Flashcards in the set

Haven't started (8)

Types of strategic alliances

  • nonequity - cooperation is managed through contracts
  • equity - cooperative contacts and supplemented by equity investments
  • joint venture - independent firm is created in which all cooperating firms invest

Types of nonequity alliances

  • licensing agreement - one firm allows the others to use its brand name
  • supply agreement - one firm agrees to supply the others
  • distribution agreement - one firm agrees to distribute the products of the others

When the cooperating firms in a strategic alliance create a legally independent firm in which they invest and the profits of which they share this is a

joint venture

Increasing returns to scale in the context of network industries means that

The value of a product or service increases as the number of people using the product or service increases

In the context of strategic alliances adverse selection means

potential partners misrepresent the value of the skills and abilities they bring to the alliance

In the context of strategic alliances moral hazard means

partners provide to the alliance skills and abilities of lower quality than they promised

Definition: holdup

partners in a strategic alliance exploit the transaction-specific investments made by the other firms in the alliance

Definition: network industries

Industries in which a single technical standard and increasing returns to scale dominate; competition in these industries is about which of several competing standards will be chosen