© 2000 John Petroff
|
|
© 2000 John Petroff |
4)- Alliances and government restrictions
Short of gulping up smaller firms, to protect themselves from threats of losing customers due to new product introduction, price wars or plain competition on better services, location or promotion, companies will seek alliances with either competitors or firms outside the industry. A complete discussion of the subject is beyond what can be covered in this manual. Only a few remarks will be offered that should make an analyst curious about the wide range of alliances that can be used by firms, and that can modify conclusion drawn from the apparent industry structure.
Some alliances are illegal, such as cartel in domestic markets; they are tolerated by governments when they fall outside their direct jurisdiction. Other defensive tools such as tying contracts and price fixing are also prohibited by anti-trust legislation, again in domestic markets only. But there are numerous discrete and occult methods of building protective agreements, acquiring controlling interests or simply learning what other firms are planning.
One way that exchanges of views can take place is in informal business encounters with corporate counterparts in trade association meetings, at conferences, in joint lobbying efforts, or in articles written in the press analyzing the industry with interview of company executives. In Europe and Asia, business circles are tighter and cross ownership is more common than in the United States. Recently, alliances are being built with foreign partners, either in joint ventures, distribution channel representation contracts, minority interest investment, occasionally majority control investment, or even a wholly owned subsidiary (if local law permits).
See review questions Q-14C4.1 through Q-14C4.7.
See research assignment R-14C4.1.
| Previous: 3-SME |
|
Next: Conglomerates |