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 pursue mutual interests to Goods Services Firm A Firm B Capabilities Resources 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