Business Strategy / Ch

Types of Strategic Alliances

Complementary Alliances
Diversification Alliances
Synergistic Alliances
Franchising
Competition Reduction Alliances
Competition Response Alliances
Uncertainty Reduction Alliances
Business-Level
Corporate-Level

Complementary Strategic Alliances

Partnerships that build on the complementarities among firms that make each more competitive
Supplier Value Chain
Buyer Value Chain
Include distribution, supplier or outsourcing alliances where firms rely on upstream partners
Japanese manufacturers rely on close relationships with and among suppliers to implement Just-In-Time inventory systems
Vertical Alliance
or downstream partners
to build competitive advantage

Complementary Strategic Alliances

Used to increase the strategic competitiveness of the partners
Horizontal Alliance
Buyer Value Chain
Buyer Value Chain
For example: Marketing agreements between Various Airlines

Types of Business-level Strategic Alliances

Explicit Collusion: When firms directly negotiate
production output & pricing agreements in order to
reduce competition.
Competition Reduction Strategies
Often illegal types of cooperative strategy which are
used to reduce competition.
Tacit Collusion: When several firms in an industry
indirectly coordinate their production & pricing
decisions by observing each others competitive
actions & responses.
e.g. the OPEC petroleum cartel
e.g. gas stations

Types of Business-Level Strategic Alliances

Firms join forces to respond to a strategic action of another competitor
Competition Response Strategies
Mega Bloks agreement with Disney.
Alliances can be used to hedge against risk & uncertainty