WHAT IS AN ALLIANCE? GROUP 8. WHAT IS AN ALLIANCE? An alliance is business agreement and...
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Transcript of WHAT IS AN ALLIANCE? GROUP 8. WHAT IS AN ALLIANCE? An alliance is business agreement and...
WHAT IS AN ALLIANCE?GROUP 8
WHAT IS AN ALLIANCE?
An alliance is business agreement and relationship with two or more firms interfacing with executives of top global or European companies
As a role of global alliance partner Working with client and extend the joint service
offerings that developed with our alliance partner Working with many members of our alliance partner
organization and other members of the firm to both educate and promote the value of the alliance.
DEFINITIONS OF “ALLIANCE”
By Webster defines the word “alliance” as An allying or close association, as of nations for a
common objectives, families by marriage An agreement for this The countries, groups in such association
By Synonyms from Webster’s Thesaurus The state of being allied, connection, membership,
affinity, participation, cooperation, support, union, agreement, common understanding, marriage, collaboration, partnership and the act of joining, etc.
Sales Alliance Solution-Specific Alliance Geographic-Specific Alliance Investment Alliance Joint Venture Alliance
Types of Alliance
• WHEN TO USE? Two companies agree to enter the market
together to sell complementary products and services.
• MAIN PURPOSE? To create sales; especially for companies that have joint selling activities with specific
clients.
Sales Alliance
• Example: i2 Technologies : Ernst & Young (CGE&Y)
• Exclusivity is NOT a requirement
Sale Alliance (cont’d)
• WHEN TO USE?Two companies agree to jointly develop and sell a specific marketplace solution.
• MAIN PURPOSE?• Joint selling of a jointly developed solution• Usually there are incentives to maximize the return to
both parties for their parts of joint development effort.
Solution-Specific Alliance
• Example : • Whirlpool, Hearst, and Boston Consulting
Group
Solution-Specific Alliances (cont’d)
• WHEN TO USE? Two companies agree to jointly market or co-brand products and services in a specific geographic
region.has been practiced for many years in the beer industry
• MAIN PURPOSE?Being able to enter to an important geographic market without having to bear high-cost fromexportation.
Geographic-Specific Alliance
• Example: • Fosters Brewing Company (Australia) :
Molson (Canada)
Geographic-Specific Alliance
WHEN TO USE?• One company makes an investment in
another company and at the same time developing an agreement to jointly market their products
• Example :• viaLink : CGE&Y and i2• HP : viaLink
Investment Alliance
WHEN TO USE? • Two companies come together and form third company to exclusively market and/or develop specific products and services. • Setting up a separate organization and
financial structure• Ownership interests and incentives will be
stated when the join venture alliance is established.
Joint Venture Alliance
• Positive Aspect:• There is a financial and legal commitment between two companies
• Negative Aspects• Failure of joint venture alliance can be PAINFUL.
• Responsibility of a separate company, including financial implications that are tied to the performance of both companies
Joint Venture Alliance
Example : • Northern Telecom (now known as Nortel) :
Motorola
Joint Venture Alliance
FRAMEWORK TO DETERMINE
THE NEED FOR AN ALLIANCE
What is Alliance ?
Step 1: Business and Market Strategy
To review the company’s business and marketing strategies
Knowing the customers and their behavior is critical
Step 2: Market Scan
1. Review of existing competitors and their market positioning
2. Review of existing competitors against the identified total “customer solution”
3. The identification of new competitors drawn into the marketplace by the bundling activity
4. The identification of non-total-customer solution providers that are intermediaries in the marketing process through technology
Step 3: Product Portfolio Assessment VS. Marketplace Scan
Identifying what the current products and services are in the company’s product portfolio
Comparing and understanding the future position of competitors
Step 4: Build Internally vs. Acquire Externally
1. To do nothing2. To create or build the needed technology or products
internally3. To acquire externally access to the technology
products and services
Step 5: Organizational Readiness and Speed to Market Demand
A quick, decision-tree process
How fast your organization is in responding in the marketplace (Speed to market)
Step 6: Proceed to Build internally or Acquire Externally
From the step 4 to 5, we will be able to make decision whether to build internally or acquire externally
What Is an Alliance?
Framework to determine
what type of alliance is needed
Step 1. Do you need an alliance that is sales-based?
All Alliances must be directly or indirectly sales –and client- based.
They must generate additional sales for all alliance partners in order to be successful.
Includes solution-based, geographic-specific, investment alliances and JVs.
Should sales based alliance not be needed, “work for hire” arrangements with other companies could be taken into consideration.
Step 2. Is there a need for Joint Solution Development?
Sales Alliances and geographic specific alliances don’t require Joint Solution Development.
Solution specific alliance requires Joint solution development.
Additionally, Joint ventures and investment alliances rely on Joint Solution Development.
Step 3. Is the need Geographic based?
Sales based alliances focus on products and services. They can occasionally be Geographically based.
Solution specific and investment alliances are not usually based on Geographic location.
Joint Ventures and geographic-specific alliances have requirements that are geographically based.
Step 4. Is there a necessity for a direct investment in the external company?
Sales alliance, geographic-specific alliance and solution specific alliances do not require direct investment.
Investment alliance and JVs usually require direct investment in external companies.
The Direct investment should be defined as the investment capital in this framework.
Step 5. Is there an overriding reason to set up a company to acquire the needed product and services from the
external provider?
There is usually no requirements to set up a new company to acquire needed products and services in sales based, geographic based, solution-specific and investment alliances.
Step 6. Pulling together the answers from the framework
Examples.
1. Two companies failing to determine the type of alliance needed led to ambiguity and postponement of the alliance.
2. Although sometimes the framework for the need is appropriately determined, the motives and goals of each party plays a crucial role in the success of a successful alliance. Framework to determine the need could be done
internally whereby both companies develop the concentric areas they want to focus on and determine the type of alliance accordingly.