Primary Type of Cooperative Strategy: Strategic Alliances Cooperative strategy - A strategy in which firms work together to achieve a shared objective  One of 3 means firms use to grow and improve performance (mode) Internal development, mergers and acquisitions, and cooperation Core and critical parts of firms strategies today Has implications for a firm’s corporate, business, and international strategy Can help in the achievement of competitive advantage and above average returns o Collaborative or relational advantages Go beyond normal company to company dealings o     Strategic Alliance - A cooperative strategy in which firms combine some of their resources and capabilities to create a competitive advantage  Involve firms with some degree of exchange and sharing of resources and capabilities to co-develop, sell, and service goods or services Three major types of strategic alliances:  o o  o  o o Joint Venture Two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage Partners typically own equal percentages and contribute equally to the ventures operations Equity Strategic Alliance Two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities to develop a competitive advantage Nonequity Strategic Alliance Two or more firms develop a contractual relationship to share some of their unique resources and capabilities to create a competitive advantage A separate independent company is NOT established Licensing agreements   Distribution agreements  Supply contracts  Outsourcing commitments Reasons Firms Develop Strategic Alliances      They allow partners to create value that they couldn’t develop by acting independently They allow partners to enter markets more quickly and with greater market penetration possibilities Most firms lack the full set of resources and capabilities needed to reach their objectives They are a prime vehicle for firm growth – mode of entry into new product or geographic markets Can account for 25% of sales revenue in large firms Reasons for using strategic alliances can also vary by market type (Figure 9.1) Business-Level Cooperative Strategy

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Principles Of Economics Q and A

Central Connecticut State University ECON 200 | Principles Of Economics I

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Primary Type of Cooperative Strategy Strategic Alliances

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