MUNHUMUTAPA SCHOOL OF COMMERCE GRADUATE BUSINESS SCHOOL CORPORATE STRATEGY MBA717 GROUP MEMBERS TATENDA ZUMBANJE - M204983 MANDI MAROWA - M205358 QUESTION 5 EXPLAIN STRATEGIC ALLIANCES APPROACHES SUITABLE FOR ZIMBABWEAN ORGANISATIONS Introduction ◦ Strategic alliance – it’s a joint that bolsters a core business strategy , creates a competitive advantage and abates competitors from moving in on a market place. ◦ It allows individual companies to achieve more together than they would have on their own ◦ It can take many different forms for example joint venture, equity strategic alliances and non equity strategic alliance ◦ Most Zimbabwean companies fail because of different problems for example poor management, insufficient capital, over expansion among others ◦ We discovered that most companies in Zimbabwe need strategic alliances which will deal with a lot problems we have listed above ◦ This presentation is going to look at the strategic alliances approaches suitable for Zimbabwean organisations CYCLES OF STRATEGIC ALLIANCE ◦ 1 Alliance strategy, ◦ 2. Partner screening ◦ 3. Partner due diligience ◦ 4. Negotiation ◦ 5. Alliance design and set up ◦ 6. Alliance office set up TYPES OF STRATEGIC ALLIANCES Joint venture ◦ This is when corporate firms form an independent firm in which they invest. Profits from this independent firm compensate partners for this investments. This is suitable of Zimbabwean organisations such as parastatals they can join venture with private companies to be successful ◦ Recently in Zimbabwe the proposed joint venture between ZimParks and Zambezi Crescent Pvt ltd will revamp and upgrade all Zimparks lodges at Zambezi Camp in Vic Falls. ◦ This joint venture is set to improve the performance of the Zambezi camp lodges which have been performing poorly over the past years ◦ Another example is of Sino Zimbabwe Cement company which is a joint venture between a Chinese foreign direct investment partner whereby the company contributed 65% of the original funding in the form of modern technology and expertise Equity strategic alliance ◦ Cooperatives contracts are supplemented by equity investments by one partner in other partner . This is suitable for many organisation in Zimbabwe ◦ This occurs when one company purchases equity in another business (partial acquisition) or each business purchases equity in each other( cross equity transactions)An example of a successful equity strategic alliance is Non equity strategic alliance ◦ Cooperation between firms is managed directly through contracts without cross equity holding or an independent firm being created. ◦ In other words organisation create an agreement to share resources without creating a separate entity or sharing equity. ◦ ZOL and Yo Africa have announced that they have entered a strategic alliance in which the two companies will combine some operating resources to lower the costs of service delivery , the two companies remain separate entities in this strategic alliance Why we need strategic alliances in Zimbabwe ◦ It mitigates a significant risk to the business- risk sharing through collaboration effort ushered in by alliances ◦ Sharing resources and expertise – since it combines the best both companies have to offer . This can be a deeper understanding of the product, sales or marketing knowledge for example Harare institute of Technology and Schweppes their co-operation will help to increase skills therefore guaranteeing production of high quality beverages ◦ Expanded production – when it comes to manufacturing and distributing products strategic alliances allow partners to increase their capabilities and scale quickly to meet demand for example ◦ Drive innovation – with the right alliances partners can outpace the competition with new solutions that are a complete package for their customers ◦ Economies of scale – strategic alliances can help organisation to attain economies of scale , allowing them to pool a diverse range of resources and acquire the critical mass required for international success ◦ Creates or maintains strategic choices for the firm ◦ Blocks a competitive threat- a well conceived alliances can mean a head start in market possibly even preventing other competitors from entering ◦ It is critical to the success of a core business goal or objective since there is a tendency of lowering production costs while at the same time boosting production EXAMPLES OF STRATEGIC ALLIANCES ◦ TM and PICK N PAY TM was struggling in Zimbabwe amid competition from OK, SPAR and Food World. PICK N PAY wanted entry into Zimbabwe. Together, they have competitive advantage to fight the stiff competition. ◦ 2020, Dairibord Zimbabwe entered into a strategic alliance with Tavistock Estate Private Limited. Tavistock is the the largest raw milk supplier, this was done to hedge itself during the drought. Both will bring together their competences and experiences for future milk supply growth strategies. ◦ Edgars and JET ◦ Bathroom Boutique and Bhola Strategic Alliances may be key in saving a lot of our companies that are failing for various reasons. ◦ Strategic alliances not only offset some of the challenges that a company faces but they can also strengthen a company position in terms of things that it is good at. ◦ Initially, pre 2015, Dial a Delivery was only for PIZZA, “ Innscor would have had to incur additional costs such as the following: ◦ Purchasing the vehicles ◦ Branding the vehicles ◦ Licensing for the vehicles ◦ Unscheduled repairs ◦ Scheduled maintenance ◦ Preventive maintenance ◦ Tyres ◦ Fuel ◦ Staff costs etc.” ◦ The strategic alliance is now place and all the parties are benefiting significantly from this. ◦ References ◦ https://www.sundaymail .co.zw ◦ https://www.workspan.com/blog/strategic-alliance-definition/ ◦ https://plexisstrategy.com/strategic-alliances-an-escape-route-for-zimbabweancompanies/ ◦ Williamson, O. E. (2010). Transaction Cost Economics: The Natural Progression. American Economic Review , 673-690. ◦ Wernerfelt, B. (1995). The Resource-Based View of the Firm: Ten Years After. Strategic Management Journal , 16 (3), 171-174. ◦ Eisenhardt, K. M., & Schoonhoven, C. B. (1996). Resource-Based View of Strategic Alliance Formation: Strategic and Social Effects in Entrepreneurial Firms. Organization Science , 7 (2), 136-150.
