Strategic Alliances Presentation
1. 1. 02 Tool Time: Strategic Alliance Au | Chandra | Dahdoule |Kermeci| Ruparel
2. 2. Key Takeaways If managed well, strategic alliances can lead to success 03 Benefits
Draws upon complementary core competencies and provides solutions beyond a single
entity’s scope. Relationships Effective communication and understanding of roles and
responsibilities between parties Risks Does the partner make a suitable and an appropriate
alliance partner?
3. 3. 04 What we see What's the real problem The Iceberg What is a strategic alliance? An
agreement between firms to do business together in ways that go beyond normal companyto- company dealings, but fall short of a merger or a full partnership - Despite the rise of
strategic alliances, we have limited definitive knowledge about how individual alliances
develop over time - Researchers have typically discussed distinct stages of alliance
development: initiation, operation and evaluation Alliances move through several phases as
they develop and evolve, and are initiated to meet a variety of needs.
4. 4. 05 The Iceberg The Initiation Phase - Informal crystallisation of issues and participants
develop the purpose for the alliance. - Characterised by partners bringing their own unique
strengths to bear on a problem. 1 The Operation Challenge2 The Evaluation Phase3
Lifecycle of a strategic alliance - Formal meetings occur and an internal structure under
which the alliance functions develops. - The full range of impacts - both positive and negative
- of the strategic alliance is realised. - Summative evaluation is used to make overall
judgment to determine if the a l l i a n c e s h o u l d b e c o n t i n u e d , restructured or
terminated. We can only visualise the immediate product of alliances, but the specifics of a
successful strategic alliance lie deep below the surface
5. 5. Strategic alliance organisation is put together, focussed on implementation of plans
worked out in previous stages. Formation Most critical stage. Beginning informally, the
discussions, details and agreements of the alliance are brought into written form and
accepted by all parties. Dialogue/ Negotiation Overall guiding principles are formed. Strategy
Lifecycle of a Strategic Alliance The process in moving towards a mutual outcome 06 Taking
direction provided the strategy stage, initial screening for potential partners is conducted.
Search Strategic alliance carries out its intended actions. Longest stage, where benefits of
actions in previous stages are realised. Operation Final stage where the strategic alliance is
taken over by one of the partners, spunoff, or liquidated. Evaluation
6. 6. It’s Been a Long Journey Historical Development of Strategic Alliances Pre-1970s: Evidence of partnerships from the earliest traces of business - Little research in the strategic
motives at this point 1970s: - Explanatory theories began to develop - Transaction cost
economics whereby cultivating alliances minimises hidden costs - Resource dependency
theory where firm wants to minimise uncertainty, this had major implications for partnership
with buyers and suppliers - Economies of scope PRE 1970s 70s Enterprise partnerships
Vertical integration alliance
7. 7. Resource monopoly alliances - Consolidation of research including an increased scope of
research from a variety of disciplines - Focus on the resource (RBV) and how to leverage
VRIO resources, both tangible and intangible - Economies of scale 90s Alliances for
competing in globalised sphere - Significant growth in the number of strategic alliances
between firms during this period - Fall in trade barriers and emergence in technology led to
an internationally competitive marketplace - This called for ‘alliances for survival’ 80s
8. 8. How the Phenomena has Changed Over Time Innovation inspired alliances - Model of the
single, independent, autonomous firm no longer practical - Alliances with international firms
allow entry into developing markets with the benefit of local knowledge but without financial
and reputational risks POST 2000
9. 9. Your task is to work with your ally to construct a visually attractive paper plane. Your plane
will be judged on quality of construction and branding. You have 5 minutes. Your time starts
now. Activity
10. 10. Organic growth Strategic alliances Mergers or acquisitions Joint ventures Greenfield
investments Franchising Other 1.2% 7.8% 16.1% 33.1% 40% 60.9% 62.7% 11 The
Economist Intelligence Unit (2005) survey on the kinds of business models executives would
rely on going forward, revealed most inclination towards Strategic Alliances, to increase
market share. Motivation Why should we undertake strategic alliances? The business
landscape has moved beyond from the “make versus buy” decisions, and expanded to the
“make versus buy versus partner” decisions. Firms turn to strategic alliances for: - Acquiring
the critical skills, knowledge, capabilities and internalizing those from external sources. Pooling financial, technological, human and other resources. - Reducing uncertainty or
sharing risky research and development. - Capitalise on growth withot risky equity stake. Gaining market power and/or expansion to new markets, or overcoming or creating barriers
to entry . - Leveraging on the already established systems, expertise and skills. Source:
Global Business Model Survey EIU/KPMG International 2005