Posted in Marketing and Strategy Terms, Total Reads: 911
Definition: Cooperative Strategies
Cooperative Strategies are used when two or more firms want to partner in and work together to achieve a common shared objective. With combined resources, firms can together create value which otherwise is not possible by working independently. But there are certain risks associated with such a coalition especially when the firms are competitors. They are called as competitive risks of cooperative strategies.
(i) When the contract is not stated properly, there are chances that firms will find loopholes and try to take advantage of the situation over the other partner firms
(ii) Companies could falsely represent their competencies by wrongly stating their knowledge about certain conditions which are crucial to meet the objective
(iii) After a deal is struck, companies can also withhold itself by not providing the necessary support and resources which was agreed upon
(iv) When one of the firms in the alliance alone makes investments while the other firm does not. This makes the firm as hostage about its investments
Apart from the above stated risks, there are many other competitive risks related to managing the venture and ability to find trustworthy partners. When there is mutual trust & faith between the firms, fewer resources are only required to control the alliance.