Copyright © 2012 Pearson Canada Inc. 00 Chapter 11 Alliances as Vehicles
Copyright © 2012 Pearson Canada Inc. 1 Strategic Alliance Defined An alliance is strategic when it has three distinguishing characteristics: 1. The exchange of knowledge associated with technology, skills, or products takes place. 2. Trust plays a key role in the management of the alliance. 3. Success of the alliance depends on the collaborative efforts among the companies forming the alliance.
Copyright © 2012 Pearson Canada Inc. 2 Strategic Alliance Defined Various Alliances 1. Consortium 2. Cooperative 3. Countertrade 4. Franchising 5. Joint Venture 6. Licensing
Copyright © 2012 Pearson Canada Inc. 3 Building and Managing an Alliance A Five-Stage Process: Stage 1: Building the Case for an Alliance Stage 2 : Identifying and Screening Potential Partners Stage 3: Negotiating and Setting Up the Alliance Stage 4: Managing the Alliance Stage 5: Assessing Strategic Performance of the Alliance
Copyright © 2012 Pearson Canada Inc. 4 Building and Managing an Alliance Stage 1: Building the Case for an Alliance Enhancing Competitive Advantage 1. Improving Operations 2. Enhancing Competitive Conditions 3. Facilitating Entry and Exit
Copyright © 2012 Pearson Canada Inc. 5 Building and Managing an Alliance Stage 2 : Identifying and Screening Potential Partners Identifying Potential Partners Screening Potential Partners
Copyright © 2012 Pearson Canada Inc. 6 Building and Managing an Alliance – IDENTIFYING POTENTIAL PARTNERS New entrants Suppliers Rivals Customers Substitutes Any other organization could become an alliance partner Firms Complementors
Copyright © 2012 Pearson Canada Inc. 7 Building and Managing an Alliance Screening Potential Partners Five Questions: Strategic fit: Are the partners’ objectives compatible? For how long? Resource and financial fit: Are the partners willing and able to contribute the resources and competencies? Cultural fit: Can the partners understand each other? Do they share the same business logic and commitment? Structure, systems, and processes fit: Can the decision-making and control mechanisms be aligned? Additional fit criteria: What other key questions should be on the table, such as timing, other alliances, alliance alternatives, environmental context, and competitive pressures?
Copyright © 2012 Pearson Canada Inc. 8 Building and Managing an Alliance Stage 3: Negotiating and Setting Up the Alliance Stewardship Resource Commitments A Governance Structure
Copyright © 2012 Pearson Canada Inc. 9 Building and Managing an Alliance Stage 4: Managing the Alliance Leadership Staffing Culture Collaboration
Copyright © 2012 Pearson Canada Inc. 10 Building and Managing an Alliance Stage 5: Assessing Strategic Performance of the Alliance Periodically, the alliance needs to be reviewed to see whether it is still the best way of doing things and whether the partner in the alliance is the best partner. If an alliance is the best solution and the partner has worked out well, the company may want to consider buying the partner. If the alliance is still the best solution but the partner has proven less satisfactory than anticipated, it is time to start looking for a new partner. If the alliance is no longer the best solution, then it is time to terminate it.
Copyright © 2012 Pearson Canada Inc. 11 Specific Forms of Alliance Cooperatives Challenges Managing Cooperatives: 1. Multiple Sources of Power 2. Personal Interests 3. Personal Styles 4. Broad Membership
Copyright © 2012 Pearson Canada Inc. 12 Specific Forms of Alliance Franchising Franchising involves a franchisor and franchisees. The franchisor has something to sell and the franchisee is willing to sell it. Contractual agreements specify what the franchisor provides to the franchisee and how much control the franchisor has.