Michael_A._Hitt,_R._Duane_Ireland,_Robert_E._Hosk

Chapter 9: Cooperative Strategy 285

Vertical Complementary Strategic Alliance
In a vertical complementary strategic alliance, firms share some of their resources from
different stages of the value chain for the purpose of creating a competitive advantage
(see Figure 9.3).^38 Oftentimes, vertical complementary alliances are formed to adapt to
environmental changes;^39 sometimes the changes represent an opportunity for partnering
firms to innovate while adapting.^40
Companies recognize that today’s consumers are more connected than ever as they use
various devices such as smartphone applications, GPS systems, and the wireless Internet.
GE Lighting and Qualcomm Atheros, Inc. (a subsidiary of Qualcomm Incorporated)
formed a vertical complementary alliance to bring another functionality to “tech savvy”
shoppers. By combining Qualcomm’s wireless technologies, which yield positioning
information, with GE’s LED bulbs that are used to light retail stores, these two firms
are making it possible for retailers to “talk” to customers while they shop. The real-time
connection this configuration creates allows
“retailers to combine contextual information
with location to create revolutionary new
tools such as indoor navigation, infinite aisle,
suggested items, product information, and
special offers or coupons to those who opt in
and download the retailer’s app.”^41

Horizontal Complementary

Strategic Alliance

A horizontal complementary strategic alliance

is an alliance in which firms share some of

their resources from the same stage (or stages)

of the value chain for the purpose of creating

a competitive advantage. Automobile man-

ufacturers make frequent use of this type of

alliance, as do pharmaceutical companies.

In this regard, Sorrento Therapeutics, Inc.

is collaborating with NantWorks LLC to

develop “next generation immunotherapies

Figure 9.2 Business-Level Cooperative Strategies

Complementary strategic alliances

Competition response strategy

• Vertical


• Horizontal

Competition-reducing strategy

Uncertainty-reducing strategy

Ringo Chiu/ZUMA Press, Inc./Alamy

Mr. Patrick Soon-Shiong, pictured here, is the CEO of Nantworks LLC.

This firm is collaborating with Sorrento Therapeutics to develop innova-

tive drugs for the purpose of combating serious diseases such as cancer.