Norman, MGT 5885

Key Points:Chapter 9: Cooperative Strategy

• Reasons for cooperation

• Types of alliances

• Considerations during partner selection

• Understand the risks of and reasons for success and failure of strategic alliances

Norman, MGT 5885

Cooperative Strategies

• Cooperative strategies are one element of a firm’s overall strategy and must fit with other strategies

• Coopetition: simultaneous competition and cooperation

Norman, MGT 5885

Partnerships between firms

where their

are combined to pursuemutual interests to

Goods

Services

Firm AFirm B

CapabilitiesResources

Strategic Alliances

Core Competencies

Develop

Manufacture

Distribute

Norman, MGT 5885

Types of Strategic Alliances

• Classification by equity• Joint Ventures

• Equity Strategic Alliances

• Nonequity Strategic Alliances

• Classification by strategy (others listed in text)

• Complementary strategic alliances (business-level)

• Diversifying strategic alliances (corporate-level)

• Synergistic strategic alliances (corporate-level)

• Franchising (corporate-level)

Norman, MGT 5885

Reasons for Alliances (Table 9.1)

• Gain access to restricted markets• Enter a new market• Maintain market stability• Gain market power• Gain access to complementary resources• Overcome trace barriers• Meet competitive challenge from other firms• Pool resources on very large capital projects• Learn new business techniques• Learn technology• Speed entry (new goods/services or markets)• Maintain market leadership• Create an industry standard• Share risks• Overcome uncertainty

Norman, MGT 5885

Partner Selection

Norman, MGT 5885

Ingredients for Alliance Success

Norman, MGT 5885

• Opportunism/cheating of partner• Partner misrepresents capabilities• Misunderstand partner intentions or partner misrepresents

intentions• Partner fails to make resources available

• Poor planning/screening and contract specification• Cultural differences (organizational and national)

• Ability to manage

Risks of Alliances

Norman, MGT 5885

• Risks can result in:• Failure of strategic alliance (short-term)• Loss of firm-specific capabilities and competitive

advantage (long-term)

• Approaches to managing risks• Develop trusting relationship• Use contractual and other monitoring mechanisms

Risks of Alliances