Strategic Alliances

Overview

What you will learn…

• Strategic Alliance defined• Information requirements • Examples of Strategic Alliances• Factors promoting Strategic Alliances• Types of Strategic alliances• Risks and cost of Strategic Alliances• Balancing co-operation and competition• Alliances and Ethics• Summary

Strategic Alliance defined

• Strategic alliances are co-operative relationships between two or more independent organisations, designed to achieve mutually beneficial goals for as long as is economically viable.

• They carry uncertainties that are not manageable in a contractual arrangement.

Figure 1: Information Phases for the alliance process

IBM’s Global Alliances

• Early Alliances: Responding to Japan• IBM’s Initiatives During the 1990s: Rebuilding

Competitiveness

The Global Airline Industry

• Airline industry consolidation of 1990s• From code sharing, joint marketing

activities to combining operations.• Examples of Alliances

– Star Alliance– ONE world Alliance

Airlines Type of Alliance

y United Airlinesy Lufthansay Scandinavian y Thai Internationaly Varig BrazilianyAir CanadayAir New Zealandy Mexicana

Star Alliance: Code sharing, joint marketing; includes up to 15 partners in 2002

Global Airline Alliances

• New market entry

• Shaping of industry evolution

• Learning and applying new technologies

• Rounding out a product line

Factors promoting alliances

• Licensing ArrangementsThe least sophisticated and easiest-to-manage

type of alliance

• Joint VenturesThe creation of a third entity representing the

interests and capital of the partners

• Consortia and NetworksHighly complex linkages among groups of

companies

Types of Strategic Alliances

Licensing Arrangements

Primary reasons for entry• A need for help in commercializing a new

technology• Global expansion of a brand franchise or

marketing image

Joint Ventures

Primary reasons for entry• Vertical integration

• Learning a partner’s skills

• Upgrading and improving skills

• Shaping industry evolution

Consortia and Networks

• Multi partner Consortia

Multi partner alliances designed to share an underlying technology

• Cross-Holding Consortia

Formal groups of companies that own large cross-holdings and equity stakes in each other

• Industry-Spanning Alliance Networks

Firms sharing knowledge, costs, and risks

Risks and Costs of Alliances

• Rising incompatibility

• Risk of knowledge or skill leakage

• Risk of dependence

• Strategic control costs

Balancing Cooperation and Competition

• Understand the firm’s knowledge and skill base

• Choose complementary partners

• Keep alliance personnel long-term

Alliances and Ethics

• Balancing collaboration and competition within the alliance

• The issue of loyalty among personnel assigned to the alliance

Summary

• Strategic alliances are no longer a strategic option but a necessity in many markets and industries.

• Dynamic markets for products and technologies coupled with increasing costs has increased the use of alliances.

• It is hard to capture value in strategic alliances.

• Knowledge resource exchange is important.

You are welcome to contact Nigel Bairstow at B2B Whiteboard your source of B2B Asia / Pacific marketing advice

http://www.linkedin.com/pub/nigel-bairstow/6/41b/726

http://twitter.com/#!/b2bwhiteboard