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788, Module 8, Cooperative Strategies, Sp2011

788, Module 8, Cooperative Strategies, Sp2011 - cost me 1...

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Module 8 Co op er a tive   Strat e gies
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Strategic   Alliances    (S.A.) a/k/a   Cooperative  Strategies Strategic alliances defined – partnerships between firms in which resources, capabilities and, less frequently, competencies are combined to pursue mutual interests Similar to acquisitions the failure rate is very high, about 70%
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Types   of   Alli anc es Joint venture (J.V.) – a “new” firm created out of the assets of two, or more, existing firms, typically with equal ownership, but not tactical control. Equity strategic alliance – a J.V. with non- equal ownership, i.e. one party “owns” control Non-equity S.A. – contractual or licensed relationships, e.g. licensed manufacture, franchising Tacit collusion , a/k/a signaling, typically legal
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Ben e fits   of   J. V .s Ask: From whose perspective? And, what will it
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Unformatted text preview: cost me? 1. Risk reduction, e.g. R & D 2. Economies of scale, scope, and/or rationalization of excess capacity 3. Acquisition of complementary resources 4. Co-opting, or blocking, competition 5. Overcoming government mandated investment or trade barriers Dangers of strategic alliances 1. Loss of control / cost of shared control (especially if you are notably smaller than your partner) 2. Loss of market 3. Loss of proprietary knowledge, a/k/a one-way learning – you avoid this by building wall or taking hostages 4. Failure due to inexperience Role of trust in S.A.s and in business in Conclusion Like vertical integration and diversification the only justification for a cooperative strategy is a sound strategic argument ....
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