April 27, 2011
Alliances and Corporate Level Performance
Firms use corporate level cooperative strategies to help diversify its products or markets served. Three corporate level cooperative strategies most commonly used are diversifying alliances, synergistic alliances, and franchising. Diversifying and synergistic alliances enable firms to grow and improve their performance by diversifying its operations.
A diversifying strategic alliance is a corporate level cooperative strategy in which firms share some of their resources and capabilities to diversify into new products or market areas.(Hitt, Ireland, & Hoskisson, 2010). Highly diverse networks of alliances can lead to poor performance by partner firms. A synergistic alliance is a corporate level cooperative strategy in which firms share some of their resources and capabilities to create economies of scope(Hitt, Ireland, & Hoskisson, 2010). It creates synergy across multiple functions or multiple businesses between partner firms. Franchising is a corporate level cooperative strategy in which a firm uses a franchise as a contractual relationship to describe and contract the sharing of it resources and capabilities with partners (Hitt, Ireland, & Hoskisson, 2010).
Based on my evaluation I think franchising can enable a firm to achieve its corporate strategy goal. A franchise is a contractual agreement between two legally independent companies whereby the franchisor grants the right to the franchisee to sell the franchisors products or do business under its trademarks in a given location for a specified time period.
Franchising can enable a firm to achieve a corporate strategy goal because partners work closely together. The franchisors main responsibility is to develop programs to transfer to franchisees the knowledge and skills that are needed to compete successfully at the local level (Hitt, Ireland, & Hoskisson, 2010). Franchises provide feedback to the...