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Cards In This Set
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What are the three forms of misappropriating value?
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Adverse selection, Moral hazard, Holdup
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Define the adverse selection form of misappropriating value.
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Misrepresenting the value of inputs
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Define the moral hazard form of misappropriating value.
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Providing inputs of lesser value than promised
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Define the holdup form of misappropriating value.
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Exploiting the transaction-specific investment of partners
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What is an alliance?
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Any cooperative effort between 2 or more independent organizations to develop, manufacture, or sell products or services; Means of VI/Diver
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Why would firms want to form an alliance?
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To access another org.'s complementary resources/capa. and/or to leverage their own existing rsrces/capas;should yield gain on trade
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What are the three basic types of alliances?
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Nonequity alliance (k's), Equity alliance (cross-equity holdings), Joint venture (joint equity holdings)
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Describe the three basic types of alliances.
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NA: licensing, supply/dist agrmts; EA: partners own stakes in each other; JV: independent firm is created
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What are the three main ways strategic alliances create value?
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Improve current operations, Shaping the competitive environment, Facilitating entry & exit
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What are the two main substitutes for strategic alliances?
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Internal development and Mergers & acquisitions
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How can internal development substitute strategic alliances?
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If: No partner available, Transaction-specific investment is high, Low uncertainty about investment
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How can mergers & acquisitions substitute strategic alliances?
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If: No anti-trust issues, Low uncertainty about investment, Firms can be easily integrated, Value of combined firms not tied to independence
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Identify the sources of improving current operations as a means of creating economic value.
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Exploiting economies of scale, Learning from competitors, Managing risk & sharing costs
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Identify the sources of shaping the competitive environment as a means of creating economic value.
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Facilitating the development of technology standards, Facilitating tacit collusion
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Identify the sources of facilitating entry and exit as a means of creating economic value.
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Low-cost entry/exit into/from new industries & segments, Managing uncertainty, Low-cost entry into new markets
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