Answer to Question 1
Firms enter into collaborative arrangements for various reasons. Spreading and reducing costs is a common reason. Second, a firm often seeks to improve performance by concentrating on those activities that best fit its competencies, depending on other firms to supply it with products, services, or support activities for which it has lesser competency. Companies may band together so as not to compete. Companies also may combine certain resources to combat larger and more powerful competitors. There are potential cost savings and supply assurances from vertical integration. Horizontal links may provide finished products or components. Many companies pursue collaborative arrangements to learn about a partner's technology, operating methods, or home market so that their own competencies will broaden or deepen, making them more competitive in the future. The major strains on collaborative arrangements are due to five factors: collaboration's importance to partners, differing objectives, control problems, partners' contributions and appropriations, and differences in culture.
Answer to Question 2
Answer: D
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