STRATEGIC SYNDICATE 4 ALLIANCES

TWC STRATEGIC ALLIANCE WHAT IS STRATEGIC ALLIANCE 2 Strategic alliances are agreements between two or more independent companies to cooperate in the manufacturing, development, or sale of products and services or other business objectives For example, in a strategic alliance, Company A and Company B combine their respective resources, capabilities, and core competencies to generate mutual interests in designing, manufacturing, or distributing of goods or services

TWC STRATEGIC ALLIANCE 3 WHAT IS STRATEGIC ALLIANCE

TWC STRATEGIC ALLIANCE 4 7 FACTORS OF STRATEGIC ALLIANCES

TWC STRATEGIC ALLIANCE 5 JOINT VENTURE Two or more firms create a legally independent company by sharing some of their resources and capabilities. EQUITY STRATEGIC ALLIANCES Partners who own different percentages of equity in a separate company. NONE-EQUITY STRATEGIC ALLIANCES Two or more firms develop a contractual relationship to share some of their unique resources and capabilities. TYPES OF STRATEGIC ALLIANCES

TWC STRATEGIC ALLIANCE 6 Gain access to a restricted market Establish a franchise in a new market Maintain market stability (e.g., establishing standards) Slow Market Cycle Gain market power (reduce industry overcapacity) Gain access to complementary resources Establish economies of scale Overcome trade barriers Meet competitive challenges from other competitors Pool resources for very large capital projects Standard Market Cycle Speed up development of new goods or service Speed up new market entry Maintain market leadership Form an industry technology standard Share risky R&D expenses Overcome uncertainty Fast Market Cycle REASONS AND VALUES FOR STRATEGIC ALLIANCES

TWC STRATEGIC ALLIANCE 7 Formed between firms that agree to use their skills and capabilities in different stages of the value chain to create value for both firms. Vertical Complementary Strategic Alliance Formed when partners who agree to combine their resources and skills to create value in the same stage of the value chain. Horizontal Complementary Strategic Alliance Example Outsourcing is one example of this type of alliance. Example Focus is on long-term product development and distribution opportunities. The partners may become competitors which requires a great deal of trust between the partners. COMPLIMENTRY STRATEGIC ALLIANCES

TWC STRATEGIC ALLIANCE 8 Partners may misrepresent what they bring to the table (lie about competencies that they do not have). Partners may fail to commit resources and capabilities to the other partners. Partners may fail to use their complementary resources effectively. Partners may act opportunistically. One partner may make investments that are specific to the alliance while its partner does not. CHALLENGES WITH STRATEGIC ALLIANCES

TWC STRATEGIC ALLIANCE 9 Shared values and vision Shared delivery objectives and goals Identification of the benefits and risks of the partnership Complementary services and products Potential impact – what will the impact be to your competitive position, brand awareness and market acceleration Compatibility of core skills, company culture and management team What access can they provide to other potential partners? Is this a good environment (Culture) for partnering? CRITERIA FOR SELECTING THE RIGHT PARTNERS

TWC STRATEGIC ALLIANCE 10 First thing, make sure you need partnerships for enhancing your functionality. Second recognize your needs; what services you want, what solutions can help you in performing better, etc. Always short-list a handful of possible partners and then negotiate with them. Estimate the advantages you will get with each partner and in return what they want from you. Check the history of your possible partners, specially look for their responsibility, reputation in public, level of service, their partners, financial stability, adoption to new technologies and strategies, etc. When entering in partnerships, decide and negotiate the rules of the partnership; its period, expected return, what happens if one partner goes backwards from the rules, etc. It is good to first enter a very- short term partnership, and extend it if you are pleased with the partnership. CRITERIA FOR SELECTING THE RIGHT PARTNERS CONT.

TWC STRATEGIC ALLIANCE 11 Betrayal of expectations. Deadlock on key operational and integration issues Cultural differencesFailure to retain top talent Diametrically opposite management styles Lack of governance & Trust FAILED STRATEGIC ALLIANCES

TWC STRATEGIC ALLIANCE 12 HP technology solutions touch a wide range of Disney applications. HP & Disney have Joint marketing initiatives Mutual expectations in terms of revenue growth and capabilities Great Synergies and Trust It's difficult to think that two powerhouse companies from two entirely different industries could have such synergy. HP & Disney understand each others cultures. SUCCESSFUL STRATEGIC ALLIANCES

TWC STRATEGIC ALLIANCE 13 4P’S TO MAKING STRATEGIC ALLIANCE WORK

TWC STRATEGIC ALLIANCE 14 1.Select The Proper Partners For The Intended Goals 2.Share The Right Information 3.Negotiate A Deal That Includes Risk And Benefit Analysis (Not Necessarily Equal) For All Sides. 4.Come To A Realistic Agreement On The Time To Market And Corporate Expectations 5.Identify and define the structure and operating issues that need to be addressed 6.Mutual, Flexible Commitment On What's Appropriate To Change, Measure And Share Within Each Partner's Culture 7.Protect your company’s intellectual property rights through legal agreements and restrictions when transferring proprietary information. 8.Be certain that the company cultures are compatible, and the parties can operate with an acceptable level of trust Before entering into a strategic alliance, enough thought is to be placed behind the structure of the relationship and the details of how it will be managed. Consider the following in your planning process: MAKING STRATEGIC ALLIANCES WORK (RECOMMENDATIONS)

TWC STRATEGIC ALLIANCE 15 CRITICAL FACTORS TO CONSIDER

TWC STRATEGIC ALLIANCE VIDEO 16

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