Question

Aro Shoes Inc. and Mova Shoes Inc., two competing shoe brands, entered into a strategic alliance to study and acquire each other competencies. Aro Shoes entered the strategic alliance to acquire the production system pioneered by Mova Shoes. Similarly, Mova Shoes agreed to the strategic alliance to study the designing process of Aro Shoes. However, Aro Shoes was more successful and faster than Mova Shoes in accomplishing its alliance goal. What does this scenario best illustrate?

A. Network effects
B. Economies of scope
C. Learning races
D. Time compression diseconomies

Answer 1

Option (C), The scenario where Aro Shoes Inc. acquires Mova Shoes Inc.'s production system faster than Mova Shoes learns Aro Shoes' design process best illustrates Learning Races in a strategic alliance.

Step-by-step explanation:

The scenario where Aro Shoes Inc. and Mova Shoes Inc. entered into a strategic alliance and Aro Shoes was quicker in achieving its goal to acquire the production system of Mova Shoes illustrates the concept of Learning Races. This outcome emphasizes the competition within alliances to quickly learn and assimilate the partner's knowledge and capabilities.

The term Learning Races refers to the competitive aspect of strategic alliances where each company aims to out-learn the other to gain a competitive edge.