Alliances 4-9-07

Alliances 4-9-07 - When to Consider an Alliance Option? A...

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1 When to Consider an Alliance Option? A company has No alliances but competitors do Far fewer alliances than competitors A failed alliance or is unhappy with its current alliance Current alliance is in disarray Has some alliance experience but its reinventing the wheel with each new alliance/enjoys no visible learning Needs more capabilities than it has time or resources to develop Rationale for Alliances Changes in Macroenvironment Globalization of markets Search for capabilities as technology blurs industry boundaries Scarce resources Intensifying competition for markets Accelerating changes in technology Need for more capabilities Defining Strategic Alliances Transactional Alliances Usually last less than 5 years Partners do not share critical capabilities contract driven Partners do not share common strategy or act in unison Remain arms-length Examples Collaborative advertising or marketing Shared distribution Cross-licensing Defining Strategic Alliances Strategic Alliances Commitment of at least 10 years Linkage based on equity or shared capabilities Reciprocal relationshipwith a shared strategy in common Increase in the companies’ value in the marketplace, placing pressure on competitors Willingness to share and leverage core capabilities Examples Create a new technology Enter a new market Strategic Alliance Objectives Risk sharing Economies of Scale Market Segment Accesss Technology access Geographic access Handling of funding constraints Skill leverage Value - added barries to competition Strategic Alliances are Different From … Cartels -- formed to restrict trated and maintain price structure Keiretsu -- designed to maintain uninterrupted vertical sources of supply Joint Venture
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Alliances 4-9-07 - When to Consider an Alliance Option? A...

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