MGT 490 Chapter 9 Flashcards

Firms work together to achieve a shared objective

firms combine some of their resources and capabilities to create a competitive advantage
exchange and sharing of resources and capabilities
co-development or distribution of goods or services

Two or more firms create an independent company by combining parts of their assets

Two or more firms create an independent company by combining parts of their assets

partners who own different percentages of equity in a new venture

contractual agreements given to a company to supply, produce, or distribute a firm’s goods or services without equity sharing

designed to take advantage of market opportunities by combining partner firms’ assets in complementary ways to create new value
include distribution, supplier or outsourcing alliances where firms rely on upstream or downstream partners to build competitive advantage

formed between firms that agree to use their skills and capabilities in different stages of the value chain to create value for both firms

formed between partners who agree to combine their resources and skills to create value in the same stage of the value chain
focus on long-term product development and distribution opportunities
partners may become competitors
requires a great deal of trust between the partners

firms join forces to respond to a strategic action of another competitor
difficult to reverse and expensive to operate
formed to respond to strategic rather than tactical actions

used to hedge against risk and uncertainty
noticed in fast cycle markets
may be formed to reduce the uncertainty associated with developing new product or technology standards

created to avoid destructive or excessive competition
explicit collusion exists when firms directly negotiate production output and pricing agreements in order to reduce competition

tacit collusion exists when several firms in an industry indirectly coordinate their production and pricing decisions by observing each other’s competitive actions and responses
reducing strategic alliances may require governments to find ways to permit collaboration among rivals without violating antitrust laws

allows a firm to expand into new product or market areas without completing a merger or an acquisition
provides some of the potential synergistic benefits of a merger or acquisition, but with less risk and greater levels of flexibility
permits a “test” of whether a future merger between the partners would benefit both parties

create joint economies of scope between two or more firms
create synergy across multiple functions or multiple businesses between partner firms