Chapter 9: Cooperative Strategy - Definition and Benefits

Student Name
Instructor
Course
Date
Chapter 9: Cooperative Strategy
1 What is the definition of cooperative strategy, and why is this strategy important to firms competing in the current competitive landscape?
A cooperative strategy is a means by which companies come together to achieve a shared goal. The strategy creates a strong relationship between firms, thereby increasing their level of competitiveness. It offers value to the customers, which cannot be achieved by the independent firms. The successful use of cooperative strategies also helps firms to increase revenues and outperform their competitors in the market.
2 What is a strategic alliance? What are the major types of strategic alliances that firms form from the purpose of developing a competitive advantage?
A strategic alliance is a cooperative strategy that firms use to increase their competitiveness by combining resources. The firms jointly develop, sell, and service their goods. There are three major types of strategic alliances, namely joint ventures, equity, and non-equity strategic alliances. A joint venture is where two or more firms create a legal company to share their resources. The partners usually own shares and contribute equally amongst themselves. In the equity alliance, firms own a different percentage of shares in the formed company. In non-equity alliance, two or more firms form contractual relationships to share resources and increase their degree of competitiveness.
3 What are the four business-level cooperative strategies? What are the key differences among them?
There are four business-level cooperative strategies. The first one is the complementary strategic alliance that allows firms to share their resources in complementary ways. They exist in two ways. The vertical complementary alliances, in which sharing of resources by firms is done at different stages of the value chain. In horizontal complementary alliances, the resources are shared from the same stage (or stages). Secondly is the competition strategy, in which firms collaborate to launch attacks to directly to counter the actions of their rivals. Thirdly, the uncertainty-reducing strategy which helps firms against the risks of uncertainty, especially while entering new product markets. Last, is the competition reduction strategy, here firms use collusive strategies to reduce competition between them.
4 What are the three cooperative-level cooperative strategies? How do firms use each of these strategies for the purpose of creating a competitive advantage?
There are three types of cooperative-level strategies that are commonly used. They include franchising, diversifying, and synergistic alliances. In franchising, a firm with an established brand (franchisor) licenses its trademark to other businesses (franchisee). The franchisee gains a competitive edge as the brand is already recognized in the market. Diversifying alliances is used by firms to enter new markets either with existing or new products. Diversified alliances require low capital input and reach a wide market scope. The synergistic alliance is used by firms to create economies of scope by sharing their resources. The alliances help firms to satisfy multiple needs.
5 Why do firms use cross-bord...