MAN exam 3 (chapter 9)

____ of cooperative strategies have serious problems in their first 2 years and that as many as __% fail - failure rate suggests that even when partnership has potential complementarities and synergies, alliance success is elusive - failure can be a valuable learning experience, meaning firms should study a cooperative strategy's failure to gain insights with respect to how to form and manage future cooperative arrangements

- 2/3 - 50

the __ of alliances with which firms are involved highlight the various ___ available to companies seeking to increase their competitiveness by cooperating with others

- array - options

compared to their business-level counterparts, corporate-level cooperative strategies commonly are ___ in scope and __ complex, making them relatively __ challenging and __ to use

- broader - more - more - costly

____, especially ___ ones, have the greatest probability of creating a competitive advantage and possibly even a sustainable one

- business-level strategic alliances - vertical

competitors initiate ____ to attack rivals and launch ____ to their competitors' actions - can be strategic or tactical

- competitive actions - competitive responses

3 steps in managing competitive risks in cooperative strategies:

- competitive risks - risk and asset management approaches - desired outcome

governments in free-market economies seek to determine how rivals can form cooperative strategies for the purpose of increasing ___ without ___ established regulations about competition

- competitiveness - violating

4 business-level cooperative strategies:

- complementary strategic alliances - competition response strategy - uncertainty-reducing strategy - competition-reducing strategy

____ and _____ are the 2 primary approaches firms use to manage cooperative strategies

- cost minimization - opportunity maximization

firms use ___ and ___ alliances to improve their performance by diversifying their operations through a means other than or in addition to internal organic growth or a merger/acquisition

- diversifying - synergistic

3 types of corporate-level cooperative strategies:

- diversifying alliances - synergistic alliances - franchising

in addition to partnerships among for-profit organizations, alliances are also formed between ___ and ___ for the purpose of commercializing ideas flowing from basic research projects completed at universities

- educational institutions - individual companies

2 types of collusive strategies:

- explicit collusion - tacit collusion

3 support functions:

- finance - hr - management information systems

often large firms create networks of relationships with smaller entrepreneurial startup firms in their search for ____ outcomes while an important outcome for small firms successfully partnering with larger firms in an alliance network is the ___ they build by being associated with their larger collaborators

- innovation-based - credibility

3 major types of strategic alliances: - key difference is ownership arrangement

- joint ventures - equity strategic alliances - nonequity strategic alliances

___ and ___ are key reasons firms use cross-border alliance

- limited domestic growth opportunities - foreign government economic policies

firms sometimes use business-level strategic alliances to hedge against __ and ___, especially in fast-cycle markets - or where uncertainty exists, such as entering new product markets, especially within emerging economies

- risk - uncertainty

3 unique market types that determine the different reasons for firms to use strategic alliances:

- slow-cycle - face-cycle - standard-cycle

effective ____ and ___ among partners while sharing their resources make it more likely that a network cooperative strategy will be successful - as does having a productive strategic center firm

- social relationships - interactions

because they can be difficult to reverse and expensive to operate, strategic alliances are primarily formed to take ___ rather than ___ actions and to respond to competitors' actions in a like manner

- strategic - tactical

5 value-chain activities:

- supply-chain management - operations - distribution - marketing - follow-up service

firms must learn how to manage both the __ and ___ assets that are involved with cooperative arrangement - partners tend to concentrate on managing the first at the expense of taking action to also manage the second

- tangible - intangible

firms able to develop corporate-level cooperative strategies and manage them in ways that are __, __, ___, and ___ develop a competitive advantage that is in addition to advantages gained through activities completed to implement business-level cooperative strategies

- valuable - rare - imperfectly imitable - nonsubstitutable

___: the set of strategic alliance partnerships that firms develop when using a network cooperative strategy - vary by industry characteristics

alliance network

when a firm seeks to diversify into markets in which the host nation's government prevents mergers/acquisitions, ___ become an especially appropriate option

alliances

firms that help to __ relationships between companies remain important network participants as these networks change

broker

___: strategy through which firms combine some of their resources to create a competitive advantage by competing in one or more products - firm believes combining some of its resources with those of one or more partners will create competitive advantages that it can't create on its own and will lead to success in a specific product market

business-level cooperative strategy

____: a competitive advantage developed through a cooperative strategy, indicating that a relationship that develops among collaborating partners is commonly the basis on which to build a competitive advantage

collaborative/relational advantage

used to reduce competition, ____ differ from strategic alliances because they are often an illegal cooperative strategy

collusive

individual companies must analyze the effect of a ____ strategy on their performance and competitiveness and decide if pursuing such a strategy facilitates or inhibits their competitive success

competition-reducing

___: - inadequate contracts - misrepresentation of competencies - partners fail to use their complementary resources - holding alliance partners' specific investments hostage

competitive risks

___: business-level alliances in which firms share some of their resources in complementary ways to create a competitive advantage - vertical and horizontal

complementary strategic alliances

firms use ____ to focus on joint long-term product development and distribution opportunities - the essence of this collaboration is pursuing opportunities to find ways to monetize operations in space

complementary strategic alliances

although they are difficult to manage, ___ are an important means of growth and enhanced firm performance - ability to effectively manage them is unevenly distributed across organizations in general, assigning managerial responsibility to a high-level executive or team improves likelihood that they will be well managed - successfully managing them can be a competitive advantage in itself

cooperative strategies

those responsible for managing the firm's ____ should take the actions necessary to coordinate activities, categorize knowledge learned from previous experiences, and make certain that what the firm knows about how to effectively form and use them is in the hands of the right people at the right time

cooperative strategies

___: means by which firms collaborate to achieve a shared objective - strategy used to create value for a customer that it likely could not create by itself

cooperative strategy

for all cooperative strategies, success is more likely when partners behave ___ - actively solving problems - being trustworthy - consistently pursuing ways to combine partners' resources to create value

cooperatively

___: strategy through which a firm collaborates with one or more companies to expand its operations - diversifying alliances, synergistic alliances, and franchising

corporate-level cooperative strategies

___ are attractive compared with mergers, and particularly acquisitions, because they require fewer resource commitments and permit greater flexibility in terms of efforts to diversify partners' operations - can be used as a way to determine whether the partners might benefit from a future merger/acquisition between them - "testing" process formed to combine firms' unique technological resources and capabilities

corporate-level strategic alliances

___ approach: the firm develops formal contracts with its partners that specify how the cooperative strategy is to be monitored and how partner behavior is to be controlled - goal is to minimize the cooperative strategy's cost and to prevent opportunistic behavior by partner

cost-minimization

_____: strategy in which firms with headquarters in different countries decide to combine some of their resources to create a competitive advantage - the number of these continues to increase - sometimes formed instead of mergers/acquisitions, which can be riskier - can be complex and hard to manage, but have potential to help firms use some of their resources to create value in locations outside their home market

cross-border strategic alliance

a ______ can help foreign partners from an operational perspective because the local partner has significantly more information about factors contributing to competitive success such as local markets, sources of capital, legal procedures, and politics

cross-border strategic alliance

____: creating value

desired outcome

____: strategy in which firms share some of their resources to engage in product and/or geographic diversification - firms seek to enter new markets with existing products or with newly developed products

diversifying strategic alliance

___: two firms form a collaborative relationship for competitive purposes

dyadic partnership

__: used in industries characterized by frequent product innovations and short product life cycles - apple and ibm

dynamic alliance networks

____: alliance in which two or more firms own different percentages of a company that they have formed by combining some of their resources to create a competitive advantage - formed to refocus strategy as a means of creating competitive advantage

equity strategic alliance

__: exists when two or more firms negotiate directly to jointly agree about the amount to produce as well as the prices for what is produced - illegal in most developed economies and will be challenged

explicit collusion

stable networks are built primarily to __ the economies that exist between the partners, such as airline or automobile industries

exploit

in dynamic alliance networks, partners typically ___ new ideas and possibilities with the potential to lead to product innovations, entries to new markets, and development of new markets

explore

___ markets are unstable, unpredictable, and complex in a word, hypercompetitive - firms must constantly seek sources of new competitive advantages while creating value by using current ones - "collaboration mindset" is of paramount importance for firms competing in this market

fast-cycle

firms in a __ market type use strategic alliances to: - speed up development of new goods/services - speed up new market entry - maintain market leadership - form industry technology standard - share risky R&D expenses - overcome uncertainty

fast-cycle

___: firm's competitive advantages are not shielded from imitation, preventing their long-term sustainability

fast-cycle markets

___ is a particularly attractive strategy to use in fragmented industries, such as retailing, hotels, motels, and commercial printing - large number of small/medium-sized firms compete as rivals, however, no firm or small set of firms has a dominant share, making it possible for a company to gain a large market share by consolidating independent companies through contractual relationships

franchising

___: strategy in which a firm (franchisor) uses a franchise as a contractual relationship to describe and control the sharing of its resources with its partners (franchisees) - form of business organization in which a firm that already has a successful product/service licenses its trademark and method of doing business to other businesses in exchange for an initial franchise fee and an ongoing royalty rate - effectiveness depends on how well franchisor can replicate its success across multiple partners in a cost-effective way - alternative to pursuing growth through mergers/acquisitions

franchising

in the most successful ___ strategy, both parties work closely together - primary responsibility of franchisor is to develop programs to transfer knowledge and skills needed to successfully compete at the local level - franchisees should provide feedback regarding how their units could become more effective and efficient - working together allows ways to strengthen core company's brand name, which is the most important competitive advantage for franchisees operating in local markets

franchising

first can successfully use both approaches to manage cooperative strategies however, the costs to monitor the cooperative strategy are ___ with cost minimization because writing detailed contracts and using extensive monitoring mechanisms is expensive, even though the approach is intended to reduce alliance costs

greater

___ are sometimes difficult to maintain because often they are formed between firms that compete against each other at the same time they are cooperating - challenge is for each firm to find ways to create greatest about of value from their simultaneous competitive and cooperative actions

horizontal complementary alliances

__: alliance in which firms share some of their resources from the same stage (or stages) of the value chain for the purpose of creating a competitive advantage - frequently automobile manufacturers and pharmaceutical companies - between buyers (each buys is also a potential competitor)

horizontal complementary strategic alliance

___ successful alliance experiences makes it more likely that the strategy will attain the desired advantages - those involved with forming and using corporate-level cooperative strategies can also use them to develop useful knowledge about how to succeed in the future - to gain maximum value, firms should organize the knowledge and verify that it is always properly distributed to those involved with forming and using alliances

internalizing

final risk: one firm may make __ that are specific to the alliance while the partner does not - if partner isn't also doing this, the firm is at a relative disadvantage in terms of returns earned from the alliance

investments

___: strategic alliance in which 2 or more firms create a legally independent company to share some of their resources to create a competitive advantage - partners own equal percentages and contribute equally to venture's operations - formed to improve firm's ability to compete in uncertain competitive environments - can be effective in establishing long-term relationships and in transferring tacit knowledge between partners

joint venture

a ______ is the optimal type of cooperative arrangement when firms need to combine their resources to create a competitive advantage that is substantially different from any they possess individually and when the partners intend to compete in highly uncertain environments

joint venture

firms with foreign operations have __ survival rates than domestic-only firms, although this is reduced if there are competition problems between foreign subsidiaries

longer

some cooperative strategies fail when it is discovered that a firm has ___ the resources it can bring to the partnership - more common when partner's contribution is based on some of its intangible assets (superior knowledge of local conditions) - effective way to deal with this risk is to ask your partner to provide evidence that it does possess the resources it will share in cooperative strategy

misrepresented

cross-border strategic alliances are __ complex and risky than domestic strategic alliances

more

__: form of tacit collusion in which firms do not take competitive actions against rivals they meet in multiple markets - firms choose not to engage in what could be destructive competition in multiple product markets

mutual forbearance

_____: strategy where several firms agree to form multiple partnerships to achieve shared objectives - increasing popularity - firms use it more extensively as a way of creating value for customers by offering many goods and services in many geographic markets - particularly effective when formed by geographically clustered firms

network cooperative strategy

important advantage of a ____ is that firms gain access to their partners' other partners - increases likelihood that additional competitive advantages will be formed as the set of shared resources expands

network cooperative strategy

disadvantage of ___ is that a firm can be locked into its partnerships, precluding the development of alliances with others - sometimes firms are expected to help other firms whenever support is required, which becomes a burden and negatively affects the focal firm's performance over time

networks

firms involved in __ gain information and knowledge from multiple sources - use these heterogeneous knowledge sets to produce more and better innovation - firms tend to be more innovative

networks

___: alliance in which two or more firms develop a contractual relationship to share some of their resources to create a competitive advantage - firms don't establish a separate independent company and therefore don't take equity positions - less formal, demand fewer partner communications, and don't foster an intimate relationship between partners, which make them unsuitable for complex projects where success requires partners to effectively transfer tacit knowledge to each other - examples: licensing agreements, distribution agreements, supply contracts, outsourcing arrangements

nonequity strategic alliance

an ___ firm wants to acquire as much of its partner's tacit knowledge as it can - full awareness of what a partner wants in a cooperative strategy reduced the likelihood that a firm will suffer these actions from another firm

opportunistic

____ approach: maximizing a partnership's value-creating opportunities - partners are prepared to take advantage of unexpected opportunities to learn from each other and explore additional marketplace possibilities - less formal contracts, with fewer constraints on partners' behaviors make it possible to explore how resources can be shared in multiple value-creating ways

opportunity-maximization

the relative lack of detail and formality that is part of the contract developed when using the ____ approach means that firms need to trust that each party will act in the partnership's best interests

opportunity-maximization

trust between partners increases the likelihood of success which highlights the benefits of the ______ approach to managing cooperative strategies

opportunity-maximization

3rd risk: a firm's failure to make available to its partners the __ that it committed to the cooperative strategy - surfaces most commonly when firms form an international cooperative strategy, especially in emerging economies - different cultures and languages can cause misinterpretations of contractual terms or trust-based expectations

resources

although monitoring systems may prevent partners from acting on their own self-interests, they also often preclude positive responses to new opportunities that surface to productively use each alliance partner's unique __ - formal contracts and extensive monitoring systems tend to stifle partners' efforts to gain maximum value from participation in cooperative strategy and require significant resources to be put into place and used

resources

one cooperative strategy ___ is that a firm may act in a way that its partner thinks is opportunistic - opportunistic behaviors surface either when formal contracts fail to prevent them or when alliance is based on false perception of partner trustworthiness

risk

___: - detailed contracts and monitoring - developing trusting relationships

risk and asset management approaches

firms in ___ markets often use strategic alliances to enter restricted markets or to establish a franchise in a new market - becoming rare in 21st century competitive landscape because: privatization of industries and economies, rapid expansion of Internet's capabilities for quick dissemination of information, speed with advancing technologies making quickly imitating even complex products possible - soon firms in this market will look competitive advantages - cooperative strategies can help firms transition from relatively sheltered markets to more competitive ones

slow-cycle

firms in a ___ market type use strategic alliances to: - gain access to restricted market - establish a franchise in a new market - maintain market stability

slow-cycle

___: markets where the firm's competitive advantages are shielded from imitation for relatively long periods of time and where imitation is costly - railroads, telecommunications, utilities, financial services

slow-cycle markets

__: formed in mature industries where demand is relatively constant and predictable - firms try to extend their competitive advantages to other settings while continuing to profit from operations in their core, relatively mature industry

stable alliance network

firms in a __ market type use strategic alliances to: - gain market power - gain access to complementary resources - establish better economies of scale - overcome trade barriers - meet competitive challenges from other competitors - pool resources for very large capital projects - learn new business techniques

standard-cycle

in ___ markets, alliances are more likely to be made by partners that have complementary resources - alliances formed by airline companies

standard-cycle

___: competitive advantages are moderately shielded from imitation, typically allowing them to be sustained for a longer period of time than fast-cycle but shorter than slow-cycle

standard-cycle markets

___: cooperative strategy in which firms combine some of their resources to create a competitive advantage - involve firms with some degree of exchange and sharing of resources to jointly develop, sell, and service goods or services - used to leverage their existing resources while working with partners to develop additional resources as foundation for new competitive advantages - vital strategy that firms use as a means to try to outperform rivals

strategic alliance

____ with local partners can help firms overcome certain liabilities of moving into a foreign country, including those related to lack of knowledge of local culture or institutional norms

strategic alliances

first reason firms form ___: - making it possible for firms to create value they couldn't generate by acting independently and entering markets more rapidly

strategic alliances

second major reason firms for ___: - most companies lack the full set of resources needed to pursue all identified opportunities and reach their objectives in the process of doing so - partnering with others will increase the probability of reaching firm-specific performance objectives - firms collaborate to: reach new customers and broaden product offerings/distribution without adding significantly to cost structures

strategic alliances

___: strategy in which firms share some of their resources to create economies of scope - create synergy across multiple functions or multiple businesses between partner firms

synergistic strategic alliance

__: exists when several firms in an industry indirectly coordinate their production and pricing decisions by observing each other's competitive actions and responses - takes place in industries dominated by a few large firms - results in production output that is below fully competitive levels and above fully competitive prices - can lead to less competition in other markets in which both firms operate - competition-reducing business-level strategy in industries with high degree of concentration (airlines or breakfast cereals) - firms recognize their interdependence, which means their competitive actions and responses significantly affect competitors' behavior towards them

tacit collusion

because it can't be codified, ____, which is increasingly critical to firms' efforts to develop competitive advantages, is learned through experiences such as those taking place when people from partner firms work together in a joint venture

tacit knowledge

the competitive advantages formed from strategic alliances designed to respond to competition and to reduce uncertainty are often more ___ than those developed through complementary alliances - because: complementary alliances have a stronger focus on creating value than do competition-reducing and uncertainty-reducing alliances, which are formed to respond to competitors' actions or reduce uncertainty rather than to attack competitors

temporary

___ can be a capability that is valuable, rate, imperfectly imitable, and often nonsubstitutable - can be competitive advantage - reduces firm's concern about its inability to contractually control all alliance details

trust

the psychological state of ___ in the context of cooperative arrangements is the belief that a firm will not do anything to exploit its partner's vulnerabilities, even if it has an opportunity to do so - less need to write detailed formal contracts to specify each firm's alliance behaviors, and cooperative relationship is more stable - more difficult to establish in international cooperative strategies than domestic due to trade policies, cultures, laws, and politics

trust

___: firms share some of their resources from different stages of the value chain for the purpose of creating a competitive advantage - formed to adapt to environmental changes, sometimes represent an opportunity for partnering firms to innovate while adapting - supplier

vertical complementary strategic alliance