Learned to collaborate by establishing strategic alliances

Assignment Help Operation Management
Reference no: EM132234580

Mini Case study: Alliance Formation, Both Globally and Locally, in the Global Automobile Industry

The academic literature on alliances has some interesting recent findings, one of which is the rationale that because firms are often located in the same country, and often in the same region of the country, it is easier for them to collaborate on major projects. As such, they compete globally, but may cooperate locally. Historically, firms have learned to collaborate by establishing strategic alliances and froming cooperative strategies when there is intensive competition. This interesting paradox is due to several reasons. FIrst, when there is intense rivalry, it is difficult to maintain market power. As such, using a cooperative strategy can reduce market power through better norms of competition; this pertains to the idea of "mutual forbearance:. Another rationale that has emerged is based on the resource-based view of the firm. To compete, firms often need resources that they dont have but may be found in other firms in or outside of the local firms home industry. As such, these completementary resources are another rationale for why large firms form joint ventures and strateic alliances whithin the same industry or in vertically related industries. Beacuse firms are co located and have similar needs, its easir for them to jointly work together, for example, to produce engines and transmiisions as part of the powertrain. This is evident in the European alliance between Peugeot-Citroen and Open-Vauxhall. It is also the reason for a recent US alliance between For and General Motors in developing upgraded nine and ten speed transmiisons. Furthermore, Ford and GM are looking to develop, together, eleven and twelve speed automatic transmissions to improve fuel efficiency and help the firms meet new federal guidelines regarding such efficiency. In regard to resouce complementarity, a very successful alliance was fromed in 1999 by French based Renault and Japan based Nissan. Each of these firms lacked the neccessary size to develop economies of scale and economies of scope that were critical to succeed in the 1990s and beyond in the global automobile industyr. When the alliance was formed, each firm took an ownership stake in the other. THe larger of the two companies Renault holds a 43.3 percent stake in Nissan, while Nissan has a 15 percent stake in Renault. It is interesting to note that Carlos Ghosn serves as the CEO of both companies. Over time, this corpoorate level synergistic allaince has developed three values to guide the relationship between the two firms: 1. trust )work fairly, impartially, and profesionall) 2. respect (honor commitments, liabilites, and responsibilites) 3. transparency (be open, frank, and clear) Largely due to these established principes, the Renalut Nissan alliance is a recognized success. One could argue that the main reason for the success of this alliance is the complementary assets that the firms bring to the alliance; Nissan is strong in Asia, while Renault is strong in Europe. Together they have eben able to establish other production locations, such as those in Latin America, whihc they may not have obtained independently. Some firms enter alliances because they are squeezed in the middle; that is they have moderate volumes, mostly for the mass market, but need to collaborate to testablish viable encomies of scale. For exmaple, fiat- chrysler needs to boost its annual sales from 4.3 billion to something like $6 billion, and likewise needs to strengthen its presence in the booming Asian market to have enough global market power. As such, it is entering joint ventures with two undersized Japanese carmakers, Mazda and Suzuki. HOwever, the past history of Mazda and Suzuki with alliance may be a reason for thier not being overly enthusiastic about the prospects of the current alliances. Fiat broke up with GM, Chrysler with aimler, and Mazda with Ford. This is also the situation in Europe locally for Peugeot Citron of France, which is struggling for survival along with the GM European subsidiary, Open-Vauxhall, More specifically, Peugeot Citroen and Opel Vauhall have struck a tentative agreement to share platforms and engines to get the capital necessary for investment in future models. As such, in all these examples, the firms need additional market share,but also enough capital to make the investment necessary to realize more market power to compete. In summary, there are a number of rationales why competitiors no tonly compete but also cooperate in establishing strategic alliances and joint ventures in order to meet strategic needs for increased market power, take advatnges of complemnetary assets and cooperate with close neighbor, often in the same region of a country.

1. How can the resource-based view of the firm help us understand why firms develop and use cooperative strategies such as strategic allainces and joint ventures?

2. What is the relationship between the core competencies a firm possesses, the core competencies the firm feels it needs, and decisions to form cooperative strategies?

3. What does it mean to say that the partners of an alliance have complementary assets? What complemenarty assets do Renault and Nissan share?

4. What are the risks associated with the corporate level strategic alliance between Renault and Nissan? What have these firms done to mitigate these risks?

5. Is it possible that some of the firms mentioned in this Mini case (eg Renault, Nissan, Mazda, Peugot Citroen, Opel Vauxhall) might form a network cooperative strategy? If so, what conditions mihgt influence a decision by these firms to form this particular type of strategy?

Reference no: EM132234580

Questions Cloud

Discuss the specific strategies that you would use to help : With respect to this situation, respond to the following: Explain the change that will be the focus of your consultation. Identify and discuss the internal.
Global strategy-business strategy-diversification strategy : What are the problems and benefits associated with each strategy. global strategy-business strategy-diversification strategy.
Develop a research-based newsletter or newspaper article : Develop a research-based newsletter or newspaper article about your topic to inform the general public about the problem or issue.
Advanced method produces a positive or negative result : Describe an example where a more advanced method produces a positive or negative result. Why is this?
Learned to collaborate by establishing strategic alliances : Firms have learned to collaborate by establishing strategic alliances and froming cooperative strategies when there is intensive competition.
Explain the different types of sampling techniques : Prepare an annotated outline comparing the different types of sampling techniques that are in the Jackson and Trochim et al. readings listed below.
Legal and ethical requirements can apply in meeting : What legal and ethical requirements can apply in meeting situations? What actions can a chairperson take to help resolve conflict between meeting participants?
Prepare the journal entry relating to the machine : Irwin, Inc., constructed a machine at a total cost of $36 million. Ignoring income taxes, prepare the journal entry relating to the machine for 2016
Identify the context for risk management : When identifying the risks, why should you do the followong: Identify the context for risk management

Reviews

Write a Review

Operation Management Questions & Answers

  Book review - the goal

Operations Management is about a book review. Title of the book is "Goal". This book has been written by Dr. Eliyahu Goldartt. The book has been appreciated by many as one of those books which offers an insight into the operations and strategic capac..

  Operational plan in hospitality enterprise

Operational plan pertaining to a hospitality enterprise is given in detail in the solution. The operational plan is an important plan or preparation which gives guidelines regarding the role and responsibilities of each and every operation at all lev..

  Managing operations and information

Recognise the importance of a strategic approach to the development and deployment of organisational information systems. Demonstrate an understanding of the importance of databases and their integration to the organisation's overall information mana..

  A make-or-buy analysis

An analysis of the holding costs, including the appropriate annual holding cost rate.

  Evolution and contributor of operations management

Briefly explain Evolution and contributor of Operations management.

  Functions and responsibilities of an operations manager

A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..

  Compute the optimal order quantity

Compute the Optimal Order quantity of DVD players. Determine the appropriate reorder point.

  Relationship to operations practice in the organisation

Evaluate problems in operations and identify approaches to overcoming them. Critically evaluate operating plans and identify areas for improvement. Justify, implement and evaluate changes to operations in line with modern approaches.

  A make or buy analysis

Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.

  Prepare a staffing plan

Prepare a staffing plan showing the change of your unit from medical/surgical staffing to oncology staffing.

  Leadership styles in different organizations

Ccompare the effectiveness of different leadership styles in different organizations

  Risk management tools and models

Be able to understand the concept of risk, roles and responsibilities for risk management and risk management tools and models.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd