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The challenges and opportunities of this cooperation are revealed using a qualitative research approach. The full text of this article hosted at iucr. If you do not receive an email within 10 minutes, your email address may not be registered, and you may need to create a new Wiley Online Library account. If the address matches an existing account you will receive an email with instructions to retrieve your username. Martin Whitehill Corresponding Author E-mail address: martin alum. Tools Request permission Export citation Add to favorites Track citation.
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Please review our Terms and Conditions of Use and check box below to share full-text version of article. Get access to the full version of this article. View access options below. You previously purchased this article through ReadCube. Institutional Login. Log in to Wiley Online Library. On the left and least-integrated side, cooperation among co-ops starts with: Communicate, where different organizations begin to meet with one another, share information, and exchange ideas: Collaborate, where they might start to mutually support efforts; Coordinate takes an additional step and starts to actually officially do things together, from shared events to timing promotions together to mutually supporting a cause; Cooperate, where we find strategic alliances; and Consolidate speaks for itself, covering mergers and acquisitions.
These latter options, cooperation and collaboration, will be the focus of the rest of this article. In the area of strategic alliances, there are many innovative approaches. Common ones include: licensing, joint research and development, start-up assistance, joint production, joint marketing, joint support activities human resources, accounting, legal, etc. Once again, a key lesson here is that there are many options.
What are the reasons co-ops might engage in these strategies? If you take these responses and combine them with what we know from research, we get some common themes driving the interest in strategic alliances and consolidation:.
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- The profit factor: how corporate culture affects a joint venture.
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While the above benefits sound impressive, strategic alliances and consolidations are not without their risks—and these can be significant. I urge co-ops to consider these five fundamentals areas, no matter their strategy; doing so provides a framework for risk assessment. Consolidations inevitably lead to different governing and management structures, potentially leading to significantly different places than what preconsolidation leaders expected before they gave up their independent decision making.
Finally, there is the risk that the overall consolidation will fail, ultimately closing down the operation, which in reality takes out two co-ops from pursuing the ends for which they were originally organized. Cultural risk: Clash of cultures has been one of the dominant sources of tension and occasional breakdown of these strategies.
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Food co-ops tend to have strong local cultures in the first place, and if there is a wide gap between partnering organizations and limited attention is paid to culture clash, this can tank a deal that looks perfect on paper. For strategic alliances, cultures may clash on how to implement projects, how to distribute work, and how to divvy up the rewards.
People put their heart and souls into building cooperative ventures, and the reality of having it turn into a different organization can cause significant problems in membership, staff, and the overall community. Fear of the unknown and assumptions about loss of intimacy or control will arise. Problems could range from disillusionment and lost loyalty to outright proactive work against the consolidation, potentially leading to personal attacks and bad blood.
In a strategic alliance, expect that folks may find opportunity elsewhere as they get to know new partners.
Systems risk: Any time you add additional variables to a system, you add stress to it. Strategic alliances require aligning different and independent systems, which may lead to square pegs meeting round holes. When trying to align or consolidate systems, from point-of-sale to human resources to board policies, you face the risk that the systems will not handle it well and begin to crack.
Financial risk: Consolidation takes investment of money, and it is possible in a strategic alliance that your partners may not deliver on their promises.
In a consolidation, not hitting the pro-forma projections can lead to significant loss of wealth or loss of the business itself. Working with humans is expensive and hard to predict accurately in its hidden costs—not to mention all the extra time it takes to manage the deal versus doing the day-to-day. These factors in combination can create a very difficult situation that co-ops ultimately need to escape—risks potentially so damaging as to threaten the survival of the businesses themselves.
Sound scary? I would rather you take the above as areas of concern to which you should pay attention in order to minimize the risk of the proposed deal.
Cultural Differences in International Merger and Acquisitions
Risk is part of business, and consolidation strategies are no different. Once we have chosen to pursue a strategy, it is our job to understand the risks and minimize them to the best of our ability. It is also our responsibility NOT to pursue the strategy if the risks are judged to be too high—even if the pressure is on to do the deal. There are many potential best practices and pitfalls, and I want to specifically highlight three. Trust, character, and competence: Trust is essentially the willingness to make oneself vulnerable to another.
Strategic alliances and consolidation have vulnerability written all over them. In order to help people accept this, it is critical that both the character and competence of all involved are demonstrated. Character here involves demonstrating positive intent—helping people see why you are doing what you are doing and that you are the kind of people and organization that will not stab others in the back.
Competence is about demonstrating you have the knowledge and abilities as individuals and as an organization to hold up your end of the bargain. Trust in not assumed—it is built consciously with communication, data, and attention to process. Rather, alignment is about building the conversations with stakeholders early, building shared understanding of the organizational purpose, its vision for the future and the means by which it will move in those directions.
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