can you please help me with this case? question 1 to 5
Chapter 9. Cooperative Strategy 301 together, eleven- and twelve-speed automatic transmis sions to improve fuel efficiency and help the firms meet something like s6 billion, and likewise needs to strengthen new federal guidelines regarding such efficiency. its presence in the booming Asian market to have enough in regard to resource complementarity, a very suc- global market power. As such, it is entering joint ventures with two undersized Japanese carmakers, Mazda and cessful alliance was formed in 1999 by French-based Renault and Japan-based Nissan. Each of these firms Suzuki. However, the past history of Mazda and Suzuki lacked the necessary size to develop economies of scale with alliances may be a reason for their not being overly enthusiastic about the prospects of the current alliances. and economies of scope that were critical to succeed in he 1990s and beyond in the global automobile industry Fiat broke up with GM, Chrysler with Daimler, and Mazda with Ford When the alliance was formed, each firm took an own- This is also the situation in Europe locally for Peugeot- ership stake in the other. The larger of the two compa- nies, Renault, holds a 43-3 percent stake in Nissan, while Citroen of France, which is struggling for survival along with the GM European subsidiary, Opel-Vauxhall. More Nissan has a 15 percent stake in Renault. It is interesting to note that Carlos Ghosn serves as the CEO of both specifically, Peugeot Citroen and Opel-Vauxhall have struck a tentative agreement to share platforms and companies. Over time, this corporate-level synergistic engines to get the capital necessary for investment in alliance has developed three values to guide the relation- future models. As such, in all these examples, the firms ship between the two firms need additional market share, but also enough capital to trust (work fairly, impartially, and professionally) make the investment necessary to realize more market z. respect (honor commitments, Habilities, and respons power to compete. sibilities) In summary, there are a number of rationales why transparency (be open, frank, and clear) competitors not only compete but also cooperate in establishing strategic alliances and joint ventures in order Largely due to these established principles, the Renault- to meet strategic needs for increased market power, take Nissan alliance is a recognized success. One could argue advantage of complementary assets, and cooperate with that the main reason for the success of this alliance is the close neighbors, often in the same region of a country. complementary assets that the firms bring to the alli- ance; Nissan is strong in Asia, while Renault is strong in Sources: 2013, Markets and mal g harder, Economist, April 20. Europe. Together they have been able to establish other s4-ss7; [. Boxel, 2013, Peugeot reaffirms pu wweft.com, February 7; D. Pearson & J. Bena push into BRICs, Financial Times production locations, such as those in Latin America, anett, 2013, Corporate DEWE M. Peugeot pledge market in Europe has which they may not have obtained independently. portunities to cooperate out- Some firms enter alliances because they are "squeezed ide the region. Wall Street Journal Online in the middle:" that is, they have moderate volumes, B. White. 2013, Mazda uses alliances to boo "ww.waj.com. January 10 st sales, Wall Street Journal Online, www.ww.com, January 27: T. Yu, M. Subram mostly for the mass market, but need to collaborate to Cannella. Jr, 2013, Competing globally, alying locally, Alliances between establish viable economies of scale. For example, Fiat- sJobat rivals and host-country factors. Journal of International Busin Chrysler needs to boost its annual sales from $4.3 billion to Studies, 442 117-137, W. Kim, 2012. The voyage of iBliance successful venture. Advances in Manag Case Discussion Questions How can the resource-based view of the firm (see Chapters 1 What are the risks associated with the corporate-level strategic and 3) help us understand why firms develop and use coopera iflance between Renault and Nissan? What have these firms tive strategies such as strategic alliances and joint ventures? done to mitigate these risks? What is the relationship between the core competencies a firm is it possible that some of the firms mentioned in this Mini- possesses, the core competencies the fim feels it needs, and Case (e.g. Renault, Nissan, Mazda, Peugot-Citroen, Opel- decisions to form cooperative strategies? Vauxhall) might form a network cooperative strategy? If so, What does it mean to say that the partners of an alllance have what conditions might Influence a decision by these firms to complementary assets'? What complementary assets do form this particular type of strategy? Renault and Nissan share?Alliance Formation, Both Globally and Locally, in the Global Automobile Industry The academic literature on alliances has some interesting To compete, firms often need resources that they don't recent findings, one of which is the rationale that because have but may be found in other firms in or outside of firms are often located in the same country, and often the focal firm's home industry. As such, these comple- in the same region of the country, it is easier for them mentary resources are another rationale for why large to collaborate on major projects. As such, they compete firms form joint ventures and strategic alliances within globally, but may cooperate locally. Historically, firms the same industry or in vertically related industries. have learned to collaborate by establishing strategic alli- Because firms are co-located and have similar needs ances and forming cooperative strategies when there is it's easier for them to jointly work together, for exam- intensive competition. This interesting paradox is due to ple, to produce engines and transmissions as part of several reasons. First, when there is intense rivalry, it is the powertrain. This is evident in the European alliance difficult to maintain market power. As stica, using a coop- between Peugeot Citroen and Opel-Vauxhall (owned by crative strategy can reduce market power through b igh better General Motors). It is also the reason for a recent U.S. normas of competition. this pertains to the idea of " mutual alliance between Ford and General Motors in devel forbearance Another rationale that has emerged is based oping upgraded nine- and ten-speed transmissions. of the resource-based view of the firm (see Chapter ;). Furthermore, Ford and GM are looking to develop
