Ireland Alliances
gjunki
CH09_PPT_UBS_3e.ppt© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Understanding Business Strategy 3e
Part 3: Strategy
Chapter 9: Creating and Maintaining Alliances
*
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 9: Creating and
Maintaining Alliances
- Reading and studying this chapter should enable you to:
Define strategic alliances and explain the difference between equity and nonequity alliances.
Explain why firms develop strategic alliances.
Identify business-level strategic alliances and explain vertical and horizontal alliances.
Describe how strategic alliances are used to implement corporate level strategies.
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 9: Creating and
Maintaining Alliances
- Reading and studying this chapter should enable you to:
Explain why strategic alliances represent a common means of entering international markets.
Identify the major risks of strategic alliances. Explain how strategic alliances can be managed to increase their success.
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 9: Creating and
Maintaining Alliances
- A strategic alliance is a type of cooperative strategy the purpose of which is to develop a competitive advantage
- Equity alliances, e.g. joint venture
- Nonequity alliances
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Developing Strategic Alliances
- A very popular strategy
- Help firms grow and have a major impact on partner firms
- What reasons can you think of that would cause firms to form alliances?
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Business-Level Strategic Alliances
- Vertical strategic alliances
- Relationship between buyers and suppliers
- Produce products
- Most effective when trust exists between partners
- Trust sustains transfer of technological knowledge
- May manage supply chain rather than pricing strategy
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Business-Level Strategic Alliances
- Horizontal strategic alliances
- Enhance the capabilities of the partners to compete in their markets
- A response to competitor’s actions
- A response to substantial uncertainty
- Requires a smaller investment of capital
- Explicit collusion v. tacit collusion
- Most difficult to manage and sustain because partners are also competitors
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Corporate-Level Strategic Alliances
- Diversification by alliance
- E.g. China’s SAIC Motorcorp & Nanjing Automobile Corp.
- Synergy by alliance
- E.g. Coca-Cola and Cargill
- Franchising
- E.g. MacDonald’s
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
International Strategic Alliance
- Some countries require that firms form joint ventures with local firms in order to enter their markets
- Foreign firms need knowledge and perhaps other resources to understand and compete effectively in the newly entered markets
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
International Strategic Alliance
- Different cultures and a lack of trust can hinder the transfer of knowledge or sharing of other resources necessary to make an alliance successful
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Managing Risk
- Development of trust
- Educating about cultural differences
- Refusing to assume about partner’s competencies
- Using contracts to guard against opportunistic behavior
- E.g. Disney and Pixar
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Managing Strategic Alliances
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Managing Strategic Alliances
Even if the firm has a unit with the overall responsibility of managing its network of alliances, a manager or sponsor should be named for each alliance (and a similar person should be named by the partner). These managers keep each other informed of major alliance activities, resource allocations, and outcomes.
The organization should analyze the alliance’s priority within its resource allocations and ensure the commitment needed for each alliance to succeed.
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Managing Strategic Alliances
A clear plan for implementing the alliance should be created and activated after the partners have agreed to the alliance.
The means for analyzing the performance of the alliance and distribution of performance outcomes to the partners should be clearly established.
In the evaluation of an alliance’s value, the partners’ partners in other alliances should be considered.
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategy Toolbox
- A firm must carefully analyze the supporting logic and reasons of entering a strategic alliance before it happens.
- Internal assessment and external consultants should be used to evaluate whether the alliance makes sense.
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
