Chapter 9: Cooperative Strategy 287competitors’ actions. Strategic alliances can be used at the business level to respond to
competitors’ attacks. The alliance among Google, Intel, and TAG Heuer that is discussed
in the Opening Case is a strategic response to Apple’s strategic action of introducing the
iWatch. Because they can be difficult to reverse and expensive to operate, strategic alli-
ances are primarily formed to take strategic rather than tactical actions and to respond to
competitors’ actions in a like manner.
In October of 2007, SABMiller and Molson Coors Brewing Company formed a part-
nership. At the time, these firms held the second and third largest shares of the U.S.
brew market. When formed, MillerCoors LLC, the name of the partnership, commanded
roughly 29 percent of the U.S. brew market. However, Anheuser-Busch held 49 percent
of the market. Indeed, the MillerCoors collaboration was a response to the size and scale
of Anheuser-Busch’s operations. (Anheuser-Busch itself was acquired by InBev in 2008,
an acquisition that created the world’s largest brewer.) Indicating that the collaboration
would result in significant cost reductions and an ability to generate economies of scale
through the firms’ combined operations, a company official said that “Miller and Coors
will be a stronger, more competitive U.S. brewer than either company can be on its own.”
Analysts agreed with this assessment, with one person noting that the partnership would
give the two companies “substantially more scale, which helps them with their retailers
and their distributors and helps erode Anheuser Busch’s No. 1 competitive advantage,
which is their (market) share.”^46 A successful collaboration in response to competitors
for many years, MillerCoors today is struggling as it tries to compete against consumers’
emerging preference for craft brews and cocktails instead of domestic lagers.^47 Thus, find-
ing ways to effectively manage this alliance going forward is critical to its future.
9-2c Uncertainty-Reducing Strategy
Firms sometimes use business-level strategic alliances to hedge against risk and
uncertainty, especially in fast-cycle markets.^48 These strategies are also used where
uncertainty exists, such as in entering new product markets, especially those within
emerging economies.
The relationship between hybrid vehicles and batteries that are needed to power them
create a situation for which alliances are being formed to reduce uncertainty. More spe-
cifically, there is insufficient industry capacity among battery manufacturers to meet the
demand for the type of batteries used in hybrids. This lack of a sufficient supply of electric
batteries creates uncertainty for automobile manufacturers. To reduce this uncertainty,
auto manufacturers are forming alliances. For example, Daimler AG formed a partner-
ship with Tesla through which it buys Tesla batteries to use in its “smart” minicar as well
as its Freightliner trucks. This collaboration continues even though Daimler recently sold
its 4 percent ownership stake in Tesla.^49 Knowing that it has access to quality batteries
through Tesla reduces Daimler’s uncertainty with respect to a component part that is
critical to building some of its products.
We further discuss Tesla in the Strategic Focus. As you will see, alliances are critical
to this firm’s current operations and will no doubt affect its ability to achieve success in
the long term.9-2d Competition-Reducing Strategy
Used to reduce competition, collusive strategies differ from strategic alliances in that
collusive strategies are often an illegal cooperative strategy. Explicit collusion and tacit
collusion are the two types of collusive strategies.
Explicit collusion exists when two or more firms negotiate directly to jointly agree
about the amount to produce as well as the prices for what is produced.^50 Explicit collusion