Cooperative Strategy

Question 1

What are 3 benefits to having an alliance portfolio?

Answer 1

1. Resource sharing
2. Info sharing
3. Economies of scale

Question 2

What are important variable in alliance portfolios?

Answer 2

1. Strength of ties
2. Characteristics of partner firms
3. Portfolio size, density and diversity

Question 3

What are the 3 types of cooperative strategies?

Answer 3

1. Equity strategic alliances
2. Non-equity strategic alliances
3. Joint ventures

Question 4

What are the 2 business-level cooperative strategies?

Answer 4

1. Vertical complementary strategic alliances (use skills at different stages of value chain)
2. Horizontal complementary strategic alliances (combine skills at same stage of value chain)

Question 5

What are the 5 stages of building and managing an alliance?

Answer 5

1. Build the case/purpose
2. Identify/screen potential partners
3. Negotiate and set up alliance
4. Manage alliance
5. Assess strategic performance

Question 6

What are 3 reasons for alliances?

Answer 6

1. Improve operations
   - economies of scale/scope
   - enhance resources
   - manage risks;share costs
2. Enhance competitive conditions
   - expand arena
   - develop common standards
   - collusion
3. Manage entry and exit
   - low-cost entry
   - low-cost exit
   - manage uncertainty

Question 7

What are 5 questions to ask when screening potential alliance partners?

Answer 7

1. Are objectives compatible and for how long? (Strategic fit)
2. Are they willing and able to contribute resources and competencies? (resource and financial fit)
3. Do you understand each other? Do you share similar business logic and commitment? (cultural fit)
4. Can decision-making and control mechanisms along? (structure, systems and processes fit)
5. Timing? Other alliances? Alternatives? Competitive pressures? (additional fit criteria)

Question 8

What is the role of alliances in stable versus dynamic environments?

Answer 8

Stable:
- consolidate market position
- economies of scale/scope
Dynamic:
- close resource gaps
- create options
- influence environmental developments
- allow to rapidly pursue opportunities and address competitive threats

Question 9

What is a network cooperative strategy?

Answer 9

When several firms agree to form multiple partnerships to achieve shared objectives.

Question 10

What are 3 types of alliance portfolios and what are their pros and cons?

Answer 10

1. Large alliance portfolio
   - more resources
   - high costs of managing
2. Dense portfolio
   - stronger interconnectedness
   - shared norms
   - risk of info redundancy
3. Sparse portfolio
   - less in-depth cooperation
   - little shared norms and trust
   - more informational benefits

Question 11

What are the key principles of network advantage?

Answer 11

1. Links among alliance partners transfer information, cooperation and power
2. These advantages are not evenly distributed
3. Success comes from actively managing
4. Success comes to firms that are best positioned in alliance network

Question 12

What are the 5 risks of cooperative strategies?

Answer 12

1. Partner acting opportunistically
2. Misrepresentation of competencies brought to partnership (catfish)
3. Partner doesn’t make resources and capabilities available to you
4. You invest in alliance-specific investments and they don’t (free loader)
5. Coordination costs; divorce costs

Question 13

Why is selling a business after an alliance usually bad?

Answer 13

Resources and knowledge are already shared, so this greatly decreases the value