AB3602 Week 9 - Cooperative Strategy
AB3602 Week 9 - Cooperative Strategy
AB3602 Week 9 - Cooperative Strategy
Strategic Management
Week #9
Cooperative Strategy
Case: Airbus A380 Part I
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Mutual Interest And Complementary Resources And
Capabilities Drive Success In Strategic Alliance
Resources Resources
Capabilities Capabilities
Core Competencies Core Competencies
Combined
Resources
Capabilities
Core Competencies
Customer Value
Customer Value
Horizontal complementary
strategy alliance occurs
Management information system
when partnering firms share Management information system
Human resource
resources & capabilities from Human resource
the same stage of the value
Finance Finance
chain to create a competitive
advantage. Such alliances
Vertical Alliance
Finance
* Sourced and adapted from Figure 9.2 of the Ireland / Hoskission / Hitt Textbook “The Management of Strategy, Concepts, 10th Edition”
Major Competitive Risks Involved In Strategic Alliances
(Transaction Cost Economics And Agency Theory Are
Useful In Identifying These Risks)
Competitive Risks Risk and Asset Management Desired Outcome
Inadequate / Incomplete contracts Detailed contracts (covering Value creation though:
(TCE) possible contingencies) -Reduced friction between
companies (enhanced
Holding alliance partner’s specific Setting up monitoring systems to cooperation)
investment hostage (TCE) ensure goals are met / processes
are proper
- Creating economies of scope
Opportunistic behavior of partner
firms (TCE, Agency Theory) Setting up incentive systems
which reward cooperation and
-Development of new resource,
Partners have hidden / non-mutual facilitate success capabilities and competencies by
agendas (Agency Theory) combination
Develop trusting behaviors
Misrepresentation of competencies through open communications -Setting up a base for future
and interactions collaboration
Partners fail to use their
complementary resources Proper understanding of partner’s -Enhanced innovation / product
competencies to facilitate success development
Understanding Risks Involved Enable Firm to Structure Successful Strategic
Alliance
* Sourced and adapted from Figure 9.4 of the Ireland / Hoskission / Hitt Textbook “The Management of Strategy, Concepts, 10th Edition”
Joint Venture vs Strategic Alliances
Reasons For Strategic Alliances
Complementary
Strategic Alliances
Allow Firms To
Share
Complementary
Resources And
Capabilities To
Create Competitive
Advantage
2. Competition Response Strategy
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3. Uncertainty-Reducing Strategy
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Strategic Alliances & Marriages:
Courtship Phase
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Strategic Alliances & Marriages:
Honeymoon Phase
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Strategic Alliances & Marriages:
Real Life Phase
8. Deliver on your end of the bargain (live up to expectations). Ensure that you
bring whatever you said you’d bring to the table. Kanter refers to “individual
excellence” and “building on your strengths“.
9. Blend formal governance with informal collaboration (keep communication
lines open). While long-distance marriages are not that common, long-
distance corporate alliances are. This distance makes formal governance
structures like alliance steering committees and operational management
teams essential. But fluid and regular informal communication can be even
more critical, enabling real-time, daily alliance management and issue
resolution.
10.Be open to different ways of collaborating (always keep your relationship
fresh by trying new things). Entering into a partnership is like taking an option
on future collaboration potential. Unless you keep an open mind, you never
know where the next opportunity to work together will come from.
*Paul Sanders, Insead Knowledge, 2019
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Alliances: Big Tech & Financial Institutions
• Financial institutions know they need to embrace innovation. They have
to find better ways to understand and respond to customers.
• There is new area of opportunity for big tech companies like Alibaba,
Apple, Google, Tencent and others.
• These companies have incredible reach, deep roots into their
customers’ lives and robust customer data.
• Big techs are constantly looking for ways to provide customers with
more value, to enhance customer loyalty by providing more integrated
ecosystem.
• Most already offer payments solutions, so extending offerings to include
financial products makes sense.
• However, there are no strong indicators that the big tech companies
want to become banks. The regulatory burden is considered too high for
their appetite.
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