Strategic Management Individual Assignment
Case
Alliance Formation, both Globally and Locally, in the Global Automobile Industry
The academic literature on alliances has some interesting recent findings, one of which is the
rationale that because firms are often located in the same country, and often in the same region of
the country, it is easier for them to collaborate on major projects. As such, they compete
globally, but may cooperate locally. Historically, firms have learned to collaborate by
establishing strategic alliances and forming cooperative strategies when there is intensive
competition. This interesting paradox is due to several reasons. First, when there is intense
rivalry, it is difficult to maintain market power. As such, using a cooperative strategy can reduce
market power through better norms of competition; this pertains to the idea of “mutual
forbearance”. Another rationale that has emerged is based on the resource-based view of the
firm.
To compete, firms often need resources that they don’t have but may be found in other firms in