1.Describe the reasons Lyft entered strategic alliances with GM and Waymo. Are some reasons more important than others? Why or why not? Explain.
Lyft entered a strategic alliance with GM because of the advantage of the upstream functional feature to manufacture cost-effective and huge production on the right time were Lyft lacked in the mass production by giving the height of its mobile transportation by having an efficient algorithm to work on the right time on the right destination by strong database and networking.
Waymo is leading with software of autopilot same as Tesla. Tesla is the leader in electric car
manufacturing who has made such software in their car that does not need a driver but the autopilot
drives. The alliance with Lyft can work on his drawback of not able to produce on large scale. So, the Lyft, GM and Waymo all three are using their advantages with each other's x-factors to deal with competition by strategic alliances.
Lyft will use its strong database and networking and Waymo can produce its autopilot
technology on a large scale with the help of GM. The market is tough, competition is high so to be united and the alliance will make them stronger in their disadvantages.
2. GM invested $500 million in Lyft in 2016. What is some possible reasons GM entering an equity alliance with Lyft? Are there any reasons GM would prefer Lyft over Uber as an alliance partner?
Strategic alliance with GM and Waymo will certainly help Lyft to bridge the gap that exists between it and Uber in terms of valuation, size and market reach. There is because the strategic alliance will enable Lyft to get benefits of the complementary assets of both GM and Waymo. The alliance between GM and Waymo will create clear and tangible synergies which Lyft can leverage to upscale its operations, size, and business reach. The fact that GM has upstream competencies and Lyft has downstream competencies will enable Lyft to create new efficiencies and this will enable it to grow considerably.
Other reasons Lyft could end up as a winner in the mobile transportation network competition are by better compensating its drivers and better making use of data available to it. Providing better compensation to drivers will certainly increase its costs in the short to medium term but in the long run this strategy will pay off as the company will be able to attract and retain good core talent and consumers will start trusting Lyft as a brand. It will also allow Lyft to build a scaled network of drivers and users and this will help the company to multiply the number of rides it handles in future.
Reference:
Strategic Management, 5th Edition; Frank Rothaermel; Chapter 9, 320-343
