So thanks very much for staying on. In this very last video lecture for
today, we're going to be looking at strategic partnerships and how they can
foster coordination between firms that produce complementary products.
We're also going to look at the form that these strategic partnerships are most
likely to take for complementary products producers.
So what's special about complementary products producers?
Well they pretty much depend on each other anyway.
Right? So, as we've seen in the previous videos
it's good if I can work with someone who's producing complementary
products. I profit from the fact that he produces high
quality or produces at a low price, or produces a large variety of my
complementary product. So, we're always, already, depending on
each other. So, helping each other, coordinating each
other's behavior, somehow comes naturally and it maximizes the postive effects of
complementarity. We also saw that it may be desirable to
integrate into one firm because that aligns interests even more.
But sometimes integrating into this one single company is just not feasible or
not desired by the involved firms. So, if you think of two massive
conglomerates that may have complementary interests in a particular segment, it's
unlikely that this is going to make them merge.
But, on the other hand it's clear that
they do have complimentary interests in this particular segment of the market.
So, an alternative to integrating and to forming a single company is to form a
strategic partnership, which is, generally speaking, a powerful way of
institutionalizing coordination and of formalizing interests.
And strategic partnerships, of course, in the very broadest sense are relationships
between firms, they're long term relationships between firms, with a
number of characteristics that are typical to strategic partnerships.