carpenter_ppt_ch09_ed2

carpenter_ppt_ch09_ed2 - Chapter 9 Understanding Alliances...

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Chapter 9 Understanding Alliances and Cooperative Strategies
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2 OBJECTIVES Describe why strategic alliances are important strategy vehicles 1 Describe the motivations behind alliances and show how they’ve changed over time 2 Explain the various forms and structures of strategic alliances 3 Explain alliances as both business‑level and corporate‑level strategy vehicles 4 Understand the characteristics of alliances in stable and dynamic competitive contexts 5 Summarize the criteria for successful alliances 6
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3 AN ALLIANCE THAT FITS LIKE A GLOVE gloves Magla Mr. Clean Expand into European markets Differentiate its product P&G Extend the brand
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4 THE WHITE WAVE-DEAN ALLIANCE 35% ownership Dean Foods $15 million Leverage over retailers (e.g., slotting fees) White Wave
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5 BENEFITS OF STRATEGIC ALLIANCES Share investments and rewards Reduce risk Reduce uncertainty Focus resources on what each partner does best Foster economics of scale and scope Companies which participate most actively in alliances outperform the least active firms by 5 to 7 percent Why?
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6 ALLIANCES ARE NOT STRATEGIES IN THEMSELVES An alliance is one vehicle for realizing a strategy Arenas Differentiators Economic Logic Staging Vehicles
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7 THE USE OF ALLIANCES AS STRATEGIC VEHICLE HAS BALLOONED 1980 1995 2% 16% Alliances as percent of revenues As of 2007, large MNCs have over 20% of their total assets tied up in alliances
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8 ALLIANCES OFFER BENEFITS, CONTRACTS CANNOT Joint Investment Increase returns by encouraging firms to make investments that they’d be otherwise unwilling to make (e.g., Wal-Mart supplier becomes willing to invest in new equipment) Complementary Resources Opportunity to create a stock of resources that is unavailable to competitors. This may create a shared advantage (e.g., Nestlé and Coke combined resources to offer canned tea and coffee products Knowledge sharing Consistent information- sharing routines enhances learning (e.g., John Deere exchanges key employees with alliance partner Hitachi) Informal management Alliances may make it more cost effective to manage an activity than arm’s-length transactions or acquisitions
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9 ALLIANCES MAY BUILD COMPETITIVE ADVANTAGE Alliances may serve to build a competitive advantage if Rivals cannot ascertain what generates the returns because of causal ambiguity surrounding the alliance
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