test 3 Flashcards
Cooperative strategy
A strategy in which firms work together to achieve a shared objective.
Strategic alliance
A primary type of cooperative strategy in which firms combine some of their resources and capabilities to create a mutual competitive advantage.
Joint Venture
Two or more firms create a legally independent company by sharing some of their resources and capabilities.
Equity strategic alliance
Partners who own different percentages of equity in a separate company they have formed.
Non equity strategic alliance
Two or more firms develop a contractual relationship to share some of their unique resources and capabilities.
Slow market
Gain access to a restricted market
Establish a franchise in a new market
Maintain market stability (e.g., establishing standards)
Fast market
Speed up development of new goods or service Speed up new market entry Maintain market leadership Form an industry technology standard Share risky R&D expenses Overcome uncertainty
Standard cycle
Gain market power (reduce industry overcapacity)
Gain access to complementary resources
Establish economies of scale
Overcome trade barriers
Meet competitive challenges from other competitors
Pool resources for very large capital projects
Learn new business techniques
Complimentary strategic alliance
Combine partner firms’ assets in complementary ways to create new value
Include distribution, supplier or outsourcing alliances where firms rely on upstream or downstream partners to build competitive advantage
Vertical complimantary alliance
Formed between firms that agree to use their skills and capabilities in different stages of the value chain to create value for both firms.
Outsourcing is one example of this type of alliance.
Horizontal complimentary alliance
Formed when partners who agree to combine their resources and skills to create value in the same stage of the value chain.
Focus is on long-term product development and distribution opportunities.
The partners may become competitors which requires a great deal of trust between the partners.
Stable alliance network
Long term relationships that often appear in mature industries where demand is relatively constant and predictable
Stable networks are built for exploitation of the economies (scale and/or scope) available between the firms
Dynamic alliance network
Arrangements that evolve in industries with rapid technological change leading to short product life cycles
Primarily used to stimulate rapid, value-creating product innovation and subsequent successful market entries
Purpose is often exploration of new ideas
Cooperative governance
-the set of mechanisms used to manage relationships among stakeholders and to determine and control the strategic direction and performance of organizations.
concerned with identifying ways to ensure that strategic decisions are made more effectively.
-used in corporations to establish harmony between the firm’s owners and its top-level managers whose interests may be in conflict.
Ownership concentration
Relative amounts of stock owned by individual shareholders and institutional investors.
