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Dirección Estrategica De La Empresa > Chapter 4: Development Methods: Cooperation Or Alliances Between Enterprises > Flashcards

Chapter 4: Development Methods: Cooperation Or Alliances Between Enterprises Flashcards

1
Q

Strategic alliance definition

A

Where two or more organisations share resources and activities to pursue a strategy. It is a tool to achieve specific objectives

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2
Q

Features of strategic alliances

A
  • There is no hierarchical relationship between cooperators
  • Loss of some organizational autonomy
  • Blurring the boundaries of the organization
  • Interdependence
  • Achieving a specific goal
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3
Q

Motives for strategic alliances

A
  • Economic motives
  • Strategic motives
  • Other factors
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4
Q

Economic motives for strategic alliances

A
  • Economies of scale
  • Economies of scope
  • Learning economies
  • Reduced transaction costs
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5
Q

Strategic motives for strategic alliances

A
  • Acces to resources and capabilities
  • Entering or developing an industry or country
  • Reduce the level of competition in an industry
  • Taking advantage of vertical integration
  • Getting the right size to compete in a global market
  • Differentiate vs Competitors
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6
Q

Other motives for strategic alliances

A
  • Political factors
  • Defensive reasons
  • Trends
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7
Q

Advantages of alliances

A
  • Combining operational efficiency with flexibility of agreement
  • Easiness to break up
  • Possibility of having complementary R&Cs
  • Reduces risk and uncertainty
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8
Q

Advantages of alliances with respect to internal development

A
  • The organizational complexity of integrated companies is avoided
  • Each partner can concentrate on managing their key activities
  • Exit barriers are reduced
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9
Q

Advantages of alliances with respect to market transactions

A
  • Greater stability to carry out shared activities
  • Reduction of risks of entry
  • Reduction of transaction costs
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10
Q

Advantages of alliances with respect to mergers and acquisitions

A
  • Reducing problems of cultural and organizational integration
  • Easier to deal with competition law issues
  • It is a more reversible commitment
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11
Q

Disadvantages of alliances

A
  • Possibility to reinforce a competitor
  • Loss of autonomy in decision making
  • Time and financial costs
  • Managerial complexity
  • Possibility of divergent interests
  • Possible lackof trust and commitment
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12
Q

Types of cooperation agreements or alliances

A
  • Contractual agreements
  • Shareholder agreements
  • Inter-organizational networks
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13
Q

Types of contractual agreements

A
  • Long-term contracts on specific activities
  • Franchise
  • Licenses
  • Subcontracting
  • Spin-off
  • Consortium
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14
Q

Long-term contracts on specific activities characteristics

A
  • Simpler form of cooperation
  • Two companies carry out specific activities together
  • Starts an ongoing relationship between the parties of the contract
  • Generally, it focuses on a single activity
  • It can lead to a wide range of activities
  • Each company usually has a similar weight in the agreement
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15
Q

Franchises definition

A

Type of contract in which one company assigns to another the right to market goods and services in a given geographical area and under certain conditions in exchange for direct or indirect economic compensation

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16
Q

Franchises characteristics

A
  • The franchiser provides marketing rights
  • The franchisee is the owner of the business and who makes the necessary investments
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17
Q

Franchise types

A
  • Distribution franchise: transfer of marketing rights
  • Service franchise: it gives the idea of service and how to provide it
  • Industrial franchise: mixes license and franchise contracts
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18
Q

Advantages of franchises

A
  • To the franchiser: quick availability of the distribution network, no investment risks, good result in international markets
  • To the franchisee: access to the franchisor’s competitive advantage, prestigious brand, support from the franchisor
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19
Q

Disadvantages of franchises

A
  • To the franchiser: lower ability to control, possible loss of brand image, missmanagement
  • To the franchisee: excessive dependence on the franchiser, possible understanding problems between parties, too high royalties and fees
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20
Q

Licenses definition

A

Contract by which one company grants another the right to use its industrial property rights for a fee

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21
Q

What licenses include

A
  • Patents, design, copyright, know-how, technical information, IP rights
  • Supply of materials, technical assistance, technological advances
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22
Q

Licenses characteristics

A
  • Not all authors consider it a form of cooperation
  • Licensing company can gain access to international markets
  • The licensee company may have access to competitive products or processes
  • Excessive technological dependence, disincentive to own innovation
23
Q

Subcontracting definition

A

A company commissions another one to carry out certain production or service provision activities, according to pre-established instructions, with the principal company retaining final economic responsibility

24
Q

Reasons for subcontracting

A
  • Cost optimization
  • Increase in capacity
  • Lack of needed resources or capabilities
  • Conditions imposed by governments in countries of origin in cases of internationalization
25
Q

Advantages of subcontracting

A
  • Reduce production costs
  • More flexibility to address changes in demand
  • Focus on core business
26
Q

Types of subcontracting

A
  • Cascade: the auxiliary companies subcontract in turn, activities to other companies
  • Advanced: the subcontractor participates in the conception, design and quality of the product
  • Co-contracting: the subcontractor provides financial support to the main firm
27
Q

Conclusions about subcontracting

A
  • It favors vertical integration
  • Each partner remains independent
28
Q

Spin-off definition

A

It involves the encouragement and support from a large company, to its own qualified workers to leave the company and create their own business, often retaining control through equity

29
Q

Spin-Off characteristics

A
  • The purpose is the independence of one of the company’s department or division
  • The activities are subcontracted to the new created company
  • It can be considered as a form of corporate restructuring or disinvestment
  • it is made up of former workers of the organization. HQ has confidence and knows their skills
  • Because of the resulting collaboration, it is a form of cooperation
30
Q

Headquarter’s role in spin-offs

A
  • Supporting the new project financially and technically
  • Relocation of staff
  • Vertical and complementary relationship
31
Q

Consortium definition

A

Alliance betweenseveral companies that establish a form of contract through which the long-term relationship is formalized and mutual organization integrated

32
Q

Consortium characteristics

A
  • Plurality of partners, carrying out large-scale activities
  • The consortium is in charge of the delegated activities
  • Can be dissolved when the task or need for its creation is completed
33
Q

Consortium objectives

A
  • To develop a single and indivisible project that exceeds the individual possibilities of the companies
  • Sharing costs of investment, risks and benefits to LP
34
Q

Consortium legal forms

A
  • Economic interest groups: set up with their own legal personality
  • Temporary union of companies
35
Q

Shareholder agreements definition

A

The collaboration project involves the acquisition of shares by at least one of the participating partners

36
Q

Objectives of shareholder agreements

A
  • Start a new company
  • Strengthen the interaction between partners
  • Provide support
37
Q

Types of shareholder agreements

A
  • Joint-venture
  • Minority shareholder agreement
38
Q

Joint-venture definition

A

Agreement by which two or more independent companies create a new company to develop through it a collaborative venture

39
Q

Joint-venture characteristics

A
  • Own legal entity
  • The partner companies provide the financial investments, personnel, technology and assets
40
Q

Joint-venture objectives

A
  • Related to any business activity, such as production, marketing or R&D
  • It does not usually carry out core or essential activities of the parent companies
41
Q

Joint-venture advantages

A
  • Flexible, effective, fast and less expensive mechanism
  • Minimizing transaction costs
42
Q

Minority shareholder agreement definition

A

Acquisition of a minority stake in one company by another or swap of shares between companies

43
Q

Minority stake minority shareholder agreement characteristics

A
  • A company acquires a stake in the equity of another company on a minority basis to support its business project
  • It is interested in the results of the project and it is continously involved
  • No purpose of control
  • Financial, technological, industrial or commercial assistance is provided
  • The main company benefits from laying the foundation for future acquisition
44
Q

Share swap minority shareholder agreement characteristics

A
  • Each company maintains control of its business
  • The alliance established is usually long-term
  • Sometimes, it includes exchange of representatives in the boards of directors
45
Q

Inter-organizational networks definition

A

Intermediate organisational form between the maret and the company characterised by the plurality of cooperation agreements between various participants

46
Q

Inter-organizational networks characteristics

A
  • Collaboration agreements are links that create networks
  • There is a multiplicity and plurality of agreements
  • Each company focuses on the activities where it has its competitive advantage
47
Q

Types of inter-organizational networks

A
  • Vertical: agreements between companies along the value chain
  • Horizontal: alliances between similar companies on the same stage of the value chain
48
Q

Advantages of inter-organizational networks

A
  • Increased efficiency in the participating companies
  • Complementary of activities/markets
  • Improvement of the competitive position - differentiation
  • Increase in international scope, without having to build own structure
49
Q

Disadvantages of inter-organizational networks

A
  • Each company seeks its position within the network
  • Each company tries to reposition to gain benefit from the network
50
Q

Steps of cooperation agreements

A
  • Formulation process
  • Management of the alliance
  • Outcome of the alliance
51
Q

Formulation process in cooperation agreements

A
  • Choice of alliance as best strategic option
  • Choice of partners
  • Design of collaboration agreement
52
Q

Management of the alliance in cooperation agreements

A
  • Attitudes: trust, commitment, flexibility
  • Systems: Objectives and goals, resources and support, personnel policy, organisational design, dissemination of information, conflict resolution, control systems
53
Q

Outcome of the alliance in cooperation agreements

A

Success: meeting of objectives, partner satisfaction

Dirección Estrategica De La Empresa (4 decks)

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