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Mahapatra, Satyanarayan; Saklani, Alok --- "Competition through cooperation" [2007] MonashBusRw 41; (2007) 3(3) Monash Business Review 27

Competition through cooperation

Satyanarayan Mahapatra, Alok Saklani

Satyanarayan Mahapatra and Alok Saklani look at the rise of the strategic alliance.

The growing integration of the global market has changed the nature of business competition from ‘me against you’ to ‘us against them’. After all, hunting in packs is always more effective. This new wave of cooperation was best summed up by the recent declaration by the firm Cable & Wireless that ‘the firm is dead – long live the federation!’

This is the age of the strategic alliance. A strategic alliance joins partners in the pursuit of common goals without losing strategic autonomy and without abandoning individual specific interests. This trade of technologies, skills or products is, if all goes as planned, a win/win situation.

In 2001, leading telecommunications system supplier Ericsson joined Sony to form Sony Ericsson Mobile Communications (SEMC). Ericsson brings the 3G technology know-how, research and development skills and an established global distribution network. Sony brings high production resources and processes as well as complementary knowledge in entertainment technology and design. In the Motorola-Toshiba joint venture, Motorola uses Toshiba’s distribution capability to gain access to Japan’s semiconductor market; in return Motorola is sharing its advanced microprocessor technology.

Pepsi’s joint venture with Starbucks moved Starbucks into the bottled-beverage market while Pepsi Co gained a line of ready-to-drink coffee products. Similarly, in the Starbucks and Maxwell House alliance, Starbucks benefited from Maxwell House’s extensive network of shelf space in major chains nationwide, while Maxwell House profited from customer desire for Starbucks-branded coffee.

Another great success story is the alliance between Hewlett Packard (HP) and The Walt Disney Co, with HP providing major IT solutions and innovations to Disney’s varied divisions. This was a well-negotiated and structured alliance with a clear understanding of what each partner had to contribute, what they would derive from the relationship and how that would change over time. Both partners are complex organisations and the integration of their alliance goals only happened due to solid planning and manageable expectations regarding implementation.

Despite these successes, up to two thirds of alliances run into serious managerial or financial trouble within the first two years. The mistakes and basic causes in alliances include weak partner selection, lack of vision, unclear goals and objectives, mistrust, poor alliance management and poor balance of power.

MBR subscribers: to view full academic paper, email mbr@buseco.monash.edu.au

Public access: www.mbr.monash.edu/full-papers.php (six month embargo applies).

Cite this article as

Mahapatra, Satyanarayan; Saklani, Alok. 'Competition through cooperation'. Monash Business Review. 2007.; Monash University ePress: Victoria, Australia. http://www.epress.monash.edu.au/. : 27–27. DOI:10.2104/mbr07041

About the authors

Satyanarayan Mahapatra

Alok Saklani

Dr S. N. Mahapatra is Assistant Professor in the Faculty of Business Administration at the SGRR Institute of Technology and Science, Dehardun, Uttarakhand, India and specialises in international marketing, strategic management and international business in the MBA and Executive MBA program. Dr Alok Saklani is Professor in the Faculty of Commerce and Management Studies, HNB Garhwal University, Srinagar, Uttarakhand, India and Director in Apeejay School of Management, New Delhi.


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