Cooperative Strategy

Cooperative Strategy

A cooperative strategy is a strategic alliance whereby the companies jointly work together towards the realization of common objectives set. A corporative strategy can provide a significant advantage for firms that do not have certain competencies, production skills, or resources, putting them in a position to attain these by forming an alliance with companies with complementary skills or resources. The partnering companies may give a cooperation with resources like products, distribution ways, manufacturing techniques, provision of financial support, skills and expertise or an asset. The strategic alliance will have a joint management that plays an important role in identifying potential partners and generating equations that can be used to share the profits. This form of a corporation requires high capital and can be complex regarding strategic components. An example of a company that has embraced cooperative strategy is Nestle Company. This has enabled it to reach more markets globally thus increasing the profits.

There are many reasons as to why companies have resorted to cooperative strategy. Some of these reasons are to solve certain challenges that the company faces and by doing so, they are put in a position to achieving the best in the market. The cooperative strategy allows the firms to come up with a value that they were not able to achieve alone. They will also be able to penetrate into the market more easily. Another important reason for adopting cooperative strategy is to reduce competition and brake the trade barriers. For instance, Nestle Company has hit the markets by going internationally thus overcoming trade barriers and popularizing itself. The cooperative strategy enables companies to attain their objectives by utilizing the resources provided by the partners, and the result will be about 25% of sales revenue in established companies. Strategic alliance also reduces competition in the market; builds better economies of scale, and improve the company’s competitive abilities.

A business-level cooperative strategy is a form of alliance in which many companies work together towards achieving the set objectives. The companies share together what they have and their capabilities to create competitive advantage regarding new products. Nestle company is faced with the problem of high cost of production. The cost of production is high as compared to those of small-scale manufacturers but the company is trying to solve this by focusing on adopting cost-efficient activities, quality assurance, and proper inventory keeping. At a business level, Nestle is trying to differentiate its products from the competitors by creating different brand names for the same product. The success of Nestle is attributed to its differentiation strategy, and this has minimized the challenge of competition that is evident. The company reduces competition by manufacturing products with a unique taste, packaging, and more importantly providing products of high nutritional value that attract consumers globally.

Corporate-level cooperative strategies are ways that are employed by the firms to help it diversify itself concerning products manufactures or markets reached or both. The corporate level strategies employed by Nestle Company include growth stability and retrenchment strategy. These strategies come into play as a result of changing business needs and varying market situations. Nestle company has expanded to about 150 countries with 500 product units because of its growth strategies. However, its growth is sometimes suspended when there are challenges like unfavorable economic states, slow company growth, or elevated market saturation. To solve these challenges, Nestle Company stops its operations until that time when the conditions change to favorable for its normal functioning. In addition, Nestle Company employs retrenchment strategy to eliminate low-performance products, or low performing business units within the company. This strategy, however, has been the least used choice for Nestle.