COMM 315 Chapter Notes - Chapter 9: Tacit Knowledge, Franchising, Tacit Collusion
Document Summary
Strategic alliances as a primary type of cooperative strategy. Commonly, firms use complementary strategic alliances to focus on joint long-term product development and distribution opportunities. (2) competition response strategy: strategic alliances can be used at the business level to respond to competitors" attacks. 2 types of collusive strategies: explicit collusion: when 2 or more firms negotiate directly with the intention of jointly agreeing about the amount to produce and the price of the products that are produced. Reduced by increasing globalization: tacit collusion (also called mutual forbearance): exists when several firms in an industry indirectly coordinate their production and pricing decisions by observing each other"s competitive actions and responses. Tacit collusion results in production output that is below fully competitive levels and above fully competitive prices. (highly concentrated industries such as airlines and breakfast cereals). Corporate-level cooperative strategy: a firm uses a corporate-level cooperative strategy to help it diversify in terms of products offered or markets served, or both.
