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Cooperative &trategy

Cooperative StrategyA strategy in which firms work together to achieve a

share o!"ective#

Cooperating with other firms is a strategy that: Creates value for a customer#

$%cees the cost of constructing customer value in

other ways#

$sta!lishes a favora!le position relative tocompetitors#

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&trategic Alliance

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Combined

+esources

Capabilities

Core Co"petencies

+esources

Capabilities

Core Co"petencies

+esources

Capabilities

Core Co"petencies

ir" A ir" -

Mutual interests in designing, "anu!acturing,

or distributing goods or services

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hree ypes o! &trategic Alliances

&oint 'enture (wo or more firms create a legally inepenent

company !y sharing some of their resources an

capa!ilities#

$)uity Strategic Alliance Partners who own ifferent percentages of e)uity in

a separate company they have forme#

*one)uity Strategic Alliance

(wo or more firms evelop a contractual relationship

to share some of their uni)ue resources an

capa!ilities#

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-usiness#Level Cooperative &trategies

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Com!ine partner firms+ assetsin complementary ways tocreate new value#

,nclue istri!ution- supplier oroutsourcing alliances wherefirms rely on upstream orownstream partners to !uilcompetitive avantage#

Co"ple"entary&trategic Alliances

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Co"ple"entary &trategic Alliances

'ertical Complementary Strategic Alliance Forme !etween firms that agree to use their skills an

capa!ilities in ifferent stages of the value chain to create value

for !oth firms#

.utsourcing is one e%ample of this type of alliance#

/ori0ontal Complementary Strategic Alliance

Forme when partners who agree to com!ine their resources

an skills to create value in the same stage of the value chain#

Focus is on long1term prouct evelopment an istri!ution

opportunities#

(he partners may !ecome competitors which re)uires a great eal

of trust !etween the partners#

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Co"petition#+educing &trategy

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Create to avoi estructive or

e%cessive competition

plicit collusion3when firms irectly

negotiate prouction output an

pricing agreements to reuce

competition illegal3#

acit collusion3when firms inirectly

coorinate their prouction an pricing

ecisions !y o!serving other firm+s

actions an responses#

Co"ple"entary

&trategic Alliances

Co"petition

+esponse Alliances

4ncertainty

+educing Alliances

Co"petition

+educing Alliances

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Assess"ent o! Cooperative &trategies

Complementary !usiness1level strategic alliances-especially the vertical ones- have the greatest pro!a!ility

of creating a sustaina!le competitive avantage#

/ori0ontal complementary alliances are sometimes

ifficult to maintain !ecause they are often !etween rivalcompetitors#

Competitive avantages gaine from competition an

uncertainty reucing strategies ten to !e temporary#

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Corporate#Level Cooperative &trategy

Corporate1level Strategies /elp the firm iversify in terms of:

Proucts offere to the market

(he markets it serves

4e)uire fewer resource commitments#

Permit greater fle%i!ility in terms of efforts

to iversify partners+ operations#

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6iversi!ying &trategic Alliances

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Allows a firm to e%pan into newprouct or market areas without

completing a merger or an

ac)uisition#

Provies some of the potential

synergistic !enefits of a merger orac)uisition- !ut with less risk an

greater levels of fle%i!ility#

Permits a 5test6 of whether a future

merger !etween the partners woul

!enefit !oth parties#

6iversi!ying

&trategic Alliance

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&ynergistic &trategic Alliances

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Creates "oint economies ofscope !etween two or more

firms#

Creates synergy across

multiple functions or multiple!usinesses !etween partner

firms#

6iversi!ying

&trategic Alliance

&ynergistic

&trategic Alliance

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ranchising

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Spreas risks an uses resources-

capa!ilities- an competencies without

merging or ac)uiring another firm#

A contractual relationship franchise3

is evelope !etween two parties- the

franchisee an the franchisor#

An alternative to pursuing growth

through mergers an ac)uisitions#

6iversi!ying

&trategic Alliance

&ynergistic

&trategic Alliance

ranchising

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7nternational Cooperative &trategy

Cross1!orer Strategic AllianceA strategy in which firms with hea)uarters in ifferent

nations com!ine their resources an capa!ilities to

create a competitive avantage#

A firm may form cross1!orer strategic alliances to

leverage core competencies that are the founation of

its omestic success to e%pan into international

markets#

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7nternational Cooperative &trategy

8cont9d:

Synergistic Strategic Alliance

Allows risk sharing !y reucing financial investment#

/ost partner knows local market an customs#

,nternational alliances can !e ifficult to manage ue

to ifferences in management styles- cultures or

regulatory constraints#

7ust gauge partner+s strategic intent such that thepartner oes not gain access to important technology

an !ecome a competitor#

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per"itted in a license distributed with a certain product or service or otherwise on a password#protected website !or classroo" use. ()1/

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;etwor% Cooperative &trategy

A cooperative strategy wherein several firmsagree to form multiple partnerships to achieve

share o!"ectives#

Sta!le alliance network

8ynamic alliance network

$ffective social relationships an interactions

among partners are keys to a successful

network cooperative strategy#

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Managing Cooperative &trategies

8cont9d:

.pportunity 7a%imi0ation Approach

7a%imi0e partnership+s value1creation opportunities

earn from each other

$%plore aitional marketplace possi!ilities

7aintain less formal contracts- fewer constraints