Shared-supply alliances Sample Clauses

Shared-supply alliances. Shared-supply alliances involve undertakings that choose to cooperate in order to achieve economies of scale on a particular component or at one stage of a production process.37 Shared-supply alliances usually include joint R&D but, also, joint purchase or production is possible. When manufacturing common components, it is important to note that the partners appear with different products on the final product’s market competing against one another. Shared-supply alliances are prematurely ended more often than any other type of alliance.38 Joint production of components or joint R&D can have negative effects on transaction costs, which sometimes outweighs any benefits realised through economies of scale. The automobile industry provides examples. For years, Peugeot, Renault and Volvo jointly designed and produced engines, which were used in cars 36 Wahyuni 2003 (n 3) 30. 37 ibid. 38 ibid. competing in different markets.39 Shared-supply alliances do not significantly affect the nature of competition on a given market.
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