CHAPTER 5 Preparing for the Alliance Manida Larprojpaiboon ID: Mintra WatcharobonID: Renuka SiriyothinID: Diana Katanskaya ID: Group 2

Table of Contents Step 1: Developing Qualitative & Quantitative Partner Criteria Step 2: Developing a Prospect List Step 3: Strategic Fit Analysis Step 4: Ranking the Strategic Fit of Your Candidates Step 5: Meeting & Evaluating Candidates Step 6: Getting to Know the Corporate Champion Step 7: Looking Out for Land Mines Step 8: Obtaining Internal Approval Step 9: Creating an Implementation Plan Step 10: If Partner Development Lags, Try a Quick Fix Step 11: Applying the Mindshift Method to the Partner Selected Step 12: Final Predeal Evaluation of All Relevant Information Step 13: Managing Any Predeal Glitches Step 14: Negotiating the Deal Step 15: Managing the Legal Process

Introduction Value of good manners and business courtesy Treat a potential partner as valued customer Delight your business partner: –Return calls promptly –Write letters confirming appointments –Say thank you when appropriate –Recognize extra effort –Keep team members informed –Ensure that support staff are pleasant, welcoming, and helpful both on the phone and in person

Step 1: Developing Qualitative and Quantitative Partner Criteria What are the ideal characteristics of your alliance partner in terms of size, market share, corporate personality, and position in the relevant industry? Could an existing partner be a candidate for an expanded relationship?

Step 2: Developing a Prospect List There are a number of sources to check out when you start to search for a partner to fit your criteria. Partner you already have Trade groups - bankers, lawyers, accountants, brokers, and investment bankers Literature scans and data-base research

Step3: Strategic Fit Analysis Does the potential partner fit the quantitative and qualitative criteria you have developed? Can you reach your return on investment? Will their market share increase your market access? Will the relationship meet the mission statement goals you have crated? What do you know about the key champion in the partner company? Have you diligently collected information on the company? What is the strategic potential for your company of a partnership with this candidate? Is there another partner in the same industry that would be a better candidate? In this relationship, what would the risk exposure for your company be in terms of both embedded and migratory knowledge transfer? What is the partnering activity of the candidate company at present?

Step 4: Ranking the Strategic Fit of Your Candidates The companies with a good strategic fit will go on your primary candidate list ranked in order of priority as their characteristics fit your goals. Then you begin relationship development with the companies on the priority list.

Step 5: Meeting and Evaluating Candidates During this process of early relationship development, a member of the alliance –planning team should be assigned the responsibility of making initial contract. The person that you have to contact is the top executive for small company and vice president for large company Do not waste the time with partners that do not have the strategic fit with your company. In the other company’s eyes positioning your company is very important. The team member who contact with that partner should write a thank you letter and develop a meeting memo.

Step 6: Getting to Know the Corporate Champion It is very important to know and understand partner who will become the champion of this opportunity within the candidate’s company. it is better to recognize equal through different needs for the relationship. During the process of collecting the information, you will be able to evaluate the strategic fit and discussion will be narrow after strategic fit appear. You have to create trust in relationship place potential deal breaking all divisive issue on the table at this stage and it will become evident during this process.

Step 7: looking out for land mines Beside the information gathering, your legal and accounting team should be involve in researching the implications of your alliance. Be aware that a majority of the member of the European parliament are currently supporter of the green political persuasion (environmental aware). Another land mines, one for your accountant to sniff out is the so called eighty twenty syndrome

Step 8: Obtaining Internal Approval Covering yourself and obtaining clear approval from the CEO and top advisory staff is an important element in managing the alliance development process. However, the internal approval political problem is often occurring with company in the declining and mature and consolidating stage. Every decision must be approved by many decision makers and someone may left out so this will cause break up problem in the negotiation stage.

Step 9 : Creating an implementation Plan An alliances conceived entirely by planning There are many examples of a well-executed business opportunity that was followed by faulty implementation The failure point occurs when the alliance-planning team hands off the project to the alliance-implementation team Why they have to work together ?? So they can translate their excitement, knowledge, desire for the benefits and awareness of the cost of the alliance to those members. Hence, bring in managers who will manage relationship first and then have the operating managers involved in the later stages of the candidate selection

Step 10: If partner development lags, Try a quick fix Sometimes the relationship-development process begins to slow down or lag, this may be the time for a “quick fix” solution. A Mature company wanted to new industry and selected the Hockeystick as a partner The Mature had difficulty understanding market The Hockeystick, on the other hand, needed speedy decisions in its own process High frustration for the Hockeystick -> competitiors Would bring increased in awareness of the business opportunity concept that had been jointly discussed to competitors

“ The Pilot Program” Show that the relationship fit the strategic criteria Determine what they consider to be success for the pilot Valuable discussion about your subsequent relationship Their company post-pilot has an increased value as a result of your joint activities and your company’s contribution to their know-how Step 10: If partner development lags, Try a quick fix

Step 11: Applying the Mindshift Method to the Partner Selected How rapidly your company will respond to changes Changes in environment, a business downturn or competitive forces Answer the questions with reference to your partner Partner’s life-cycle stage, its corporate personality the managerial personalities of the partners’ managers The fit between the project’s role in your company strategy and the analysis you have made of your partners. Is there a good fit? No partnership is perfect but can you live with the differences The closer the partners are in their life-cycle stages, the better they can relate to and understand each other

Step 12: Final Predeal Evaluation of All Relevant Information Does the opportunity meet your objectives? Personality traits -> corporate, individual managerial and project Balance the human dimension with the business issues The alliance will never be successful unless business and personal consideration are acceptable 73% felt that corporate personality was a contributing factor leads to failure 63% attributed failure to managerial personality 58% to project personality

Step 13: Managing Any Predeal Glitches Unexpected issues and its impact It is recommended to have a cultural interpreter with business expertise present throughout the whole alliance- planning process to smooth cultural miscommunications. Be aware of the “invisible decision maker”.

Step 14: Negotiating the Deal In alliance, the best approach is problem solving - the only methodology for reaching compromise Adapt your business and negotiations styles Take advantage of the guidelines for international business negotiations (12 Variables) Be aware of the personalities and status of your team members “Alliance creation and alliance management are one and the same thing. You will start off negotiating, and end up doing the same thing”.

Step 14: Negotiating the Deal

Step 15: Managing the Legal Process Structuring the agreements: –Nondisclosure agreements –Nondisclosure agreements: Agreements to keep confidential information that is designated as confidential by either party. –Evaluation agreements –Evaluation agreements: Agreements giving one party the ability to examine the other party’s information on products for the purpose of evaluating strategic fit for a defined period of time, with the added requirements of confidentiality. –Letters of Intent Specific –Letters of Intent Specific: Expressions of intent to do business together in a defined area. Termination of the alliance is not always the best solution be well prepared

Questions?