What is the definition of cooperative strategy and why is this strategy important to firms competing in the 21st century competitive landscape?
Presentation on theme: "Competing for Advantage"— Presentation transcript: 1 Competing for Advantage Show
2 The Strategic Management Process
3 Cooperative Strategy Key Terms Cooperative strategy
4 The Importance of Cooperative Strategy 5
The Importance of Cooperative Strategy 6 The Importance of Cooperative Strategy 7 Reasons for Strategic Alliances by
Market Type
8 Strategic Alliances in Slow-Cycle Markets
9 Strategic Alliances in Fast-Cycle Markets
10 Strategic Alliances in Standard-Cycle Markets
11 Types of Alliances Key Terms Equity strategic alliance
12 Types of Alliances Key Terms Joint venture Tacit knowledge
13 Strategic Objectives of Cooperative Strategies 14 Cooperative Strategies to Differentiate or Reduce Costs
15 Complementary Strategic Alliances 16 Network Cooperative Strategies
17 Firms involved in alliance networks tend to be more innovative. 18
Alliance Network Success
19 A Strategic Network Figure 7.2: A Strategic Network – Cooperative relationships in alliance networks revolve around an effective strategic center firm which is at the core or center of the alliance network.
20 Strategic Center Firms 21 Types of Alliance Networks 22 Stable Alliance Networks 23 Dynamic Alliance Networks
24 Cooperative Strategies to Address Forces in the External Environment
25 Competitive Response Alliances 26 Competitive Response Alliances 27 Competition-Reducing Alliances
28 Collusive Strategies Explicit collusion - direct negotiation amongst firms to establish output levels and pricing agreements to reduce industry competition Tacit collusion - several firms indirectly coordinate production and pricing decisions which impact the degree of competition faced in the industry
Collusive Strategies – Often illegal, two types of collusion work to reduce competition. Discussion points: Explicit collusion Two or more competing firms negotiate directly to jointly agree about the amount to produce as well as the prices that will be charged for what is produced Illegal in the U.S. and most developed economies, where firms can face litigation for noncompetitive actions Exception is regulated
industries Tacit collusion Common to highly-concentrated industries Examples: Cereal and airline industries When coordination of production and pricing results from observing competitor actions and responses Firms recognize interdependence among industry participants and that their competitive behavior significantly affects each firm in the industry Results in less than fully competitive production levels and prices
that exceed competitive pricing models Mutual forebearance – one form of tacit collusion that occurs because firms fear and avoid competitive attacks against rivals who they compete with in multiple markets Example: PC industry Governments in free market economies need to determine how rivals can collaborate to increase competitiveness without violating established regulations. Examples: Global pharmaceutical and biotechnology industries
29 Associations and Consortia
30 Cooperative Strategies to Promote Growth and/or Diversification
31 Cooperative Strategies to Promote Growth and/or Diversification 32 Cooperative Strategies to Promote Growth and/or
Diversification
33 Successful Franchising Behaviors 34
Cooperative Strategies to Promote Growth and/or Diversification 35 Reasons for Cross-Border Alliances 36 A Distributed Strategic Network
37 Risks of Cooperative Strategies 38 Managing Competitive Risks in Cooperative Strategies 39 Implementing and Managing Cooperative Strategies 40 Primary Approaches to Manage Cooperative Strategies 41 Cost Minimization Approach 42 Opportunity Maximization Approach 43 Benefits of
Trust with Alliance Partners
44 Ethical Question From an ethical perspective, how much information is a firm obliged to provide to a potential complementary alliance partner about what it expects to learn from a cooperative arrangement?
45 Ethical Question “A contract is necessary because most firms cannot be trusted to act ethically in a cooperative venture such as a strategic alliance.” In your opinion, is this statement true or false? Why? Does the answer vary by country? Why?
46 Ethical Question Ventures in foreign countries without strong contract law are risky because managers may be subjected to bribery attempts once their firms’ assets have been invested in the country. How can managers deal with these problems?
47 Ethical Question This chapter mentions international strategic alliances being formed by the world’s airline companies. Do these companies face any ethical issues as they participate in multiple alliances? If so, what are the issues? Are they different for airline companies headquartered in the United States than for those with European
home bases? If so, what are the differences, and what accounts for them? 48 Ethical Question Firms with a reputation for ethical behavior in strategic alliances are likely to have more opportunities to form cooperative strategies than companies that have not earned this reputation. What actions can firms take to earn
a reputation for behaving ethically as a strategic alliance partner? What is meant by cooperative strategy?A cooperativestrategy is an attempt by a firm to realize its objectives through cooperation withother firms, in strategic alliances and partnerships (typically joint ventures), ratherthan through competition with them.
What are cooperative strategies and why do firms use them?A cooperative strategy (or cooperation strategy) concerns an attempt by an organization to cooperate with other firms in the achievement of its objectives. The cooperation may serve to reduce costs, sure up supply chains, reduce competition, add resources/knowledge/skillsets, and create other synergies.
How cooperative strategies may contribute to a firm's success?Through cooperation strategies such as strategic alliances, companies can scale up, consolidate their positions in the market, strengthen their businesses, form new businesses, access new markets, develop new products or services, or more complex products and services, access other's technologies and skills more ...
What is corporate level cooperative strategy?What is a Corporate-Level Cooperative Strategy? A corporate-level cooperative strategy is a cooperative strategy that affects a firm at corporate-level. Usually, the use of corporate-level in context means ways to help firms expand their operations by selecting the right portfolio of markets for themselves.
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