You will use the Internet to find two articles describing fi

You will use the Internet to find two articles describing firms’ use of a cooperate strategy: one where trust is being used as a strategic asset and another where contracts and monitoring are being emphasized. What are the difference between the managerial approaches being used in the two companies? Which of the cooperative strategies has the highest probability of being successful? Why

Solution

Ans:

The example of first kind of company is Apple which has used customers\' trust as a strategic asset for growth. The company has built this trust with offering technologically superior products that are also great looking and feeling, instant brand recognition and a premium feel, policies that set it apart from the crowd and an ability to create a wow experience for the user. The trust makes the customers wait for a new product like crazy, keeps them awake through the night and queue up at stores and pay the premium price for a new masterpiece.

McDonalds is the second type of company which has used contract and monitoring model to take its products through the globe and is successful at most places. The secret is contracting with right local partner that can grow business for it, monitoring and vigilance for maintaining uniformity of the service levels and product quality throughout the world and customizing the product according to the local taste.

The managerial approach of Apple is to build premium products with cutting edge technology and excellent user interface. Apple calls it simplistic elegance, which helps in creating loyal followers, whose trust itself is sufficient to initiate a purchase. McDonalds uses its approach of global standardization of services and local customization of products to achieve its strategic business goals.

Both companies are successful in their ventures, though the first strategy has higher probability of being successful as the company has higher control over all aspects of business. Contracting and franchising may sometimes lead to lax and substandard service, which may go undetected for some time even under most efficient vigil and monitoring, as McDonalds has faced recently with a partner in Northern parts of India.

Ref: https://hbr.org/2011/12/why-trust-matters-more-than-ev