ch 9 Flashcards
What is a cooperative strategy?
A means by which firms collaborate to achieve a shared objective.
Define 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 to create a competitive advantage.
What is an equity strategic alliance?
An alliance in which a firm purchases equity in another firm, thus becoming a partial owner.
What is a nonequity strategic alliance?
An alliance in which two or more firms develop a contractual relationship to share some of their resources in pursuit of a mutually beneficial project.
Why do firms use strategic alliances?
- To create value they couldn’t generate independently
- To access new markets more rapidly
What is tacit knowledge in the context of joint ventures?
Knowledge that is learned through experiences when people from partner firms work together.
What are some examples of nonequity strategic alliances?
- Licensing agreements
- Distribution agreements
- Supply contracts
What is the benefit of joint ventures in uncertain competitive environments?
They can establish long-term relationships and transfer knowledge between partners.
What is a key characteristic of slow-cycle markets?
Competitive advantages are shielded from imitation for relatively long periods.
What is a characteristic of fast-cycle markets?
Competitive advantages are not shielded from imitation, preventing their long-term sustainability.
How do firms in slow-cycle markets use strategic alliances?
- To enter restricted markets
- To establish a franchise in a new market
What role do alliances play in the global airline industry?
Individual airlines compete against each other while joining alliances that compete against one another.
What is the significance of the partnership between Barnes & Noble and Starbucks?
It allows Barnes & Noble to reach new customers without a huge strain on resources.
What is an example of an equity strategic alliance?
Panasonic’s $30 million investment in Tesla, bringing its battery cell technology to the partnership.
What is a reason for firms to form strategic alliances in fast-cycle markets?
To compete more effectively with rivals across markets.
Fill in the blank: A _______ is a strategic alliance in which two or more firms create a legally independent company.
joint venture
True or False: Nonequity strategic alliances are more formal than joint ventures.
False
What is one reason firms in slow-cycle markets are becoming rare?
The rapid expansion of the Internet’s capabilities for quick dissemination of information.
What is a collaborative advantage?
A competitive advantage developed through a cooperative strategy.
What is the main goal of using cooperative strategies?
To create the greatest amount of value for stakeholders.
What is a strategic alliance?
A partnership between firms that combines resources to create competitive advantages.
Name two benefits of forming a strategic alliance.
- Gain access to a restricted market
- Speed up development of new goods or services
What characterizes fast-cycle markets?
They are unstable, unpredictable, and hypercompetitive.
How do alliances help firms in fast-cycle markets?
They help firms transition from the present to the future and gain rapid entry into new markets.
Provide an example of a fast-cycle market alliance.
The partnership between Ford and ADT to create high-tech security systems for vehicles.
What are standard-cycle markets characterized by?
Alliances are formed by partners with complementary resources.
Give an example of a standard-cycle market alliance.
Airline alliances such as Star Alliance, SkyTeam, and Oneworld.
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 to create a competitive advantage.
What is a vertical complementary strategic alliance?
An alliance where firms share resources from different stages of the value chain.
What is an example of a vertical complementary strategic alliance?
The partnership between Honda and Sony to build electric vehicles.
Define horizontal complementary strategic alliance.
An alliance where firms share resources from the same stage of the value chain.
What is ‘coopetition’?
Simultaneous cooperation and competition among firms at the same stage of the value chain.
What role did horizontal alliances play in the pharmaceutical industry during the COVID-19 pandemic?
They helped develop and produce vaccines.
What is a competition response strategy?
A strategy using alliances to respond to competitors’ actions.
What was the purpose of the alliance between SABMiller and Molson Coors?
To respond to the competitive pressure from Anheuser-Busch.
Fill in the blank: Fast-cycle markets force firms to constantly seek sources of new _______.
competitive advantages
True or False: Alliances in standard-cycle markets are primarily formed for international expansion.
True
What is the expected outcome of the collaboration between General Motors and Honda?
Develop affordable electric vehicles for the mass market.
What is the primary focus of Accenture Interactive?
Digital services, especially for the advertising industry.
What innovative product did Rothco, a unit of Accenture, create to help children with speech disorders?
Saylists
What is one key challenge in horizontal alliances?
Parties may not agree on how to combine their complementary resources.
What acquisition created the world’s largest brewer?
InBev acquired Anheuser-Busch in 2008.
This acquisition resulted in significant cost reductions and economies of scale.
What was the unexpected economic impact of the MillerCoors joint venture?
Prices of beer products increased by 17–18 percent after the joint venture.
This increase was partly due to reduced competition.
What type of strategy do firms use to hedge against risk and uncertainty?
Uncertainty-Reducing Strategy.
These strategies are particularly relevant in fast-cycle markets and emerging economies.
What is the purpose of R&D alliances in business?
To reduce risks associated with developing new products and entering new markets.
Especially important in emerging economies.
What is the Corporate Electric Vehicle Alliance?
A coalition launched by Ceres to help companies transition to electric vehicles.
Members include Amazon, IKEA, and Siemens.
What are the two types of collusive strategies?
- Explicit collusion
- Tacit collusion
Explicit collusion involves direct negotiations, while tacit collusion is indirect coordination.
What is explicit collusion?
When firms directly negotiate production and pricing agreements.
This practice is illegal in the U.S. and most developed economies.
What is tacit collusion?
Indirect coordination of production and pricing decisions by observing competitors.
Common in industries dominated by a few large firms.
What does mutual forbearance refer to in competitive strategy?
A form of tacit collusion where firms avoid competitive actions against rivals in multiple markets.
This strategy helps firms prevent destructive competition.
What is a diversifying strategic alliance?
A strategy where firms share resources to engage in product and/or geographic diversification.
Example: Fratelli Wines applying Italian methods in India.
What is a synergistic strategic alliance?
A strategy where firms share resources to create economies of scope.
Often occurs across the value chain.
What is franchising?
A strategy where a franchisor licenses its trademark and business methods to franchisees.
This model is effective in fragmented industries.
What are the benefits of franchising in fragmented industries?
- Allows for consolidation of independent companies
- Increases market share
- Requires fewer resource commitments
Franchising is often used in retail and hospitality sectors.
What challenges do firms face when forming horizontal complementary alliances?
They compete against each other while also cooperating.
This duality can complicate value creation.
What is the main goal of corporate-level cooperative strategies?
To expand a firm’s operations through collaboration with other companies.
These strategies include diversifying alliances, synergistic alliances, and franchising.
What must firms do to maximize the value from corporate-level cooperative strategies?
Internalize successful alliance experiences and organize knowledge effectively.
This helps in future strategic decision-making.
What is the result of strategic alliances in high concentration industries?
They can reduce competitive behavior, such as price wars.
This can lead to higher prices and reduced service quality.
What is the role of trust in managing strategic alliances?
Trust is essential for coordinating activities and ensuring the success of partnerships.
It helps in managing diversity and aligning objectives.
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 is a corporate-level cooperative strategy?
A strategy that involves developing and managing cooperative strategies that are valuable, rare, imperfectly imitable, and nonsubstitutable.
Define franchising in the context of cooperative strategies.
A strategy in which a firm (the franchisor) uses a franchise as a contractual relationship to describe and control the sharing of its resources with its partners (the franchisees).
What is a cross-border strategic alliance?
A strategy in which firms with headquarters in different countries decide to combine some of their resources to create a competitive advantage.
List some purposes for which firms use cross-border transactions.
- Entering international markets
- Overcoming limited domestic growth opportunities
- Complying with foreign government economic policies
What can strategic alliances with local partners help firms overcome?
The liability of foreignness associated with moving into a foreign country.
True or False: Cross-border strategic alliances are generally simpler and less 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 network cooperative strategies.
Cisco
What is an alliance network?
The set of strategic alliance partnerships that firms develop when using a network cooperative strategy.
What are stable alliance networks typically formed in?
Mature industries where demand is relatively constant and predictable.
What characterizes dynamic alliance networks?
Industries characterized by frequent product innovations and short product life cycles.
Fill in the blank: A cross-border strategic alliance can help foreign partners from an ________ perspective.
[operational]
What did Ford and Mahindra aim to achieve through their strategic alliance?
Develop specific vehicles for India and other emerging markets.
What was one of the reasons Ford’s sales in India were disappointing?
Challenges in navigating the Indian automobile market.
What percentage stake did Mahindra hold in the joint venture with Ford?
51 percent
What are the potential benefits of being part of an alliance network?
- Access to partners’ other partners
- Increased likelihood of forming additional competitive advantages
- Stimulating product innovations
What is a key risk associated with network cooperative strategies?
A firm can be locked into its partnerships, which could preclude the development of alliances with other firms.
True or False: Firms in a network can use heterogeneous knowledge sets to produce more and better innovation.
True
What is the primary goal of dynamic alliance networks?
To explore new ideas with the potential to lead to product innovations.
What is a dynamic alliance network?
A network used in industries with frequent product innovations and short product life cycles
Which companies are examples of competitors that utilize dynamic alliance networks?
Apple and IBM
What is a primary benefit of a network cooperative strategy?
Access to partner’s other partnerships
What types of firms typically partner in dynamic alliance networks?
Large firms and smaller entrepreneurial start-up firms
What is a key outcome for small firms partnering with larger firms?
Building credibility through association
What percentage of cooperative strategies reportedly have serious problems in their first two years?
Two-thirds
True or False: 50% of cooperative strategies fail.
True
What is one risk associated with cooperative strategies?
Insufficient contracts
What behavior can lead to a breakdown of trust in an alliance?
Opportunistic actions
What should firms do to learn from failed cooperative strategies?
Study the reasons for failure
What is a risk of misrepresenting resources in a partnership?
Under-delivering on intangible assets
Fill in the blank: A common approach in supply chain alliances is to have _______ suppliers available.
backup
What is the focus of the cost-minimization approach in managing cooperative strategies?
Minimizing costs and preventing opportunistic behavior
What is a characteristic of the opportunity-maximization approach?
Exploring unexpected opportunities to create value
What does trust in a cooperative strategy help reduce?
The need for detailed formal contracts
What is a significant challenge in establishing trust in international cooperative strategies?
Cultural differences
What is the purpose of strategic alliances?
To create value and gain resources for objectives
What is a competition-reducing strategy?
A strategy to avoid excessive competition while gathering resources
What is mutual forbearance?
A form of tacit collusion in multiple markets
What is a synergistic alliance?
An alliance where firms share resources to develop economies of scope
What type of strategy is franchising considered?
Corporate-level cooperative strategy
What is a cross-border strategic alliance?
An international cooperation for performance superiority or to navigate governmental restrictions
What is a stable alliance network used for?
Extending competitive advantages into new areas
What is a dynamic alliance network primarily used for?
Innovation through frequent product changes
What can happen if a contract is not developed appropriately in a cooperative strategy?
Increased risk of failure
What is a cooperative strategy?
A cooperative strategy is a method used by firms to form partnerships with others to achieve shared objectives.
What are the two types of networks in network cooperative strategies?
- Stable alliance network
- Dynamic alliance network
What is the primary benefit of a network cooperative strategy?
Access to a partner’s other partnerships.
In which type of industries are stable networks primarily used?
Mature industries.
What is the focus of dynamic networks?
Innovation in rapidly changing environments.
What risks are associated with cooperative strategies?
- Inappropriate contract development
- Misrepresentation of resources by partners
- Asset-specific investments being exploited
Why is trust important in cooperative strategies?
Trust allows for effective management of opportunities between partners.
What happens when trust is lacking in cooperative strategies?
Formal contracts and extensive monitoring systems are used.
What is the difference between cost minimization and opportunity maximization in managing cooperative strategies?
Cost minimization focuses on reducing expenses, while opportunity maximization focuses on leveraging partnership opportunities.
What is a business-level cooperative strategy?
A strategy that focuses on partnerships at the business level to achieve competitive advantage.
What is a strategic alliance?
A formal agreement between firms to collaborate for mutual benefit.
What are the three major types of strategic alliances?
- Complementary strategic alliances
- Diversifying strategic alliances
- Cross-border strategic alliances
What is a joint venture?
A business arrangement in which two or more parties agree to pool their resources for a specific goal.
What is an example of a joint venture mentioned in the text?
Avanade, created through a joint venture between Accenture and Microsoft.
What was the primary purpose of forming Avanade?
To combine strategy and technology to improve clients’ IT capabilities.
What recognition did Avanade receive in 2021?
Named a Most Loved Workplace by Newsweek.
What are the three key principles for creating a Most Loved Workplace according to Pamela Maynard?
- Unite the organization around a common objective
- Create a culture of innovation
- Emphasize diversity and inclusion
What is the focus of the Accenture Microsoft Business Group?
To help clients overcome disruptions caused by digital technologies.
What is a key element of Avanade’s business strategy?
Integrating learning and development.
What is the significance of ‘geek allowances’ at Avanade?
They help employees stay current on the latest technologies.
Who runs the diversity and inclusion programs at Avanade?
A chief diversity and inclusion officer.
What is the current trend in the electric aviation market?
It is in the developmental stages of evolving into an established industry.
What are some risks associated with electric aviation?
- Technological risks
- Regulatory risks
- Market acceptance risks
