Chapter 9: Cooperative Strategy 301
together, eleven- and twelve-speed automatic transmis-
sions to improve fuel efficiency and help the firms meet
new federal guidelines regarding such efficiency.
In regard to resource complementarity, a very suc-
cessful alliance was formed in 1999 by French-based
Renault and Japan-based Nissan. Each of these firms
lacked the necessary size to develop economies of scale
and economies of scope that were critical to succeed in
the 1990s and beyond in the global automobile industry.
When the alliance was formed, each firm took an own-
ership stake in the other. The larger of the two compa-
nies, Renault, holds a 43.3 percent stake in Nissan, while
Nissan has a 15 percent stake in Renault. It is interesting
to note that Carlos Ghosn serves as the CEO of both
companies. Over time, this corporate-level synergistic
alliance has developed three values to guide the relation-
ship between the two firms:
- trust (work fairly, impartially, and professionally)
- respect (honor commitments, liabilities, and respon-
sibilities) - transparency (be open, frank, and clear)
Largely due to these established principles, the Renault-
Nissan alliance is a recognized success. One could argue
that the main reason for the success of this alliance is the
complementary assets that the firms bring to the alli-
ance; Nissan is strong in Asia, while Renault is strong in
Europe. Together they have been able to establish other
production locations, such as those in Latin America,
which they may not have obtained independently.
Some firms enter alliances because they are “squeezed
in the middle;” that is, they have moderate volumes,
mostly for the mass market, but need to collaborate to
establish viable economies of scale. For example, Fiat-
Chrysler needs to boost its annual sales from $4.3 billion to
something like $6 billion, and likewise needs to strengthen
its presence in the booming Asian market to have enough
global market power. As such, it is entering joint ventures
with two undersized Japanese carmakers, Mazda and
Suzuki. However, the past history of Mazda and Suzuki
with alliances may be a reason for their not being overly
enthusiastic about the prospects of the current alliances.
Fiat broke up with GM, Chrysler with Daimler, and Mazda
with Ford.
This is also the situation in Europe locally for Peugeot-
Citroën of France, which is struggling for survival along
with the GM European subsidiary, Opel-Vauxhall. More
specifically, Peugeot-Citroën and Opel-Vauxhall have
struck a tentative agreement to share platforms and
engines to get the capital necessary for investment in
future models. As such, in all these examples, the firms
need additional market share, but also enough capital to
make the investment necessary to realize more market
power to compete.
In summary, there are a number of rationales why
competitors not only compete but also cooperate in
establishing strategic alliances and joint ventures in order
to meet strategic needs for increased market power, take
advantage of complementary assets, and cooperate with
close neighbors, often in the same region of a country.Sources: 2013, Markets and makers: Running harder, Economist, April 20,
ss4–ss7; J. Boxell, 2013, Peugeot reaffirms push into BRICs, Financial Times,
http://www.ft.com, February 7; D. Pearson & J. Bennett, 2013, Corporate news:
GM, Peugeot pledge to deepen car alliance – Tough market in Europe has
slowed progress, but automakers now see opportunities to cooperate out-
side the region, Wall Street Journal Online, http://www.wsj.com, January 10;
J. B. White, 2013, Mazda uses alliances to boost sales, Wall Street Journal
Online, http://www.wsj.com, January 27; T. Yu, M. Subramaniam, & A. A.
Cannella, Jr., 2013, Competing globally, allying locally: Alliances between
global rivals and host-country factors, Journal of International Business
Studies, 44: 117-137; W. Kim, 2012, The voyage of the Renault-Nissan
alliance: A successful venture, Advances in Management, 5(9): 25–29.Case Discussion Questions
- How can the resource-based view of the firm (see Chapters 1
and 3) help us understand why firms develop and use coopera-
tive strategies such as strategic alliances and joint ventures? - What is the relationship between the core competencies a firm
possesses, the core competencies the firm feels it needs, and
decisions to form cooperative strategies? - What does it mean to say that the partners of an alliance have
“complementary assets”? What complementary assets do
Renault and Nissan share?
4. What are the risks associated with the corporate-level strategic
alliance between Renault and Nissan? What have these firms
done to mitigate these risks?
5. Is it possible that some of the firms mentioned in this Mini-
Case (e.g., Renault, Nissan, Mazda, Peugot-Citroen, Opel-
Vauxhall) might form a network cooperative strategy? If so,
what conditions might influence a decision by these firms to
form this particular type of strategy?