1. Group Members Diana Katanskaya ID: 5280618 Manida Larprojpaiboon ID: 4880352 Mintra WatcharobonID: 4980022 Renuka SiriyothinID: 4980638

2. CHAPTER 1 OPPORTUNITIES AND IMPERATIVES

3. Content Introduction The rationale for the alliances Defining strategic alliances Ford Motor Company & Mazda Motors Strategic Alliance Objectives

4. Introduction Strategic Alliance as a diver of superior growth: ROI of 17 % during 10 years The revenue increased more than double In 2002 the amount of alliances exceed 35 % It is time to move from “I own this” to “We must work together” Strategic Alliances as a way to:  To gain competitive advantage  Enrich customer value  Drive markets  To fill critical capability gaps

5. Introduction Strategic alliances are complex process Business Fit Implementation Issues New Key Questions When do we consider alliance as an option? How long can we wait?

6. The US got high purchasing power Russia had skill s and experience in aerospace industry The alliance were planted in 1993 The Tu-144 became Tu-144LL The new of corporation alliance is - the strategies - the scope - the distinction to other business relationships

7. The Rationale for Alliances Many companies are not able to achieve their goals The competitions in the market are also intense The major forces that create the alliance - The globalization of markets - The search for capabilities as the rapid technology shift - The scarcity of resources and intensifying competition of markets The New Reality Macro-environmental forces:  Globalization  Integration of markets Rapid changes in technology:  High costs  R&D  Short product lifecycle

8. The Rationale for Alliances Increased global competition Scarce resources Shortening of the period of competitive advantage Emergence of new regional trading blocs The companies have to enhance their core competencies through new knowledge and capabilities

9. The Rationale for Alliances The example of Oracle System Shift from vertical integration to outsourcing and virtual corporation Adopt new vocabulary - Coopetition -> be able to learn to a partner and a competitor at the same time - Complementarity -> None of the competitors have the same or the overlap business scope

10. The Rationale for Alliances The Growth of Capabilities When the company faces strategic gaps in critical differential capabilities that are too expensive or will take too long to develop internally, they ally with other companies in order to access to a subset of another’s capabilities. In a strategic alliance, companies can select, build, and deploy the critical capabilities that will allow each of them to gain competitive advantages, enhance customer value, and drive markets. Ex. Ford Motor Company and Mazda Motors

11. Defining Strategic Alliances Transactional Alliances Last less than 5 years Partners do not share critical capabilities and common strategy The relationship does not involve control and is usually contract driven Forms of transactional alliances Collaborative advertising or marketing Shared distribution Cross-licensing Ex.- American Express and Toys-R-Us - Nissan and Volkswagen - Dreamworks and Universal Pictures

12. Defining Strategic Alliances Strategic Alliance A commitment of at least 10 years A linkage based on equity or on shared capabilities A reciprocal relationship An increase in companies’ value in marketplace A willingness to share and leverage core capabilities Ex.- Cytel and Sumitomo Pharmaceuticals - Toshiba, Siemens, and IBM - Microsoft and NBC

13. Strategic Alliance Objectives Risk sharing (unable to afford the risk) ex. Kodak with three camera makers Economies of scale ( have high fixed cost) ex. British airways and American airline Market segment access (lack of customer - understanding) ex. Wal-mart and Cifra Technology acess (can not develop technology by - yourself) ex. IBM, Motorola, and Apple computer

14. Strategic Alliance Objectives Geographic access (difficulty in penetrating a -foreign market) ex. Anheuser-Bush and Kirin Handling of funding constraints (large -development cost) ex. Lockheed and pentagon Skills leverage (access skill faster at lower cost) ex. Glencore and Metaleurop Value-added barriers to competition (want to strengthen skills and raise the level of competitive intensity) ex.Washington post company and Russian publisher

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