284 Part 2: Strategic Actions: Strategy Formulationothers operating in this industry given the fast-cycle nature of the storage-
solution market. Micron and Seagate recently formed a strategic alliance for the pur-
pose of combining the firms’ innovation and expertise. Resulting from this collaboration,
the partners believe, will be an ability to provide customers with “industry-leading” stor-
age solutions. In turn, Micron and Seagate believe that customers buying the products that
will flow from the collaboration will themselves be able to innovate faster while producing
their goods and services. As reflected by the following comment from a customer, those
anticipating buying products from the firms’ strategic alliance seem to believe that novel
products will be available to them to purchase: “The strategic agreement between Micron
and Seagate promises to deliver new and innovative flash-based storage solutions.”^34Standard-Cycle Markets
In standard-cycle markets, alliances are more likely to be made by partners that have
complementary resources. The alliances formed by airline companies are an example of
standard-cycle market alliances.
When initially established, airline alliances were intended to allow firms to share their
complementary resources to make it easier for passengers to fly between secondary cities
in the United States and Europe. Today, airline alliances are mostly global in nature and
are formed primarily so members can gain marketing clout, have opportunities to reduce
costs, and have access to additional international routes.^35 Of these reasons, international
expansion by having access to more international routes is the most important because
these routes are the path to increased revenues and potential profits. To support efforts
to control costs, alliance members jointly purchase some items and share facilities such as
passenger gates, customer service centers, and airport passenger lounges when possible.
For passengers, airline alliances create benefits such as less complicated ticket buying pro-
cesses, easier connections for international flights, and the earning of frequent flyer miles.
There are three major airline alliances operating today. Star Alliance is the largest with
27 members. With 16 members, Oneworld Alliance is the smallest, while the 20-member
SkyTeam Alliance is in between the other two alliances in terms of total number of mem-
bers. All three alliances continue to add members to expand their geographic coverage
and to respond to market trends, such as the increasing amount of travel from regions
throughout the world to Asia. In general, most airline alliances, such as the three we
mention here, are formed to help firms gain economies of scale and meet competitive
challenges (see Figure 9.1). Code sharing agreements and the ability to reduce costs asso-
ciated with operations, maintenance, and purchases are examples of how airline alliances
help members gain economies of scale as a path to increasing their competitiveness.^369-2 Business-Level Cooperative Strategy
A business-level cooperative strategy is a strategy through which firms combine some
of their resources to create a competitive advantage by competing in one or more product
markets. As discussed in Chapter 4, business-level strategy details what the firm intends
to do to gain a competitive advantage in specific product markets. Thus, the firm forms
a business-level cooperative strategy when it believes that combining some of its resources
with those of one or more partners will create competitive advantages that it can’t create
by itself and will lead to success in a specific product market. We present the four
business-level cooperative strategies in Figure 9.2.9-2a Complementary Strategic Alliances
Complementary strategic alliances are business-level alliances in which firms share some
of their resources in complementary ways to create a competitive advantage.^37 Vertical and
horizontal are the two dominant types of complementary strategic alliances (see Figure 9.2).A business-level
cooperative strategy is
a strategy through which
firms combine some of
their resources to create a
competitive advantage by
competing in one or more
product markets.Complementary strategic
alliances are business-level
alliances in which firms share
some of their resources
in complementary ways
to create a competitive
advantage.