Which of the following is the correct combination ? (i) A GSA allows an MNE to enter into activities that might too costly and risky to pursue on its own. (ii) A GSA does not allow a firm to enhance economics of scale. (iii) A GSA does not allow a firm to bypass entry barriers into a target foreign country. (iv) A GSA allows a firm to acquire partner knowledge. Codes :
(i), (iv) are correct.
A global strategic alliance (GSA) is a cooperative arrangement between firms from different countries that pool resources while remaining independent. Firms form GSAs to share costs and risks, to reach new markets, to gain scale and to learn from their partners.
Statement (i) is correct: an alliance lets a multinational undertake activities, such as large R&D projects or entry into a difficult market, that would be too costly and risky to pursue on its own.
Statement (ii) is wrong. Pooling production, purchasing or distribution with a partner is one of the main ways an alliance helps a firm enlarge volumes and enjoy economies of scale.
Statement (iii) is wrong as well. Partnering with a local firm is a classic way to get around entry barriers such as government restrictions, limited distribution access or local regulations in a target country.
Statement (iv) is correct: alliances give access to the partner's technology, market knowledge and managerial skills, which is often a key motive. So only (i) and (iv) are correct.
Hence, (i), (iv) are correct.
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