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Unformatted text preview: Strategic alliances are collaborative arrangements where two or more companies join forces to achieve mutually beneficial strategic outcomes. Company use of alliances is quite widespread. The best alliances are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit. They tend to enable a firm to build on its strengths and to learn. The competitive attraction of alliances is in allowing companies to bundle competencies and resources that are more valuable in a joint effort than when kept separate. Combining the operations of two companies, via merger or acquisition, is an attractive strategic option for achieving operating economies, strengthening the resulting company's competences and competitiveness, and opening up avenues of new market opportunity. A vertical integration strategy has appeal only if it significantly strengthens a firm's competitive position. Outsourcing involves farming out certain value chain activities to outside vendors. A company should generally not perform any value chain activity internally that can be performed more efficiently or effectively by outsiders—the chief exception is when a particular activity is strategically crucial and internal control over that activity is deemed essential. It takes successful offensive strategies to build competitive advantage—good defensive strategies can help protect competitive advantage but rarely are the basis for creating it. The best offensives use a company's resource strengths to attack rivals in those competitive areas where they are weak. It is just as important to discern when to fortify a company's present market position with defensive actions as it is to seize the initiative and launch strategic offensives. There are many ways to throw obstacles in the path of would be challengers. Companies today must wrestle with the strategic issue of how to use their Web sites in positioning themselves in the marketplace—whether to use their Web sites just to disseminate product information or whether to operate an e-store to sell direct to online shoppers. Because of first-mover advantages and disadvantages, competitive advantage can spring from when a move is made as well as from what move is made. Companies with manufacturing facilities in a particular country are more cost-competitive in exporting goods to world markets when the local currency is weak (or declines in value relative to other currencies); their competitiveness erodes when the local currency grows stronger relative to the currencies of the countries to which the locally made goods are being exported. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets....
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This note was uploaded on 12/14/2011 for the course BUS 5480 taught by Professor Nwabueze during the Fall '11 term at FIT.
- Fall '11