Question

To build trust in a cooperative relationship, both firms can: a. write short-term contracts that must be renewed frequently. b. increase their vertical integration. c. use outsourcing of non core activities. d. make mutual investments in specialized assets. e. rely on competitive bidding.

Answer 1

Answer:

D) make mutual investments in specialized assets.

Explanation:

I'm not sure about the exact background of the question, but if you are trying to build a trust relationship with another company, the best way to do it is by investing together.

E.g. if company A is interested in securing an important supplier, instead of trying to acquire it, they might try to invest together in some assets or another business. That way, when it comes to deciding which company should receive discounts or prioritize their requirements, the supplier will always favor their business partners.