Chapters 4-9 Strategic Management and Strategic Competitiveness

1.

MULTIPLE CHOICE
1. The _______dimension of relationships with customers is particularly important for social networking sites such
as Facebook and MySpace.
a. reach
b. richness
c. affiliation
d. social
2. An interior decorator has moved his business from Los Angeles to St. Paul, Minnesota, because his spouses
company transferred her to St. Paul. The decorator is distressed because the customers in his target market
have, in his words, banal and bourgeois taste. What is the decorators problem?
a. The decorator does not understand that customer needs are neither right nor wrong, good
nor bad.
b. The decorator has no core competencies that will transfer to his new geographic market.
c. The decorator should choose a strategy of cost-leadership in this environment.
d. The decorator is highly affiliated with the new target market and understands how he can
create value for it.

3. The analysis of the activity map of a successful company such as Southwest Airlines emphasizes how
a. the organizational culture of Southwest Airlines is the key to the success of the
organization.
b. understanding of the profit pool in an industry indicates to companies where aboveaverage returns can be earned.
c. it is hard for rivals to match a configuration of integrated activities than to imitate a single
activity.
d. the primary and support activities of a successful company capture value all along the
value chain.

4. If Southwest Airlines employees lost their high enthusiasm and commitment to the company,
5.

a. the airline could continue without problems because its cost-leadership strategy is
dependent on its efficient internal procedures.
b. replacement employees could be hired from rival airlines that are laying off employees
easily merged into the Southwest culture.
c. there would be no impact on Southwests profitability because Southwests customers
value the low fares rather than being entertained by the employees.
d. Southwest would have lost one of its competitive advantages and its performance would
be threatened.

A
company
using a
narrow
target
market in

its business strategy is

a. following a cost leadership business strategy.
b. focusing on a broad array of geographic markets.
c. limiting the group of customer segments served.
d. decreasing the number of activities on its value chain.

6. Durable Ceramics, Inc., provides inexpensive ceramic tile to builders of institutional buildings such as schools,
prisons, and public administration buildings. It has always competed on a cost leadership basis. Most of its
products are purchased by a few commercial construction firms, so it is fairly dependent on these
construction firms for selling its product. Durable Ceramics next most-efficient competitor, Cost-Less
Ceramics, Inc., earns average returns, while Durable earns above-average returns. The commercial
construction firms are putting pressure on Durable to reduce its prices. If Durable reduces its prices below
those of Cost-Lesss prices, it is likely that

a. both Durable and Cost-Less will devise additional ways to become more efficient in their
production processes.
b. Durable will be unable to absorb the lower cost, and will go out of business.
c. both Cost-Less and Durable will go out of business, leaving the customers with fewer
alternative sources of low-cost tile.
d. Cost-Less will go out of business, and Durable will gain higher power over its customers.

7. When the costs of supplies increase in an industry, the low-cost leader

a. may continue competing with rivals on the basis of product features.
b. will lose customers as a result of price increases.
c. will be unable to absorb higher costs because cost-leaders operate on very narrow profit
margins.
d. may be the only firm able to pay the higher prices and continue to earn average or aboveaverage returns.

8. Ever improving levels of efficiency enhance profit margins for a cost leader. This effects which of the five
forces of industry structure most directly?
a. Potential entrants
b. Substitutes
c. Buyer power
d. Supplier power

9. The products or services that are differentiated from others have qualities that are
a.
b.
c.
d.

perceived by the customer to add value for which they will pay a premium.
valued by the typical industry customer.
perceived as standardized by the customer.
seen as classic attributes rather than passing fads.

10. Blind taste-tests have shown that the taste of premium-priced vodkas and inexpensive vodkas are
indistinguishable even to regular drinkers of vodka. But the sales of premium vodkas are thriving. This is an
example of
a. the perception of perceived prestige and status as a means of differentiating a product.
b. the importance of high-quality raw materials when using the differentiation strategy.
c. the risk of product imitation by competitors.
d. the danger counterfeiting holds for firms pursuing the differentiation strategy.

11. All of the following are ways that a good or service can be differentiated EXCEPT
a.
b.
c.
d.

Responsive customer service

Perceived prestige and status
Economies of scale and efficient operations**
Engineering design and performance

12. Which of the following is NOT a value-creating activity associated with the differentiation strategy?
a. develop policies to ensure efficient hiring and retention to keep costs low and implement
traing to ensure high employee efficiency.
b. provide accurate and timely delivery of goods to customers.
c. ensure receipt of of high quality supplies (raw materials and other goods).
d. develop flexible systems that allow rapid response to to customers changing needs.

13. The typical risks of a differentiation strategy do NOT include which of the following?
a. Customers may find the price differential between the low-cost product and the
differentiated product too large.
b. Customers experience with other products may narrow customers perception of the value

of a products differentiated features.

c. Counterfeit goods are widely available and acceptable to customers.
d. Suppliers of raw materials erode the firms profit margin with price increases.
14. The focused differentiation strategy differs from the differentiation strategy in that
a. the focused differentiators have a broader competitive scope.
b. the value-creating activities of focused differentiators are more constrained.
c. focused differentiators target a narrower customer market.
d. there are fewer risks with the focused differentiation strategy.

15. Competitive dynamics refers to the

a. circumstances in which competitors are aware of the degree of their mutual
interdependence resulting from market commonality and resource similarity.
b. set of competitive actions and competitive responses the firm takes to build or defend its
competitive advantages and to improve its market position.
c. total set of actions and responses taken by all firms competing within a market.
d. ongoing set of competitive actions and competitive responses between competitors as they
maneuver for advantageous market position.

16. Competition in the global automobile producer industry is characterized by________________

(Chapter 5 Strategic Focus)
a. lack of awareness and motivation.
b. high market commonality and low resource similarity.
c. high market commonality and high resource similarity.
d. reduced rivalry, especially in the production of fuel efficient cars.

17. Hilliard Pharmaceuticals and Ahrens Vitamins, Inc., have high market commonality, both geographically and
in the market segments in which they compete. Hilliard, the number two firm in the industry, has undertaken
a major strategic attack upon Ahrens, the market leader. Which of the following statements is most likely to
be TRUE?
a. Ahrens will not respond aggressively since this is a strategic move and not a tactical
action.
b. As the market leader, Ahrens has little to fear from an attack by Hilliard and will not
expend organizational slack on a major response.
c. Ahrens will respond aggressively because of the high multimarket contact between
Hilliard and Ahrens.
d. Ahrens will respond after a long delay as the nutrition supplement industry is a slow-cycle
industry.

18. In general, compared with firms which compete in only one market, among firms which face one another in
multiple markets there is
a. similar competitive rivalry.
b. less competitive rivalry.
c. more competitive rivalry.
d. no competitive rivalry.

19. Research suggests that a firm with greater multimarket contact is _______ likely to initiate and attack, and
_____ likely to respond aggressively when attacked.
a. more; more
b. less; more
c. less; less
d. more; less

20. Wal-Mart initially used a focused cost leadership strategy to compete only in small communities by using
sophisticated logistics systems and efficient purchasing practices to gain a competitive advantage. The
response of local competitors was _______ because they __________.
a. rapid; were nimble and flexible
b. slow; lacked the ability to marshal resources
c. rapid; perceived gains from responding to Wal- Marts attack
d. rapid; had the resources and flexibility compete against Wal-Mart

21. Bubble-Up, Inc., is a small manufacturer of educational toys for children under age 10. It has co-existed with
three other competitors in the educational toy industry for over 20 years, each of them maintaining a stable
market share. There is a wide-spread rumor that Mega-Toy, Inc., the market leader in the broad childrens
toy market, has decided to target educational toys. Which of these statements is most likely TRUE?
a. The owners of Bubble-Up are unconcerned about Mega-Toys entry to the market because
of the resource dissimilarity between the firms.
b. Bubble-Ups greater organizational slack will allow it to aggressively attack Mega-Toy.
c. Bubble-Ups smaller size may make it more flexible in introducing innovations than
Mega-Toy.
d. Competitive rivalry will not increase for Bubble-Up because Mega-Toy is not dependent
on the educational toy market.

22. The more constrained the relatedness of diversification,

a.
b.
c.
d.

the fewer the linkages between the businesses within the portfolio owned by the firm.
the wider the variation in the portfolio of businesses owned by the firm.
the more links there are among the businesses owned by an organization.
the lower the proportion of total organizational revenue derived from the dominantbusiness.

23. The more sharing of resources and activities among businesses, the more ____ is the relatedness of the
diversification.
a. Linked
b. Constrained
c. Integrated
d. Intense

24. Revenues for United Parcel Service (UPS) come from the following business segments: 60 percent from U.S.
package delivery operations, 22 percent from international package delivery, and 18 percent from nonpackaging operations. Which best describes the corporate level strategy of UPS?
a. Single business
b. Dominant business
c. Related constrained
d. Related linked

25. The main difference between the related constrained level of diversification and the related linked level of
diversification is
a. the percentage of total organizational profitability that comes from the dominant business.
b. the level of resources and activities shared among the businesses.
c. whether the diversification is vertical or horizontal.
d. whether the diversification is value-creating or value-neutral.

26. Procter & Gamble (P&G) has a paper towel and baby diaper business, both of which use paper products. The
firms paper production plant produces inputs for both businesses. P&G most likely uses the
_______________diversification strategy to create ____________.

a.
b.
c.
d.

related constrained; operational relatedness.

related linked; corporate relatedness.
related constrained; corporate relatedness
related linked; operational relatedness

27. Which of the following is TRUE?

a. Conglomerates no longer exist in the U.S. business scene, but are common in emerging
markets.
b. Unrelated diversified firms seek to create value through economies of scope.
c. The sharing of intangible resources, such as know-how, between firms is a type of
operational sharing in related diversifications.
d. Related constrained firms share more tangible resources and activities between businesses
than do related linked firms.

28. The _________________diversification strategy creates value in two ways. First, since the core competence
has already been developed in one business, the firm does not have to allocate resources to develop it.
Second, since the resource is intangible, competitors cannot easily imitate it.
a. related constrained
b. unrelated
c. related linked
d. dominant business

29. According to the Chapter 7 Opening Case, the difference between Googles and Microsofts acquisition
approaches is that
a. Microsoft tends to acquire earlier-stage companies whereas Google tends to acquire laterstage companies.
b. None of Googles acquisitions have survived as independent companies whereas
Microsofts have continued to operate as subsidiaries.
c. Googles approach is to acquire earlier-stage companies whereas Microsoft tends to
acquire later-stage companies.
d. Googles acquisitions have all been friendly whereas Microsofts have all been hostile.

30. Currently, the rationale for making an acquisition includes each of the following EXCEPT
a.
b.
c.
d.

To increase market power.

To decrease taxes paid by shareholders.
To overcome entry barriers.
To increase diversification.

31. A primary reason for a firm to pursue an acquisition is to

a.
b.
c.
d.

avoid increased government regulation.

achieve greater market power.
exit a hyper-competitive market.
achieve greater financial returns in the short run.

32. Managers perceive internal product development as a high-risk activity and tend to choose acquisitions
because approximately _______ percent of innovations are imitated within four years after patents are
obtained.
a. five
b. ten
c. sixty
d. twenty

33. A manager in your company is proposing the acquisition of Taylor Company, which has developed a new,
innovative product instead of a strategy of developing new products in-house. All of the following
arguments are correct EXCEPT
a. The acquisition of Taylor should be primarily for defensive rather than strategic reasons.
b. Research suggests that acquisition strategies are a common means of avoiding risky
internal ventures.
c. The outcomes of acquisitions can be estimated more easily and accurately than the
outcomes for an internal product development process.
d. Acquisitions could become a substitute for innovation within your firm.

34. The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because
a. of barriers to entry in many industries.
b. it is difficult and time intensive for companies to develop products that differ from their
current product line.
c. innovation in both the acquired and the acquiring firm is enhanced by the exchange of
competencies resulting from acquisition.
d. unrelated acquisitions are usually uncomplicated because the acquired firm is allowed to
continue to function independently as it did before acquisition.

35. Problems associated with acquisitions include all of the following EXCEPT
a.
b.
c.
d.

Managers overly focused on acquisitions.

Integration difficulties.
Large or extraordinary debt.
Excessive time spent on the due diligence process.

36. Which of the following is NOT a factor pressuring companies for local responsiveness?
a.
b.
c.
d.

differences in employment laws

customization due to cultural differences
government pressure for firms to use local sources for procurement
availability of low labor costs

37. Working in multiple international markets can provide firms with __________ perhaps even in terms of
_______ .
a. location advantages; larger markets
b. research and development activities; larger markets
c. new learning opportunities; research and development activities.
d. economies of scale and learning; larger markets

38. In Porters model, a specialized factor of production would include

a.
b.
c.
d.

abundant natural resources.

a large workforce.
an extensive highway transportation system.
workers with advanced engineering skills.

39. The four aspects of Porters model of international competitive advantage include all of the following
EXCEPT
a. factors of production.
b. demand conditions.
c. political and economic institutions.
d. related and supporting industries.

40. A large domestic market can provide the countrys industries a chance at dominating the world market because
a. they have been able to develop economies of scale at home.

b. they have access to abundant and inexpensive factors of production.

c. the related and supporting industries will have been developed.
d. the nations culture and educational system will be adapted to producing the labor force
needed for the industry.

41. All of the following are correct about what managers should know about firms based in a country with a
national competitive advantage EXCEPT
a. Success is not guaranteed as the firm implements its chosen international business-level
strategy.
b. The actual strategic choices made are most compelling reasons for success or failure.
c. Success is guaranteed as the firm implements its chosen international business-level
strategy.
d. The determinants of national competitive advantage provide a foundation for a firms
competitive advantages.

42. Effectively implementing the ________ international corporate-level strategy often produces higher
performance than does implementing either the _______ or _________ strategies.
a. multidomestic; global; transnational
b. global; multidomestic; transnational
c. cost leadership; differentation; focus
d. transnational; multidomestic; global

43. Which type of strategic alliance is best at passing tacit knowledge between firms?
a.
b.
c.
d.

primary cooperative strategic alliances

joint ventures
equity strategic alliances
nonequity strategic alliances

44. Fujitsu Siemens Computers is a legally independent company of which Fujitsu and Siemens each own 50%.
This collaboration is an example of a ________ which is effective at transferring ___________.
a. nonequity strategic alliance; explicit knowledge
b. joint venture; tacit knowledge
c. joint venture; explicit knowledge
d. equity strategic alliance; tacit knowledge

43. Hewlett-Packard licenses some of its intellectual property through strategic alliances. Which of the following
is correct about this relationship?
a. This is a joint venture because in licensing arrangements, a new company is created.
b. This is an equity strategic alliance because licensing does not involve the creation of a
new company, but does involve an equity commitment.
c. The firms risk charges of collusion because most licensing relationships between
competitors involve explicit collusion.
d. This is a nonequity strategic alliance with Hewlett-Packard leveraging its unique
capabilities.

44. Meredith Inc. is a manufacturer of art supplies. The company has announced plans to enter into an equity
strategic alliance with JaZz Paper to develop a line of specialty papers for use with a line of specialty paints
Meredith manufactures. Which of the following would be the accurate interpretation of this announcement?
a. Meredith will own a majority equity stake in the new venture.
b. JaZz will own a majority equity stake in the new venture.
c. Meredith or JaZz will own an equal equity stake in the new venture.
d. Either Meredith or JaZz will own a majority equity stake, but we do not know which one
based on the announcement.

45. A nonequity strategic alliance exists when

a.
b.
c.
d.

two firms join together to create a new company.

two or more firms have a contractual relationship to share resources and capabilities.
two partners in an alliance own unequal shares in the combined entity.
the partners agree to sell bonds instead of stock in order to finance a new venture.

46. The global airline industry is one in which

a.
b.
c.
d.

national political interests prevent airlines from making international alliances.

the fast-cycle nature of the industry mandates heavy use of alliances.
most alliances tend to be vertical complementary.
alliance versus alliance competition dominates firm versus firm competition.

47. A relatively young firm has developed a method of transferring photographic images of surface textures onto
any type of hard surface. This potentially has a huge market in the home-decorating field as well as any hard
surface that is typically painted, such as car bodies. The type of alliance partner this firm would be searching
for would be one with
a. low-cost labor production facilities in another country. (p. 304)
b. similar products who could help the firm establish economies of scale.
c. access to franchises in new markets.
d. excess resources for investing.

48. Firms in ____ markets cooperate to pool resources and gain market power.
a.
b.
c.
d.

slow-cycle
standard-cycle
fast-cycle
hyper-cycle

49. Smith Commercial Lighting, Inc., which sells lighting for factories and businesses, has entered into an alliance
with Revelation Lighting, Inc., a retailer of home decor lighting, in order to expand into the trend of using
industrial-type lighting in non-traditional style homes. Smith has invested 40% and Revelation has invested
60% into the new operation. This is an example of a(an)
a. joint venture.
b. nonequity alliance.
c. horizontal complementary strategic alliance.
d. vertical complementary strategic alliance.

TRUE/FALSE
50. Business-level strategy can be thought of as the firms core strategy.
TRUE/FALSE
51. An English professor spends her summers writing low-brow romance novels that sell directly to paperback.
She writes under a fictional name because she is embarrassed to admit to her colleagues and students how
she earns the extra money for foreign vacations. The professor is correct in her concern that she is serving
customer needs that are objectively inferior and bad.

TRUE/FALSE
52. Changing consumer needs is illustrated by Starbucks allowing consumers to have an experience rather than
just a cup of coffee and to design their own drinks.

TRUE/FALSE

53. Companies without the core competencies in their value chain activities and support functions are still able to
implement successfully a either a cost leadership or a differentiation strategy, although they cannot
implement an integrated cost leadership/differentiation strategy.

TRUE/FALSE
54. Southwest Airlines tightly integrated activities make its cost leadership strategy more vulnerable to imitation
than if its activities were loosely integrated.

TRUE/FALSE
55. The key to Southwest Airlines success has been its ability to continuously reduce costs while providing
customers with superior levels of differentiation such as an engaging culture.

TRUE/FALSE
56. The difference between the cost leadership and differentiation business-level strategies, and the focused cost
leadership and focused differentiation strategies, is their basis for customer value.

TRUE/FALSE
57. Low-cost leaders usually concentrate on the value chain activities of inbound logistics and outbound logistics
as a means to reduce costs.

TRUE/FALSE
58. The value-creating activities associated with the cost leadership strategy and differentiation strategy are the
same.

TRUE/FALSE
59. Human resources and other support functions are not value-creating activities in the value chain; only the
value chain activities create value.

TRUE/FALSE
60. Although it is a cost leader, IKEA also offers differentiated features that appeal to its target customers,
including its unique furniture designs, in-store playrooms for children, wheelchairs for customer use, and
extended hours.

TRUE/FALSE
61. Research suggests that a firm with greater multimarket contact is less likely to initiate an attack, but more
likely to respond aggressively when attacked.

TRUE/FALSE
62. Extensive market commonality guarantees intense competition in an industry.
TRUE/FALSE
63. Bayou Belle Water markets water drawn only from a single artesian well in Southern Louisiana. It has a loyal
following in its region. Since Bayou Belle markets the water, just as Coca-Cola, Nestle, and PepsiCo do,
Bayou Belle has high resource similarity with these international firms.

TRUE/FALSE
64. Two firms that have similar resources, but do not share markets would not be direct and mutually
acknowledged competitors.

TRUE/FALSE

65. Two firms, such as Fed Ex and UPS that have similar resources and common markets would be direct and
mutually acknowledged competitors.

TRUE/FALSE
66. Two firms, such as a small local, family-owned Italian restaurant and Olive Garden share few markets and
have little similarity in resources, but are nonetheless direct and mutually acknowledged competitors.

TRUE/FALSE
67. A lack of awareness leads to a reduction in competition.
TRUE/FALSE
68. Wal-Marts aggressive pricing strategy is a strategic action that plays a major role in how it competes.
TRUE/FALSE
69. In a money-making effort, a small private university has decided to institute consulting services using its
business faculty as consultants whose services would be sold to clients. This university is attempting to use
its faculty to gain economies of scope.

TRUE/FALSE
70. Extensive outsourcing contributes to the firms core competencies and helps the firm transfer those
competencies to other business units in the diversified firm.

TRUE/FALSE
71. Contract manufacturers who manage their customers entire product line, and offer services ranging from
inventory management to delivery and after-sales services are prime examples of vertical integration.

TRUE/FALSE
72. Firms with both operational and corporate relatedness are favorites of investment analysts because the
transparency and clarity of their financial statements clearly show the value-creation resulting from the
combination of multiple businesses.

TRUE/FALSE
73. GE (discussed in the Chapter 6 Opening Case) is an example of a firm that has used internal capital market
allocation as a means of creating value even though it competes using a related linked rather than an
unrelated diversification strategy.

TRUE/FALSE
74. In spite of the challenges associated with it, a number of firms continue to use the unrelated diversification
strategy, especially in Europe and in emerging markets.

TRUE/FALSE
75. One advantage of an unrelated diversification strategy in a developed economy is that competitors cannot
easily imitate the financial economies whereas they can easily replicate the value gained through the use of a
related diversification strategy.

TRUE/FALSE
76. Companies in emerging markets frequently use the unrelated diversification strategy because of the absence of
a soft infrastructure in those markets.

TRUE/FALSE

77. Although the price Microsoft paid for the acquisition of Skype went up significantly from the earlier
acquisition price for Skype paid by Silver Lake, the acquisition price per user went down significantly
(Chapter 7 Opening Case).

TRUE/FALSE
78. The recent financial crisis made it difficult for firms to complete megadeals and the slowdown in merger and
acquisition has continued in 2011.

TRUE/FALSE
79. The relatively strong U.S. dollar has increased the interest of firms from other nations to acquire U.S.
companies.

TRUE/FALSE
80. Research evidence suggests that horizontal acquisitions of firms with dissimilar characteristics result in higher
performance levels.

TRUE/FALSE
81. In the current global landscape, firms from North America and Europe use the acquisition strategy more
frequently than firms from other nations.

TRUE/FALSE
82. Private synergies are unique to the acquired and acquiring firms and could not be developed by combining
either firms assets with another company.

TRUE/FALSE
83. Unrelated diversified firms become overdiversified with a smaller number of business units than do firms
using an related diversification strategy.

TRUE/FALSE
84. Research has shown that maintaining a low or moderate level of firm debt is critical to the success of an
acquisition, even when substantial leverage was used to finance the acquisition itself.

TRUE/FALSE
85. According to the Chapter 8 Strategic Focus, Starbucks implements the transnational strategy by using its core
competencies to standardize its operations to gain global efficiences while decentralizing decision making
responsibilities to local units.

TRUE/FALSE
86. Rivals Airbus and Boeing have multiple manufacturing facilities and outsource activities partly for the purpose
of developing economies of scale as a source of being able to create value for customers.

TRUE/FALSE
87. Having substantial supplies of critical basic natural resources is a necessary condition for a country to support
businesses which can successfully compete in international markets.

TRUE/FALSE
88. A firm based in a country with a national competitive advantage is not guaranteed success as it implements its
chosen international business-level strategy. Instead the actual strategic choices managers make may be the
most compelling reasons for success or failure.

TRUE/FALSE

89. A company that chooses a truly global corporate-level strategy assumes that the liability of foreignness will be
minimal.

TRUE/FALSE
90. The liability of foreignness will have a greater negative impact on a firm using a multidomestic strategy than
on a firm using a global strategy.

TRUE/FALSE
91. The regionalization environmental trend means that firms can focus on a region (customization) but also
have some standardization or sharing within the region.

TRUE/FALSE
92. By choosing a region where markets are more similar, the firm may be able to better understand those markets
and cater to their needs, but also achieve economies through sharing of resources.

TRUE/FALSE
93. According to the Chapter 9 Opening Case, in addition to their corporate-level alliance, Renault and Nissan
have each formed vertical complementary strategic alliances with other companies.

TRUE/FALSE
94. A cooperative agreement between a hotel chain and a casino operator would be viewed as a horizontal
complementary strategic alliance because as separate entities, the two firms would compete for the same
customer.

TRUE/FALSE
95. Using business-level strategic alliances to hedge against risk and uncertainty is most common in the slowcycle markets.

TRUE/FALSE
96. Research in the airline industry suggests that tacit collusion reduces service quality and on-time performance.
TRUE/FALSE
97. Although governments in free-market economies allow rivals to collaborate to improve competitiveness, the
challenge is to make sure the alliance does not lead to price fixing.

TRUE/FALSE
98. Of the four business-level cooperative strategies, the competition-reducing strategy has the lowest probability
of creating a sustainable advantage.

TRUE/FALSE
99. Synergistic strategic alliances such as the Renault-Nissan alliance discussed in the Opening Case focus on
economies of scope by sharing their resources and capabilities to develop manufacturing platforms that can
be used to Renault or Nissan cars.

TRUE/FALSE
100. A major risk of a network cooperative strategy is that firms gain access to their partner's partners thus
exposing their proprietary processes to loss or theft.

TRUE/FALSE