Exam 9: Cooperative Implications for Strategy

Although growing in popularity with small and medium-sized firms because they can gain economies of scale, large companies tend to avoid strategic alliances.

Of the four business-level cooperative strategies, the competition-reducing strategy has the lowest probability of creating a sustainable advantage.

Collusion is a form of cooperative strategy.

A ____ cooperative strategy helps the firm diversify in terms of products offered, markets served, or both.

Japanese telecom NTT DoCoMo Inc. and Chinese Internet search operator Baidu Inc. established an alliance to distribute games and other mobile-phone content. Baidu will own 80% of this collaboration with DoCoMo holding the remaining 20%. This collaborative arrangement is an example of a(n)

Identify the four types of business-level cooperative strategies and the advantages and disadvantages of each.

A nonequity strategic alliance exists when

The cost minimization approach of managing alliances is more expensive to put into place and to use than is the opportunity maximization management approach.

International strategic alliances have played an important role in helping manufacturers of jet aircraft engines respond to increasing fuel prices and tougher environmental regulations.

Case Scenario 1: Norning International Norning International (NI) states that both its past successes and future growth strategies are based on an evolving network of wholly owned businesses and joint ventures around its core competency in glass making. Through their alliances and owned divisions they compete in four global business sectors: Specialty Glass and Materials (including materials for HDTV and LCD displays), Consumer Housewares (including microwavable dishware), Laboratory Sciences Products and Services (test tubes, testing equipment, and drug trials testing), and Communications (fiber optics and related technologies). Per the company's annual report, "binding all four sectors together is the glue of a commitment to leading edge glass making technologies, shared resources, and dedication to total quality." Each sector is composed of divisions, subsidiaries and alliances. However, the central role played by alliances is demonstrated by the fact that the combined revenue of its 30-some alliances is more than double that of NI on its own. Most of the alliances provide NI with access to particular geographic markets, industries, or channels, although an increasing number of alliances involve both market access and technological development. -(Refer to Case Scenario 1) Why would a company like NI place such emphasis on alliances as a growth vehicle?

A cooperative strategy is a means by which firms work together to achieve a shared objective.

Explain the rationales for a cooperative strategy under each of the three types of basic market situations (i.e., slow, standard, and fast cycles).

Tacit collusion tends to be least used as a business-level, competition-reducing strategy in highly concentrated industries such as airlines and breakfast cereals even though it results in higher prices for consumers.

In the U.S., cooperative strategies to reduce competition may result in ____ if they are explicit.

The opportunity maximization approach is more difficult to establish in international relationships than in domestic relationships because of differences in all EXCEPT

Which type of strategic alliance is best at passing tacit knowledge between firms?

Identify the three types of corporate-level cooperative strategies.

The primary responsibility of the franchisor, such as McDonald's or Hilton International is to

A major risk of a network cooperative strategy is that firms gain access to their partner's partners thus exposing their proprietary processes to loss or theft.

The alliance between BP Plc and OAO Rosneft to extract oil from Russia's Arctic Ocean was managed using contracts, i.e., the cost minimization approach.