ch 9-13 Flashcards
What is a cooperative strategy?
A means by which firms collaborate to achieve a shared objective.
What is a strategic alliance?
A cooperative strategy in which firms combine some of their resources to create a competitive advantage.
What are the three major types of strategic alliances?
- Joint ventures
- Equity strategic alliances
- Nonequity strategic alliances
What is a joint venture?
A strategic alliance in which two or more firms create a legally independent company to share some of their resources.
What is an equity strategic alliance?
An alliance in which a firm purchases equity in another firm, becoming a partial owner.
What is a nonequity strategic alliance?
An alliance in which firms develop a contractual relationship to share resources without forming a separate company.
What are some examples of nonequity strategic alliances?
- Licensing agreements
- Distribution agreements
- Supply contracts
Why do firms use cooperative strategies?
To create value they couldn’t generate independently and to access resources needed for competitive advantages.
What is tacit knowledge?
Knowledge that is learned through experiences and is often critical for developing competitive advantages.
What role do strategic alliances play in the competitive landscape?
They are integral for improving competitiveness and can involve partnerships among for-profit organizations and educational institutions.
What is the significance of the relationship among partners in a cooperative strategy?
It is commonly the basis for building a competitive advantage.
What are slow-cycle markets?
Markets where competitive advantages are shielded from imitation for relatively long periods.
What are fast-cycle markets?
Markets where competitive advantages are not shielded from imitation, preventing their long-term sustainability.
What are standard-cycle markets?
Markets where competitive advantages are moderately shielded from imitation, allowing for a sustained advantage longer than in fast-cycle markets.
What is a key reason for forming strategic alliances in slow-cycle markets?
To enter restricted markets or establish a franchise in a new market.
What is an example of a joint venture in the automotive industry?
The joint venture between General Motors and SAIC Motor Corp. to develop cars for the Chinese market.
What is a key benefit of nonequity strategic alliances?
They are less formal and demand fewer commitments than joint ventures or equity alliances.
Fill in the blank: A _______ is formed when two or more firms create a legally independent company.
joint venture
True or False: Equity strategic alliances require firms to share profits equally.
False
What is a potential outcome of a joint venture between Carnival Corporation and China Merchants Group?
Launching China’s first domestic cruise brand targeting Chinese customers.
What is a common reason for firms in fast-cycle markets to form strategic alliances?
To speed up market entry and share risky R&D expenses.
What is the significance of resource sharing in strategic alliances?
It allows firms to leverage existing resources and develop additional resources for competitive advantage.
What is one reason why slow-cycle markets are becoming rare?
The rapid expansion of the Internet and quick dissemination of information.
What advantage does a firm gain by participating in strategic alliances?
Access to complementary resources and increased market power.
What is a strategic alliance?
A partnership where firms combine resources to achieve specific objectives.
List three benefits of forming a strategic alliance.
- Gain access to a restricted market
- Speed up development of new goods or services
- Share risky R&D expenses
What characterizes fast-cycle markets?
They are unstable, unpredictable, and hypercompetitive.
How do alliances help firms in fast-cycle markets?
They help transition from present to future and gain rapid entry into new markets.
What is an example of a partnership in fast-cycle markets?
Ford and ADT’s joint investment in Canopy for vehicle security systems.
What defines standard-cycle markets?
Alliances are made by partners with complementary resources.
What are the names of three major airline alliances?
- Star Alliance
- SkyTeam Alliance
- Oneworld Alliance
What is a business-level cooperative strategy?
A strategy where firms combine resources to create a competitive advantage in product markets.
What are complementary strategic alliances?
Business-level alliances where firms share resources in complementary ways.
What types of complementary strategic alliances are there?
- Vertical
- Horizontal
What is a vertical complementary strategic alliance?
An alliance where firms share resources from different stages of the value chain.
Provide an example of a vertical complementary strategic alliance.
Honda and Sony’s partnership to build electric vehicles.
What is a horizontal complementary strategic alliance?
An alliance where firms share resources from the same stage of the value chain.
What is the term for simultaneous cooperation and competition among firms?
Coopetition.
Which industries frequently utilize horizontal complementary strategic alliances?
Pharmaceuticals.
What was the purpose of the MillerCoors partnership?
To respond to competition from Anheuser-Busch and gain market strength.
What is the main goal of competition response strategy?
To respond to competitors’ strategic actions.
Fill in the blank: Fast-cycle markets are characterized by _______.
[instability and unpredictability]
True or False: Standard-cycle markets are typically stable and predictable.
True.
What are the advantages of airline alliances for passengers?
- Simplified ticket buying
- Easier connections for international flights
- Earning frequent flyer miles
What kind of value does Accenture Interactive aim to create with its alliances?
Value that helps children overcome speech disorders.
What is an example of a project from Accenture’s Rothco Unit?
‘Saylists’ that help make speech therapy fun for children.
What is a primary reason for forming standard-cycle market alliances?
To enhance market power through strength in numbers.
List two characteristics of horizontal alliances.
- Firms compete for the same market
- Firms share resources at the same stage of the value chain
What acquisition created the world’s largest brewer?
InBev acquired Anheuser-Busch in 2008
This acquisition resulted in significant market consolidation.
What were the unexpected outcomes of the MillerCoors joint venture?
Price increases of 17-18 percent for beer products
The joint venture reduced competition, leading to higher prices.
What type of strategy do firms use to hedge against risk and uncertainty?
Uncertainty-Reducing Strategy
This strategy is particularly useful in fast-cycle markets and emerging economies.
What is the purpose of the Corporate Electric Vehicle Alliance?
To help companies transition to electric vehicles
Members include Amazon, IKEA, and DHL.
What are the two types of collusive strategies?
Explicit collusion and tacit collusion
Both strategies aim to reduce competition but differ in legality and execution.
What is explicit collusion?
Direct negotiation between firms to set production and pricing
This strategy is illegal in most developed economies.
What is tacit collusion?
Indirect coordination of production and pricing decisions among firms
It often occurs in industries with few large firms.
What is mutual forbearance?
A form of tacit collusion where firms avoid competitive actions against rivals in multiple markets
It helps prevent destructive competition.
What is a diversifying strategic alliance?
A strategy where firms share resources for product or geographic diversification
Example: Fratelli Wines alliance applying Italian methods in India.
What is a synergistic strategic alliance?
A strategy where firms share resources to create economies of scope
This can involve partnerships across the value chain.
What is franchising?
A strategy where a franchisor licenses its trademark and business methods to franchisees
Examples include McDonald’s and Hilton International.
What are the primary responsibilities of a franchisor?
To develop programs for knowledge transfer and support franchisees
Effective franchising relies on cooperation between franchisors and franchisees.
What is the main challenge of corporate-level cooperative strategies?
They are broader in scope and more complex, making them challenging and costly
Effective management can lead to competitive advantages.
What are the common types of corporate-level cooperative strategies?
Diversifying alliances, synergistic alliances, and franchising
These strategies help firms expand operations and enter new markets.
What is the significance of complementary business-level strategic alliances?
They have the greatest probability of creating a competitive advantage
Particularly vertical alliances tend to be more effective.
What do firms need to assess when forming corporate-level cooperative strategies?
The potential competitive advantages and customer value
Internalizing successful alliance experiences is crucial for future success.
What two questions do firms answer when dealing with corporate-level strategy?
- In which businesses and product markets will the firm choose to compete? 2. How will those businesses be managed?
What defines a franchising strategy?
A strategy in which a firm (the franchisor) uses a franchise as a contractual relationship to control the sharing of its resources with partners (the franchisees).
What is a cross-border strategic alliance?
A strategy in which firms with headquarters in different countries combine some of their resources to create a competitive advantage.
Why do firms use cross-border alliances?
- Limited domestic growth opportunities
- Foreign government economic policies
- Overcoming liability of foreignness
Fill in the blank: A cross-border strategic alliance helps firms create value in markets that neither firm could create operating _______.
[independently]
What are some areas in which partners of a cross-border strategic alliance may cooperate?
- Development
- Procurement
- Production processes
True or False: Cross-border strategic alliances are generally less complex and risky than domestic strategic alliances.
False
What is a network cooperative strategy?
A strategy by which several firms agree to form multiple partnerships to achieve shared objectives.
Give an example of a company that uses a network cooperative strategy.
Cisco
What is the advantage of a stable alliance network?
It allows firms to extend their competitive advantages to other settings while profiting from operations in their core, relatively mature industry.
What characterizes a dynamic alliance network?
It is used in industries characterized by frequent product innovations and short product life cycles.
What can happen if a firm becomes locked into its partnerships within a network?
It could preclude the development of alliances with other firms.
What is one disadvantage of being part of a network cooperative strategy?
The burdens associated with membership can negatively affect the member firm’s performance over time.
Fill in the blank: Firms involved in networks of alliances tend to be more _______.
[innovative]
What did the strategic alliance between Ford and Mahindra intend to achieve?
Combine capabilities to develop new vehicles for the Indian market.
What percentage of the joint venture did Mahindra own in the Ford-Mahindra alliance?
51 percent
What was a key reason for the failure of the Ford and Mahindra alliance?
Challenges in overcoming different corporate cultures and processes.
What is the significance of the Competition Commission of India in the Ford-Mahindra joint venture?
It approved the formation of the joint venture and the transfer of Ford’s Indian automotive business.
What was a primary goal of Cisco’s Global Partner Network?
To drive growth, differentiate itself, enter new business areas, and create competitive advantages.
What is a key characteristic of firms at the strategic center of a network?
They are more likely to engage in international strategic alliances.
What are dynamic alliance networks used for?
Used in industries characterized by frequent product innovations and short product life cycles
Industries like those in which Apple and IBM compete exemplify dynamic alliance networks.
What is a foundational aspect of achieving objectives in dynamic alliance networks?
A network of relationships among multiple companies
What do partners in dynamic alliance networks typically explore?
New ideas with the potential for product innovations, entry to new markets, and development of new markets
Why do large firms often create networks with smaller entrepreneurial start-ups?
To search for innovation-based outcomes
What is a common reason smaller firms seek alliance participation?
To enhance their competitive positions
What is a potential benefit for small firms partnering with larger firms?
Building credibility through association with larger collaborators
What is the failure rate of cooperative strategies within the first two years?
Two-thirds have serious problems, and up to 50 percent fail
What can firms learn from the failure of cooperative strategies?
Insights about how to form and manage future cooperative arrangements
What is one significant risk associated with cooperative strategies?
Insufficient contracts that do not address important issues
What can opportunistic behavior in alliances lead to?
A breakdown of trust and damage to the alliance’s objectives
What does misrepresentation of resources in a partnership often lead to?
Failure of the cooperative strategy
What is a common approach to guard against the risk of misrepresentation in alliances?
Identifying backup partners
What is a primary management approach to cooperative strategies?
Assigning managerial responsibility to a high-level executive or dedicated team
What two primary approaches do firms use to manage cooperative strategies?
- Cost minimization
- Opportunity maximization
What is the focus of the cost-minimization approach?
Developing formal contracts and controlling partner behavior
What does the opportunity-maximization approach emphasize?
Maximizing value-creating opportunities through less formal contracts
What is a significant challenge when establishing trust in international cooperative strategies?
Differences in trade policies, cultures, laws, and politics
What is a major form of cooperative strategies?
Strategic alliances
What is the primary reason firms form strategic alliances?
To create value they couldn’t generate independently
What are competition-reducing strategies designed to do?
Avoid excessive competition while improving strategic competitiveness
What is mutual forbearance?
A form of tacit collusion where firms do not compete against rivals in multiple markets
What is a cross-border strategic alliance?
An international cooperative strategy used to overcome governmental restrictions and achieve performance superiority
What is a key characteristic of network cooperative strategies?
Firms form multiple partnerships to achieve shared objectives
What are stable networks typically used for?
To extend competitive advantages into new areas in mature industries
What is a significant risk in cooperative strategies?
Failure to provide committed resources to partners
What is a network cooperative strategy?
A strategy used to form either a stable alliance network or a dynamic alliance network.
What are the primary benefits of a network cooperative strategy?
Access to a partner’s other partnerships.
What type of network is used in mature industries?
Stable networks.
What type of network is used in rapidly changing environments?
Dynamic networks.
What is the main purpose of dynamic networks?
Tool of innovation.
What risks are associated with cooperative strategies?
Failure due to poorly developed contracts, misrepresented resources, and exploitation of specific investments.
Why is trust important in cooperative strategies?
It maximizes the pursuit of opportunities between partners.
What happens when trust is absent in cooperative strategies?
Formal contracts and extensive monitoring systems are used.
What is the focus of cost minimization in cooperative strategies?
Managing costs rather than maximizing opportunities.
Define ‘cooperative strategy’.
A strategy that involves partnering with other firms to achieve shared objectives.
What are the four business-level cooperative strategies?
- Complementary strategic alliances
- Diversifying strategic alliances
- Synergistic strategic alliances
- Coopetition
What are the three corporate-level cooperative strategies?
- Cross-border strategic alliances
- Corporate-level cooperative strategy
- Business-level cooperative strategy
Why do firms engage in cross-border strategic alliances?
To access new markets and resources.
What is a joint venture?
A partnership where two or more firms create a new entity.
What is an equity strategic alliance?
An alliance where partners invest in each other and share ownership.
What is a nonequity strategic alliance?
An alliance without shared ownership, often based on contracts.
What is ‘coopetition’?
A strategy where competing firms collaborate to achieve mutual goals.
Fill in the blank: Avanade was created in 2000 through a _______.
joint venture.
What company was Avanade created from a joint venture with?
Accenture and Microsoft.
What is the focus of the Accenture Microsoft Business Group?
Helping clients overcome disruptions caused by digital technologies.
What recognition did Avanade receive in 2021?
Named a Most Loved Workplace.
What are the three key elements Pamela Maynard identifies for creating a Most Loved Workplace?
- Unite around a common objective
- Create a culture of innovation
- Focus on diversity and inclusion
What is a ‘geek allowance’?
Funds provided to employees to stay current on the latest technologies.
What is the significance of a strong internal work environment in Avanade?
It enhances employee satisfaction and productivity.
What is Avanade’s approach to fostering diversity and inclusion?
Hiring a chief diversity and inclusion officer and focusing on leadership programs.
