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[Solved] Strategic Management Sessions 9 to 13 Questions and Answers

Strategic Management Session: Questions and Answers Dr. Noel Jones, PhD International Business & Management Consultant ... [Show More] Ch. 9 REVIEW QUESTIONS & ANSWERS 1. What is the definition of cooperative strategy, and why is this strategy important to firms competing in the twenty-first century competitive landscape? (pp. 254-255) • A cooperative strategy is a strategy in which firms work together to achieve a shared objective . Cooperative strategy is the third major alternative (internal growth and mergers and acquisitions are the other two ) firms use to grow, develop value-creating competitive advantages, and create differences between them and competitors. Thus, cooperating with other firms is another strategy that is used to create value for a customer that exceeds the cost of creating that value and to create a favorable position in the marketplace. The increasing importance of cooperative strategies as a growth engine shouldn’t be underestimated. This means that effective competition in the twenty-first century landscape results when the firm learns how to cooperate with, as well as compete against, competitors. 2 Dr. Noel Jones Ch. 9 REVIEW QUESTIONS & ANSWERS 2. What is a strategic alliance? What are the three types of strategic alliances firms use to develop a competitive advantage? (pp. 255-256) •. A strategic alliance is a partnership between firms whereby each firm’s resources and capabilities are combined to create a competitive advantage. •. The three types of explicit cooperative strategies mentioned are (1) joint ventures, (2) equity strategic alliances, and (3) nonequity strategic alliances . However, tacit collusion and mutual forbearance (the latter being a form of tacit collusion) are also included as implicit cooperative arrangements. •. A joint venture is an alliance where a new, independent firm is formed by two or more partners who share some of their resources and capabilities to develop a competitive advantage. •. An equity strategic alliance is an alliance where partner firms share resources and capabilities, but own unequal shares of equity in a new venture . Many foreign direct investments are completed through equity strategic alliances, such as those involving Japanese or U.S. companies operating in China. •. A nonequity strategic alliance is an alliance where a contract is granted to a company to supply, produce, or distribute a firm’s products or services . No equity sharing is involved . Other types of cooperative contractual arrangements concern marketing and information sharing. Because they do not involve the forming of separate ventures or equity investments, nonequity strategic alliances are less formal and demand fewer commitments from partners as compared to both joint ventures and equity strategic alliances. However, the attributes of nonequity alliances make them unsuitable for complex projects where success is to be influenced by effective transfer of tacit knowledge between partners. 3 Dr. Noel Jones [Show Less]

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