1 / 36

Global Strategic Alliances

Global Strategic Alliances. Session 6. Strategic Alliance: The definition. An alliance is the sharing of capabilities between two or more firms with the view of enhancing their competitive advantages and/or creating new business without losing their respective strategic autonomy.

brooksl
Télécharger la présentation

Global Strategic Alliances

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Global Strategic Alliances Session 6

  2. Strategic Alliance: The definition • An alliance is • the sharing of capabilities • between two or more firms • with the view of enhancing their competitive advantages • and/or creating new business • without losing their respective strategic autonomy. • A global alliance is one in which the • object is either to develop a global market presence (global reach alliance) • or to enhance the worldwide competitive capabilities of the firm (global leverage alliance). • What makes an alliance ‘strategic’ ? • The sharing of capabilities (R&D, manufacturing or marketing) affects the long-term competitiveness of the firms involved and implies a relatively long-term commitment of resources by partners.

  3. Ways to organize joint effort involving the contribution of separate firms • When either full control is not feasible, for legal or practical reasons • When a contract is difficult to draw up because of the uncertainties involved and none of the parties involved has the ability to develop the needed capability internally Merger of capabilities under a single management control (M&As) Market contract (Buyer-supplier contract) Strategic Alliance

  4. Types of international alliances Global Scope Local Market Capabilities Object

  5. Global vs. Local Alliances (1) • Rationale behind local alliances (Joint ventures): • Consists of an exchange of market or resources for technology. • Foreign investors are invited to bring their products, processes and management technologies alongside their capital in exchange for an entry in the domestic market or an access to key natural resources. • The value for the foreign partner: an increase in market penetration, a set of profits coming from various sources – dividends, transfer prices, management fees. • The value for the local partner is an increase in know-how, a flow of dividends and other indirect cash flow such as rental fees, local procurement, etc.

  6. Global vs. Local Alliances (2): Types of Strategic Alliances

  7. Differences between strategic alliances and country-based joint ventures

  8. Framework for the analysis of Strategic Alliances • Strategic Context and Value Potential • Defining the scope • Strategic Objectives • Value Creation Potential • Industry prospects and competitive forces • What are the benefits of the • alliance? • What do partners get from it? Shape EXPECTATIONS • Partners’ Fit • Strategic Fit • Capabilities’ fit • Cultural fit • Organizational fit • Partner selection • How workable is the • relationship? Identify ISSUES • Negotiation and design • Operational scope • Interface • Governance How do we organize and manage? Set the AGREEMENT • Implementation • Integration • Co-operation • Evolution Achieve RESULTS How do we work?

  9. Strategic Context: Scope of the Alliance

  10. Strategic Objectives pursued in various types of Alliances

  11. Value potential (1) • Two-step process: • Step one: value created by the alliance • Step two: value captured by each partner. • The value created by the alliance is driven by four factors: • Revenues generated by the alliance through volume of sales • Revenues generated by the alliance through the ability to command a high differentiated price • Future revenues or costs benefits coming from joint R&D products or processes • Cost benefits resulting from economies of scale and scope.

  12. Value potential (2) • The value captured by partners comes from: • Distribution of the alliance profits when the alliance is structured as an autonomous economic entity • Profit generated by the sales of intermediary products, components or services to the alliance • Profits derived from products or processes developed thanks to the alliance • Increased revenues or costs reduction coming from the alliance because of increased market reach or economies of scale or scope • Profits coming from other products whose sales are boosted because of the alliance.

  13. Framework for the analysis of Strategic Alliances • Strategic Context and Value Potential • Defining the scope • Strategic Objectives • Value Creation Potential • Industry prospects and competitive forces • What are the benefits of the • alliance? • What do partners get from it? Shape EXPECTATIONS • Partners’ Fit • Strategic Fit • Capabilities’ fit • Cultural fit • Organizational fit • Partner selection • How workable is the • relationship? Identify ISSUES • Negotiation and design • Operational scope • Interface • Governance How do we organize and manage? Set the AGREEMENT • Implementation • Integration • Co-operation • Evolution Achieve RESULTS How do we work?

  14. Partner analysis: Strategic Fit • An analysis of strategic fit implies the following assessments: • Criticality of the alliance for the partners • The relative competitive position of partners • The compatibility in strategic agendas.

  15. Partner analysis: Strategic Fit • Assessing criticality of the alliance for each partner: • How important is the alliance for the partners? • Do they need an alliance to achieve their objectives? Strategic Importance Need for Partner FIT FIT High High PARTNER A PARTNER A ? Option ? Timing Low Low Low High Low High PARTNER B PARTNER B

  16. Strategic Fit: Relative competitive position • Competitive positions: • leaders (dominant firm in the industry) • challengers (second-tier firms in the industry) • laggards (firms which need to catch up) • Alliances among leaders are plagued with problems (Doz and Hamel,1998)

  17. Strategic Fit: Strategic Agendas

  18. Strategic fit against partner’s strategic agendas Venturing Agenda Extractive Agenda Sharing Agenda Option Agenda Fit Long-Term Problematic Fit Problematic Fit Possible Fit Venturing Agenda Extractive Agenda Problematic Fit Fit Short-Term Possible Short-Term Fit Problematic Fit Sharing Agenda Problematic Fit Possible Short-Term Fit Fit Possible Short-Term Fit Option Agenda Possible Fit Problematic Fit Possible Short-Term Fit Fit Short-Term

  19. Capabilities fit • The objective of a capabilities fit analysis is to assess the extent to which partners are capable of contributing to the necessary competitive capabilities of the business. • What are capabilities required for effective competitiveness? • Resources • Assets • Competencies • What are the contributions of partner A? • Resources • Assets • Competencies • Do they complement each other? • What are the gaps? • Are there any redundancies? • What are the co-investments needed? • What are the contributions of partner B? • Resources • Assets • Competencies

  20. Cultural fit • The role of cultural fit analysis is to understand the nature of the differences, to anticipate their possible consequences in the functioning of the alliance and to take action in order to prevent negative effects • Types of differences in organisational cultures:

  21. Organizational fit • Objective: to assess whether the partners’ organizational structure systems and procedures differ significantly to the extent that the organization of the work between partners within the alliance is affected. • Dimensions of organizational fit analysis: • The degree of decentralization of decision-making • The degree of documentation of policies and rules • The accounting and reporting methods and systems • The degree of formalization of decision-making • The kind of incentives used to motivate personnel.

  22. Framework for the analysis of Strategic Alliances • Strategic Context and Value Potential • Defining the scope • Strategic Objectives • Value Creation Potential • Industry prospects and competitive forces • What are the benefits of the • alliance? • What do partners get from it? Shape EXPECTATIONS • Partners’ Fit • Strategic Fit • Capabilities’ fit • Cultural fit • Organizational fit • Partner selection • How workable is the • relationship? Identify ISSUES • Negotiation and design • Operational scope • Interface • Governance How do we organize and manage? Set the AGREEMENT • Implementation • Integration • Co-operation • Evolution Achieve RESULTS How do we work?

  23. Negotiation and design: Organizational designs in alliances Operator OPERATIONAL CAPABILITIES Broker Coalitions Co-specialization Alliances Learning Alliances

  24. Interface and Governance • Domains for consideration and agreement: • The legal structure and the decision-making mechanisms • 50/50 joint venture advisable • The degree of task integration • The appointment of executives • The distribution of value • The reporting and communication processes • The conflict resolution mechanisms.

  25. The degree of task integration • Task integration defines which activities are carried on by the alliance, which ones are carried separately, and the extent to which activities carried by each partner need to be integrated. • Integration requires co-ordination and joint work and therefore is likely to demand complex management approaches. • Alternatively, if integration is limited, each party fulfils its obligations separately, making co-ordination straightforward and simple. • Limited integration is possible if tasks are defined precisely up front and the joint output is obtained by ‘assembling’ the separate outputs together with limited interactions.

  26. The Appointment of Executives • Parent’s transfer • Allocation of managers and staff from each parent to the venture as opposed to the independent staffing of the alliance structure. In the case of transfer, the problem arises of the distribution of functions and roles. • One technique, known as the ‘shadow’ organization, consists of putting a manager from one partner in charge of a function with a manager from the other partner as his or her deputy. • Skills of alliance managers

  27. Alliance stages and Roles of Managers

  28. Alliance stages and Roles of Managers

  29. Distribution of value • Profit-sharing scheme • Each partner receives the share of profits generated by the alliance on the market proportionately to their share of work. • Revenue-sharing scheme • Each partner receives the revenues generated by the alliance on the market proportionately to their share of work.

  30. Framework for the analysis of Strategic Alliances • Strategic Context and Value Potential • Defining the scope • Strategic Objectives • Value Creation Potential • Industry prospects and competitive forces • What are the benefits of the • alliance? • What do partners get from it? Shape EXPECTATIONS • Partners’ Fit • Strategic Fit • Capabilities’ fit • Cultural fit • Organizational fit • Partner selection • How workable is the • relationship? Identify ISSUES • Negotiation and design • Operational scope • Interface • Governance How do we organize and manage? Set the AGREEMENT • Implementation • Integration • Co-operation • Evolution Achieve RESULTS How do we work?

  31. Integration and cooperation • This phase is frequently operationalised by ‘integration teams’ • Integration teams are functional working groups made of managers from the different partners who are assigned the task of identifying the practical ways of implementing the alliance: • which processes to adopt • which IT platform to use • the kind of measurements to adopt • how to manage relationships with third parties • which accounting system to use

  32. The ‘Death Valley’ spiral

  33. Learning Two forms of learning offered by alliance: • Learning from the alliance, or co-learning: what the partners learn within the alliance • Learning from the partners, orcaptured learning: what the partners learn from each other.

  34. Learning from the alliance • In implementing alliances, partners can learn: • About the business • characteristics and trends of markets • the industry and its competitive drivers • About the tasks • About partners’ expectations and capabilities. • Crucial: to put in place the organizational mechanisms so that learning is distributed to partners

  35. Receptivity in learning

  36. Criteria for successful alliances

More Related