish
partnership and joint decision making between the customer and supplier.
Nonetheless, there are substantial risks in high levels of dependence on strategic customers.
Investments should be weighed against the risks of customer disloyalty and strategic change,
as well as the perception of strategic customer privileges by the rest of the customer base. The
attraction of SAM may rest on a degree of market and relationship stability which may not
exist.
Difficulty: Moderate
Page: 201

35. What features should a successful disengagement plan for a strategic alliance contain?

Answer: A successful disengagement plan, agreed between partners at the establishment of

the alliance, should consider:
• Identifying and agreeing on the events that will trigger exit from the alliance

7-7
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Strategic Relationships

• Detailed description of the rights of each partner to alliance assets and products on
disengagement
• Design of the disengagement process
• A communication plan for continuous flow of information to alliance partners, customers,
suppliers, and other involved parties during the alliance dissolution.
Difficulty: Moderate
Page: 210

7-8
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.