Business Strategy / Ch

Uncertainty Reduction Strategies
Siemens & Fujitsu – “Fujitsu Siemens Computers” sharing technical resources & capabilities

Types of Corp.-level Strategic Alliances

Create economies of scope between 2 or more firms, creating synergy across multiple businesses between firms.
Synergistic Strategic Alliances
Allows firms to grow with relatively strong centralized control without significant capital investments.
Franchising
Boston Pizza with 200 restaurants in Western Canada.
Cisco Systems has many synergistic strategic alliances.
Allows a firm to expand into a new product or market area without an acquisition.
Diversifying Alliances
Flynn Canada created strategic alliances with U.S. contractors.

International Cooperative Strategies

• Host partner knows local market & customs

However....

• Allows risk sharing by reducing financial investment

• International alliances can be difficult to

manage due to differences in management styles, cultures or regulatory constraints

• Must gauge partner’s strategic intent so they

do not gain access to important technology and become a competitor

Network Strategies

Network strategies involve a group of interrelated firms that work for the common good of all
Dynamic Networks
The types of networks are:
Stable Networks
Built for the exploitation of economies available between firms
Used in industries characterised by frequent product innovations & short product life cycles

Competitive Risks with Cooperative Strategies

While cooperative systems offer many advantages, there are also significant risks associated with them:
Poor contract development
Misrepresentation of partners’ competencies
Failure of partners to make complementary
resources available
Being held hostage through specific
investments made with partner
Misunderstanding partner’s strategic intent