Cooperative Strategies
Cooperative strategy is a strategy in which firms work
together to achieve a shared objective.
Cooperating with other firms is a strategy that:
Creates value for a customer•
Exceeds the cost of constructing customer •
value in other ways
Establishes a favorable position relative to •
competitionCooperative Strategies
A strategic alliance is a cooperative strategy in which:
Firms combine some of their resources and capabilities•
to create a competitive advantage.
A strategic alliance involves:
Exchange and sharing of resources and•
capabilities.
Codevelopment or distribution of goods or services .•Cooperative Strategies
Firm A Firm B
Resources Resources
Capabilities Capabilities
Core CompetenciesCore CompetenciesCombined
Resources
Capabilities
Core Competencies
Mutual interests in designing, manufacturing,
or distributing goods or servicesCooperative Strategies
Four types of alliances:
Joint Venture•
Two or more firms create an independent company by
combining parts of their assets.
Each partner owns 50% of the stock.
JV may be publicly traded.
Examples:
Sprint and Virgin Group’s alliance targets 1530
years olds for their pay as you go wireless phone service.
Brand from Virgin and service from Sprint.
Sony Pictures, Warner Bros., Universal Pictures,
Paramount Pictures, and MetroGoldwynMayer, each
has a 20% stake in a joint venture to use the Internet
to deliver feature films on demand.
Owens–Corning Fiberglas.Cooperative Strategies
Four types of alliances:
Equity Alliance•
Partners who own different percentages of equity
in a new venture.
Examples:
Cott Corporation, the world’s largest soft drink supplier,
and J.D. Iroquois Enterprises formed an equity strategic
alliance. Cott gained exclusive supply rights for Iroquois’
private label spring water products and Iroquois expanded
its branded business in the West and Far East.
Ford Motor Company and Mazda. Ford owns 70% while
Mazda owns 30%.
Chrysler and Mitsubishi. Chrysler owns 52%, Mitsubishi owns
48%.Cooperative Strategies
Four types of alliances:
Non Equity Alliance•
Contractual agreements given to a company to supply, produce,
or distribute a firm’s goods or services without equity sharing.
Examples:
Chemical processes tend to be improved along
technology corridors, and therefore licensing and cross
licensing are wellestablished practices in chemical and
pharmaceutical industries.
Magna International, a leading global supplier of
automotive systems, components, and modules, has
formed many nonequity strategic alliances with GM,
Ford, Honda, DaimlerChrysler, Toyota.
Ralph Lauren uses licensing agreements to support its Polo
brand. It uses 29 domestic licensing agreements, including
West Point Stevens (bedding), Reebok (casual shoes), and ICI
Paints (Ralph Lauren Home Products).Cooperative Strategies
Four types of alliances:
Strategic Cooperative Network•
Multiple firms agree to form partnerships to achieve shared
objectives.
The strategic network seeks to develop a competitive
advantage in primary or support activities.
A strategic center firm often manages the network.
Strategic center firm engages in four primary tasks:
Cooperative Strategies
Four types of alliances:
Strategic Cooperative Network•
Strategic center firm engages in four primary tasks:
Strategic outsourcing (outsources and partners with more firms
than do other network members).
Competencies (supports each member’s efforts to develop core
competencies that can benefit the network).
Technology (manages the development and sharing of
technologybased ideas among network members).
Race to learn (guides participants in efforts to form network
specific competitive advantages).Cooperative Strategies
Strategic Cooperative Network
Strategic
Center
FirmCooperative Strategies
Reasons for alliances – Determined by market situation
Slowcycle markets•
Standardcycle markets•
Fastcycle markets•