Question

Why would any firm, whether global or otherwise, seek to collaborate with another firm, be it local or foreign? Explain in depth.

Answer 1

Any Firm would seek to collaborate with another firm because of the following

1) Wide Exposure to markets

By collaborating the Firm has a wide exposure and reach in the markets they are serving and helps them to grow from a small scale business to large scale business in terms of product or service reach. It helps them to understand the factors that drive the large scale market and gives them a lot of exposure to creating sustainable solutions to the problems that are generated by serving the large scale market

2) Resource sharing

Collaboration is a bit like a barter system wherein goods & services are exchanged.

Example: A firm might be having an innovative product that will revolutionize the market but lacks warehousing and distribution so it collaborates with firms that provide these and those firms can be benefitted by having a share in the profits from the sale of the revolutionary product.

3) More value addition for the sake of greater good

Firms collaborate so that together they can achieve the common goal with the expertise from both the firms so that greater value is added and to serve the customers at a very high level, these also include collaboration done for the national cause.

Ex: such as building hospitals during an epidemic.

4)To cut out the competition & Share revenue

Often the competition is so fierce that it leads to unethical means of business and also a third party organization gets benefitted by this competition and to arrest this and have a smooth business environment. its often said more value addition happens from adding friends or partners rather than having rivals and it suits aptly for the collaboration activity.

Ex: Local companies collaborating to control local markets and save them from foreign indulgence

5) To venture into different markets

Often industries want to venture into different markets and hence collaborate so that both benefits from the expertise they have in their respective market and to help each other to have a good foothold in each others market that they serve

Ex: Law & insurance firms collaborating with each other.

6) Ambition

Founders of the firms are visionary and they are ambitious and hence these lead to collaborations that helps them in gaining a path to become the market leaders.

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