A cooperative strategy is an attempt by two or more firms to work together to achieve a common goal. Organizations apply suitable strategies to increase profits by cooperating with other companies that are not competitors. Cooperative strategies offer companies access to a new and broader market and create a possibility of learning through cooperation. The main types of collaborative approaches are joint venture, equity strategic alliance, and nonequity strategic alliance. This paper will identify two articles that discuss joint venture and strategic equity alliances and determine which has the highest probability of succeeding.
A joint venture is formed when two parent companies form a child company which is a separate entity. The two parent companies operate separately outside of their child company (Nippa & Reuer, 2019). Google uses a joint venture with objectives to expand a business, penetrate a market, increase profits, access superior technology, upscale, and research and development. An equity strategic alliance is formed when one company purchases a certain equity percentage of the other company (Rocha, 2022). Tesla’s relationship with Panasonic is an ideal example of a firm using an equity strategic alliance. The organizations use equity strategic alliances to diversify risk, reduce entry barriers, create economies of scale, and provide capital-raising opportunities.
Tesla uses operations management (OM) to minimize costs while maximizing productivity. The management approach contributes to Tesla’s ability to sell its products at an affordable price, considering the cost of materials and current market forces. Google uses laissez-faire management as a means of promoting employee innovation and creativity. The Laissez-faire management approach allows employees to use their imagination, resources, and experience to achieve their goals. On the other hand, operations management is responsible for managing and controlling the operations process; thus, it does not give employees freedom compared to laissez-faire.
The joint venture has the highest probability of success compared to an equity strategic alliance. This is because a joint venture ensures risks and costs are shared with a partner; thus, the burden of a loss does not fall on one party. A firm can also access new knowledge and expertise, specialized staff, and superior technology, which improve business performance. A joint venture is more likely to succeed because it enables growth without borrowing funds or looking for investors.
References
Nippa, M., & Reuer, J. J. (2019). On the future of international joint venture research. Journal of International Business Studies, 50(4), 555-597. Web.
Rocha, J., Castillo-Lavergne, C. M., Byrd, M. J., Carnethon, M. R., Miller, R., Lin, M.,… & Yancy, C. W. (2022). Reimagining educational equity through strategic alliance partnerships in response to the USA STEM-M diversity gap. Health Promotion International, 37(2), daab094. Web.