CHAPTER 5

Preparing forthe Alliance

Manida Larprojpaiboon ID: 4880352Mintra Watcharobon ID: 4980022Renuka Siriyothin ID: 4980638Diana Katanskaya ID: 5280618

Manida Larprojpaiboon ID: 4880352Mintra Watcharobon ID: 4980022Renuka Siriyothin ID: 4980638Diana Katanskaya ID: 5280618

Group 2Group 2

Table of ContentsStep 1: Developing Qualitative & Quantitative Partner CriteriaStep 2: Developing a Prospect ListStep 3: Strategic Fit AnalysisStep 4: Ranking the Strategic Fit of Your CandidatesStep 5: Meeting & Evaluating CandidatesStep 6: Getting to Know the Corporate ChampionStep 7: Looking Out for Land MinesStep 8: Obtaining Internal ApprovalStep 9: Creating an Implementation PlanStep 10: If Partner Development Lags, Try a Quick FixStep 11: Applying the Mindshift Method to the Partner SelectedStep 12: Final Predeal Evaluation of All Relevant InformationStep 13: Managing Any Predeal GlitchesStep 14: Negotiating the DealStep 15: Managing the Legal Process

Introduction• Value of good manners and business courtesy

• Treat a potential partner as valued customer

• Delight your business partner:– Return calls promptly – Write letters confirming appointments– Say thank you when appropriate– Recognize extra effort– Keep team members informed – Ensure that support staff are pleasant, welcoming, and

helpful both on the phone and in person

Step 1: Developing Qualitative and Quantitative Partner Criteria

• What are the ideal characteristics of your alliance partner in terms of size, market share, corporate personality, and position in the relevant industry?

• Could an existing partner be a candidate for an expanded relationship?

Step 2: Developing a Prospect List

There are a number of sources to check out when you start to search for a partner to fit your criteria.

• Partner you already have• Trade groups - bankers, lawyers, accountants, brokers,

and investment bankers • Literature scans and data-base research

Step3: Strategic Fit Analysis

• Does the potential partner fit the quantitative and qualitative criteria you have developed? Can you reach your return on investment? Will their market share increase your market access?

• Will the relationship meet the mission statement goals you have crated?• What do you know about the key champion in the partner company? • Have you diligently collected information on the company?• What is the strategic potential for your company of a partnership with this

candidate? • Is there another partner in the same industry that would be a better

candidate?• In this relationship, what would the risk exposure for your company be in

terms of both embedded and migratory knowledge transfer?• What is the partnering activity of the candidate company at present?

Step 4: Ranking the Strategic Fit of Your Candidates

• The companies with a good strategic fit will go on your primary candidate list ranked in order of priority as their characteristics fit your goals. Then you begin relationship development with the companies on the priority list.

Step 5: Meeting and Evaluating Candidates

• During this process of early relationship development, a member of the alliance –planning team should be

assigned the responsibility of making initial contract.• The person that you have to contact is the top executive

for small company and vice president for large company• Do not waste the time with partners that do not have the

strategic fit with your company.• In the other company’s eyes positioning your company is

very important.• The team member who contact with that partner should

write a thank you letter and develop a meeting memo.

Step 6: Getting to Know the Corporate Champion• It is very important to know and understand partner who

will become the champion of this opportunity within the candidate’s company.

• it is better to recognize equal through different needs for the relationship.

• During the process of collecting the information, you will be able to evaluate the strategic fit and discussion will be narrow after strategic fit appear.

• You have to create trust in relationship • place potential deal breaking all divisive issue on the table

at this stage and it will become evident during this process.

Step 7: looking out for land mines

• Beside the information gathering, your legal and accounting team should be involve in researching the implications of your alliance.

• Be aware that a majority of the member of the European parliament are currently supporter of the green political persuasion (environmental aware).

• Another land mines, one for your accountant to sniff out is the so called eighty twenty syndrome

Step 8: Obtaining Internal Approval

• Covering yourself and obtaining clear approval from the CEO and top advisory staff is an important element in managing the alliance development process.

• However, the internal approval political problem is often occurring with company in the declining and mature and consolidating stage.

• Every decision must be approved by many decision makers and someone may left out so this will cause break up problem in the negotiation stage.

Step 9 : Creating an implementation Plan• An alliances conceived entirely by planning • There are many examples of a well-executed business

opportunity that was followed by faulty implementation• The failure point occurs when the alliance-planning team

hands off the project to the alliance-implementation team• Why they have to work together ??• So they can translate their excitement, knowledge,

desire for the benefits and awareness of the cost of the alliance to those members.

• Hence, bring in managers who will manage relationship first and then have the operating managers involved in the later stages of the candidate selection

Step 10: If partner development lags, Try a quick fix

• Sometimes the relationship-development process begins to slow down or lag , this may be the time for a “quick fix” solution.

• A Mature company wanted to new industry and selected the Hockeystick as a partner

• The Mature had difficulty understanding market• The Hockeystick, on the other hand, needed speedy

decisions in its own process• High frustration for the Hockeystick -> competitiors• Would bring increased in awareness of the business

opportunity concept that had been jointly discussed to competitors

• “ The Pilot Program”• Show that the relationship fit the strategic criteria• Determine what they consider to be success for the pilot• Valuable discussion about your subsequent relationship• Their company post-pilot has an increased value as a

result of your joint activities and your company’s contribution to their know-how

Step 10: If partner development lags, Try a quick fix

Step 12: Final Predeal Evaluation of All Relevant Information• Does the opportunity meet your objectives? • Personality traits -> corporate, individual managerial and

project• Balance the human dimension with the business issues• The alliance will never be successful unless business and

personal consideration are acceptable• 73% felt that corporate personality was a contributing

factor leads to failure• 63% attributed failure to managerial personality • 58% to project personality

Step 13: Managing Any Predeal Glitches

• Unexpected issues and its impact

• It is recommended to have a cultural interpreter with business expertise present throughout the whole alliance-planning process to smooth cultural miscommunications.

• Be aware of the “invisible decision maker”.

Step 14: Negotiating the Deal

• In alliance, the best approach is problem solving - the only methodology for reaching compromise

• Adapt your business and negotiations styles• Take advantage of the guidelines for international

business negotiations (12 Variables)• Be aware of the personalities and status of your

team members • “Alliance creation and alliance management are one

and the same thing. You will start off negotiating, and end up doing the same thing”.

Step 14: Negotiating the Deal

Step 14: Negotiating the Deal

Step 14: Negotiating the Deal

Step 15: Managing the Legal Process • Structuring the agreements:

– Nondisclosure agreementsNondisclosure agreements: Agreements to keep confidential information that is designated as confidential by either party.

– Evaluation agreementsEvaluation agreements: Agreements giving one party the ability to examine the other party’s information on products for the purpose of evaluating strategic fit for a defined period of time, with the added requirements of confidentiality.

– Letters of Intent SpecificLetters of Intent Specific: Expressions of intent to do business together in a defined area.

• Termination of the alliance is not always the best solution be well prepared

Questions?