Cooperative & Corporate Strategy

8/12/2019 Cooperative & Corporate Strategy

1/26

Cooperative &Corporate StrategyBySaurabh Chandra Srivastava

MBA 2012-2014


2/26

Cooperative Strategy

A strategy in which firms work together to achieve a

shared objective

Cooperating with other firms is a strategy that:

Creates value for a customer

Exceeds the cost of constructing customer value in

other ways

Establishes a favorable position relative to competitors


3/26

Strategic Alliance (Starbucks & Barnes and Nobles)

A primary type of cooperative strategy in which firms

combine some of their resources and capabilities to create

a mutual competitive advantage

Involves the exchange and sharing of resources and

capabilities to co-develop or distribute goods and

services

Requires cooperative behavior from all partners


4/26

Examples of cooperative behavior known to contribute to

alliance success:

Actively solving problems

Being trustworthy

Consistently pursuing ways to combine partners

resources and capabilities to create value

Competitive advantage developed through a cooperative

strategy is called a collaborative or relational advantage


5/26

Contd


6/26

Other Strategy


7/26


8/26


9/26


10/26


11/26

Risks

Partners may act opportunistically

Partners may misrepresent competencies brought to the

partnership

Partners fail to make committed resources and

capabilities available to other partners

One partner may make investments that are specific to the

alliance while its partner does not


12/26

Managing Risks in Cooperative

Strategies


13/26

Managing Cooperative Strategies

Cost minimization management approach

Formal contracts with partners

Specify

How strategy is to be monitored

How partner behavior is to be controlled

Goals that minimize costs and prevent opportunistic

behavior by partners


14/26

Opportunity maximization approach

Maximizepartnershipsvalue-creation opportunities

learn from each other

explore additional marketplace possibilities

less formal contracts, fewer constraints


15/26

Corporate Strategy

The choice of direction of the firm as a whole and the

management of its business or product portfolio and

concerns:

Directional strategy

Portfolio analysis

Parenting strategy


16/26

Directional Strategy


17/26

Growth Strategy (Concentration strategies)

Vertical growth- taking over the function previously

provided by a supplier or by a distributor

Vertical integration- the degree to which a firm operates

vertically in multiple locations on an industrys value

chain from extracting raw materials to manufacturing to

retailing


18/26

Backward integration- assuming a function previously

provided by a supplier (Amazon.com)

Forward integration- assuming a function previouslyprovided by a distributor ( Intel acquires Dell)


19/26

Full integration- a firm internally makes 100% of its

key suppliers and completely controls its distributors

Taper integration- a firm internally produces less than

half of its own requirements and buys the rest from

outside suppliers (Reliance Fresh)

Quasi-integration- a company does not make any of

its key supplies but purchases most of its requirements

from outside suppliers that are under its partial control

(Dell)

Long-term contracts- agreements between 2 firms to

provide agreed-upon goods and services to each other

for a specific period of time


20/26

Horizontal growth- expansion of operations into other

geographic locations and/or increasing the range of

products and services offered to current markets(Disney merging with Pixar )

Horizontal growth is achieved through:

Internal development

Acquisitions

Strategic alliances

Horizontal integration-the degree to which a firm operates

in multiple geographic locations at the same point on an

industrysvalue chain


21/26

Growth Strategy (Diversification)

Concentric (Related) Diversification- growth into a

related industry when a firm has a strong competitive

position but attractiveness is low [Eureka Forbes

{Electric Iron & Food Processor}, Philips]

Conglomerate (Unrelated) Diversification- growth

into an unrelated industry [Concentric Dial Up Internet

& Nextlink, Ponds India {1980 Thermometer &

Leather product}, Nirma]


22/26

Stability Strategy

Continuing activities without any significant change indirection

Pause/Proceed with caution strategy- an opportunity

to rest before continuing a growth or retrenchment

strategy (Hindustan Levers)

No change strategy- continuance of current operations

and policies (Microsoft CRM)

Profit Strategy- to do nothing new in a worsening

situation but instead to act as though the companys

problems are only temporary


23/26


24/26

Sell-out strategy- management can still obtain a good

price for its shareholders and the employees can keep

their jobs by selling the company to another firm

Divestment- sale of a division with low growth

potential ( Philips divested its chip division

called NXP)

Liquidation-management terminates the firm


25/26

Bankruptcy- company gives up management of the

firm to the courts in return for some settlement of the

corporationsobligations (Enron)


26/26

THANK YOU

Cooperative & Corporate Strategy

Documents