Ashwin Ppt Notes

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    2004 by South-Western/Thomson Learning 1

    Cooperative StrategyCooperative Strategy

    Robert E. Hoskisson

    Michael A. Hitt

    R. Duane Ireland

    Chapter 10Chapter 10

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    2

    Chapter 2Chapter 2

    Strategic LeadershipStrategic Leadership

    Chapter 4Chapter 4

    The InternalThe Internal

    OrganizationOrganization

    Chapter 6Chapter 6

    Competitive Rivalry andCompetitive Rivalry and

    Competitive DynamicsCompetitive Dynamics

    Chapter 9Chapter 9

    International StrategyInternational Strategy

    Chapter 1Chapter 1

    Introduction toIntroduction to

    Strategic ManagementStrategic Management

    Chapter 3Chapter 3

    The ExternalThe External

    EnvironmentEnvironment

    Chapter 5Chapter 5

    Business-LevelBusiness-Level

    StrategyStrategy

    Chapter 8Chapter 8Acquisition andAcquisition and

    Restructuring StrategiesRestructuring Strategies

    Chapter 11Chapter 11

    Corporate GovernanceCorporate Governance

    Strategic IntentStrategic Intent

    Strategic MissionStrategic Mission

    Chapter 7Chapter 7

    Corporate-Level StrategyCorporate-Level Strategy

    Chapter 10Chapter 10

    Cooperative StrategyCooperative Strategy

    Chapter 12Chapter 12

    Strategic EntrepreneurshipStrategic Entrepreneurship

    Strategic

    Analysis

    Strategic

    Thinking

    Creating

    Competitive

    Advantage

    Monitoring

    And Creating

    EntrepreneurialOpportunities

    The Strategic Management ProcessThe Strategic Management Process

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    3

    Cooperative StrategyCooperative Strategy

    Cooperative strategy is a strategy in whichCooperative strategy is a strategy in which

    firmsfirms

    work togetherwork together

    to achieve a shared objectiveto achieve a shared objective

    Cooperating with other firms is a strategyCooperating with other firms is a strategy

    thatthat

    creates value for a customercreates value for a customer exceeds the cost of constructing customerexceeds the cost of constructing customer

    value in other waysvalue in other ways

    establishes a favorable position relative toestablishes a favorable position relative to

    competitioncompetition

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    4

    Strategic Alliance as aStrategic Alliance as a

    Cooperative StrategyCooperative StrategyA strategic alliance is a cooperativeA strategic alliance is a cooperative

    strategy in whichstrategy in which

    firms combine some of their resources andfirms combine some of their resources and

    capabilitiescapabilities

    to create a competitive advantageto create a competitive advantage

    A strategic alliance involvesA strategic alliance involves

    exchange and sharing of resources andexchange and sharing of resources andcapabilitiescapabilities

    co-development or distribution of goods orco-development or distribution of goods or

    servicesservices

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    5

    CombinedCombined

    ResourcesResources

    CapabilitiesCapabilities

    Core CompetenciesCore Competencies

    ResourcesResources

    CapabilitiesCapabilitiesCore CompetenciesCore Competencies

    ResourcesResources

    CapabilitiesCapabilitiesCore CompetenciesCore Competencies

    Strategic AllianceStrategic Alliance

    Firm AFirm A Firm BFirm B

    Mutual interests in designing, manufacturing,Mutual interests in designing, manufacturing,

    or distributing goods or servicesor distributing goods or services

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    6

    Four Types of Strategic AlliancesFour Types of Strategic Alliances

    Joint venture: two or more firms create anJoint venture: two or more firms create anindependent company by combining parts ofindependent company by combining parts oftheir assetstheir assets

    Equity strategic alliance: partners who ownEquity strategic alliance: partners who owndifferent percentages of equity in a new venturedifferent percentages of equity in a new venture Nonequity strategic alliances: contractualNonequity strategic alliances: contractual

    agreements given to a company to supply,agreements given to a company to supply,produce, or distribute a firms goods or servicesproduce, or distribute a firms goods or services

    without equity sharingwithout equity sharing Strategic cooperative network: multiple firmsStrategic cooperative network: multiple firms

    agree to form partnerships to achieve sharedagree to form partnerships to achieve sharedobjectivesobjectives

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    7

    Strategic NetworkStrategic Network

    StrategicStrategicCenterCenterFirmFirm

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    8

    Strategic NetworkStrategic Network

    A strategic network is a grouping ofA strategic network is a grouping oforganizations that has been formed toorganizations that has been formed tocreate value through participation in ancreate value through participation in an

    array of cooperative arrangements, sucharray of cooperative arrangements, suchas alliances and joint venturesas alliances and joint ventures

    The strategic network seeks to develop aThe strategic network seeks to develop a

    competitive advantage in primary orcompetitive advantage in primary or

    support activitiessupport activitiesA strategic center firm often manages theA strategic center firm often manages the

    networknetwork

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    9

    Strategic NetworkStrategic Network

    strategic center firm engages in fourstrategic center firm engages in four

    primary tasksprimary tasks

    strategic outsourcing (outsources and partnersstrategic outsourcing (outsources and partners

    with more firms than do other network members)with more firms than do other network members)

    competencies (supports each members efforts tocompetencies (supports each members efforts to

    develop core competencies that can benefit thedevelop core competencies that can benefit the

    network)network)

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    10

    Strategic NetworkStrategic Network

    strategic center firm engages in fourstrategic center firm engages in four

    primary tasksprimary tasks

    technology (manages the development andtechnology (manages the development and

    sharing of technology-based ideas among networksharing of technology-based ideas among network

    members)members)

    race to learn (guides participants in efforts to formrace to learn (guides participants in efforts to form

    network-specific competitive advantages)network-specific competitive advantages)

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    11

    MarketMarket ReasonReason

    Slow Cycle Gain access to a restricted market Establish a franchise in a new market

    Maintain market stability (e.g.,establishing standards)

    Reasons for Strategic AlliancesReasons for Strategic Alliances

    by Market Typeby Market Type

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    12

    MarketMarket ReasonReason

    Fast Cycle Speed up development of new goods or

    service

    Speed up new market entry Maintain market leadership Form an industry technology standard Share risky R&D expenses

    Overcome uncertainty

    Reasons for Strategic AlliancesReasons for Strategic Alliances

    by Market Typeby Market Type

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    13

    MarketMarket ReasonReason

    Standard Cycle Gain market power (reduce industry

    overcapacity)

    Gain access to complementary resources Establish economies of scale Overcome trade barriers Meet competitive challenges from other

    competitors Pool resources for very large capital

    projects Learn new business techniques

    Reasons for Strategic AlliancesReasons for Strategic Alliances

    by Market Typeby Market Type

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    14

    Business-Level CooperativeBusiness-Level Cooperative

    Strategies:Strategies:ComplementaryComplementary

    AlliancesAlliances

    complementary strategic alliancescomplementary strategic alliances

    are designed to take advantage ofare designed to take advantage of

    market opportunities by combiningmarket opportunities by combining

    partner firms assets inpartner firms assets incomplementary ways to create newcomplementary ways to create new

    valuevalue

    these include distribution, supplierthese include distribution, supplier

    or outsourcing alliances whereor outsourcing alliances where

    firms rely on upstream orfirms rely on upstream or

    downstream partners to builddownstream partners to build

    competitive advantagecompetitive advantage

    Complementary Strategic AlliancesComplementary Strategic Alliances

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    15

    Business-Level CooperativeBusiness-Level Cooperative

    Strategies:Strategies:

    Margin Margin

    Primary Activities

    SupportActiv

    ities

    Service

    Marketing & Sales

    Outbound Logistics

    Operations

    Inbound LogisticsFirm

    Infrastructu

    re

    HumanResourceMgmt.

    TechnologicalD

    evelopment

    Procurement

    Margin Margin

    Primary Activities

    SupportAc

    tivities

    Service

    Marketing & Sales

    Outbound Logistics

    Operations

    Inbound LogisticsFirm

    Infrastru

    ctu

    re

    HumanReso

    urc

    eMgmt.