Question

A drawback involved in using cross-border strategic alliances to enter new foreign markets is that:__________

A) the foreign firm will need to make larger investments when compared to entering the new market on its own.
B) some of the firm's proprietary know-how may be appropriated by the foreign partner.
C) all potential business risks in the new market will have to be faced alone by the foreign firm.
D) the shareholder value of the foreign partner will decline drastically.

Answer 1

The best answer is "B"

some of the firm's proprietary know-how may be appropriated by the foreign partner.

Step-by-step explanation:

A strategic alliance is a type of cooperative strategy where few resources or capabilities advantage are combined by companies.

A cross border alliance is a strategic alliance where some resources and capabilities of the organizations having their headquarters in different countries are shared. This type of alliance helps companies to gain relevance even in outside markets but a major disadvantage of this alliance is that foreign partners will be appropriated some of the company's proprietary know-how. The risk can only be reduced by entering into a cross-licensing agreement