292 Part 2: Strategic Actions: Strategy Formulation
In the most successful franchising strategy, the partners (the franchisor and the fran-
chisees) work closely together.^70 A primary responsibility of the franchisor is to develop
programs to transfer to the franchisees the knowledge and skills that are needed to suc-
cessfully compete at the local level.^71 In return, franchisees should provide feedback to
the franchisor regarding how their units could become more effective and efficient.^72
Working cooperatively, the franchisor and its franchisees find ways to strengthen the
core company’s brand name, which is often the most important competitive advantage
for franchisees operating in their local markets.^739-3d Assessing Corporate-Level Cooperative Strategies
Costs are incurred to implement each type of cooperative strategy.^74 Compared with their
business-level counterparts, corporate-level cooperative strategies commonly are broader
in scope and more complex, making them relatively more challenging and costly to use.
In spite of these costs, firms can create competitive advantages and value for custom-
ers by effectively using corporate-level cooperative strategies.^75 Internalizing successful
alliance experiences makes it more likely that the strategy will attain the desired advan-
tages. In other words, those involved with forming and using corporate-level cooperative
strategies can also use them to develop useful knowledge about how to succeed in the
future. To gain maximum value from this knowledge, firms should organize it and verify
that it is always properly distributed to those involved with forming and using alliances.
We explained in Chapter 6 that firms answer two questions when dealing with
corporate-level strategy: in which businesses and product markets will the firm choose to
compete and how will those businesses be managed? These questions are also answered
as firms form corporate-level cooperative strategies. Thus, firms able to develop corpo-
rate-level cooperative strategies and manage them in ways that are valuable, rare, imper-
fectly imitable, and nonsubstitutable (see Chapter 3) develop a competitive advantage
that is in addition to advantages gained through the activities completed to implement
business-level cooperative strategies. (Later in the chapter, we further describe alliance
management as another potential competitive advantage.)9-4 International Cooperative Strategy
The new competitive landscape finds firms using cross-border transactions for several
purposes. In Chapter 7, we discussed cross-border acquisitions—actions through which
a company located in one country acquires a firm located in a different country. In
Chapter 8, we described how firms use cross-border acquisitions as a way of entering
international markets. Here in Chapter 9, we examine cross-border strategic alliances as a
type of international cooperative strategy. Thus, as the discussions in Chapters 7, 8 and 9
show, firms engage in cross-border activities to achieve several related objectives.
A cross-border strategic alliance is a strategy in which firms with headquarters in
different countries decide to combine some of their resources to create a competitive
advantage. Taking place in virtually all industries, the number of cross-border alliances
firms are completing continues to increase.^76 These alliances are sometimes formed
instead of mergers and acquisitions, which can be riskier. Even though cross-border alli-
ances can themselves be complex and hard to manage,^77 they have the potential to help
firms use some of their resources to create value in locations outside their home market.
The cross-border alliance between Renault and Nissan that we mentioned earlier is
thought to be one of “the auto-industry’s most successful cross-border alliances.”^78
Through this collaboration, the partners cooperate in terms of development, procure-
ment, and production processes partly in order to be able to create value in markets
throughout the world that neither firm could create operating independently.A cross-border strategic
alliance is a strategy
in which firms with
headquarters in different
countries decide to combine
some of their resources
to create a competitive
advantage.