The complexity associated with most cooperative strategies increases the difficulty of successfully using them. One cause of this complexity is the fact that often, firms collaborating on certain projects are simultaneously competing with each other as well. As explained earlier, this reality describes the relationship between Cisco and IBM as well as those existing with airline companies that have joined alliance networks (such as Star, Oneworld, and SkyTeam). Another complication is that firms sometimes form a partnership with a company that is itself a collaboration between other companies. For example, Ford Motor Company formed a joint venture with carbon manufacturer DowAksa, a firm that is a joint venture organized by Dow Chemical Company and Istanbul-based Aksa Akrilik Kimya Sanayii A.S. The purpose of the Ford/DowAksa collaboration is to find ways to develop cheaper grades of carbon fiber components that can be integrated into Ford’s automobiles and trucks. Because it is much lighter than steel, carbon fiber helps auto manufacturers reduce the weight of their products, which in turn facilitates their efforts to increase products’ gas mileage. We see then that, for multiple reasons, the complexities of cooperative strategies increase the challenge of effectively implementing them and may contribute to alliance failure.

Questions

1. What are some of the major complexities encountered in developing cooperative strategies such as strategic alliances and joint ventures?
2. What role does competition from rivals play in the eventual success of cooperative strategies? Please explain.
3. What costs are incurred in developing strategic alliances? How can these costs be managed?
4. Should cost minimization or opportunity maximization be the primary goal of a cooperative strategy? Can both be achieved simultaneously? Why or why not?