Strategic Alliances
Strategic Alliances
Strategic Alliances
1990 : 3-5%
2000: 20%
2005: 30%
2010: 40%
(Peter Drucker)
Cooperation
Communication
.Success factors cont
Essential 1. Partner selection (70%)
2. Senior management commitment (68%)
3. Clearly understood roles (49%)
4. Clearly defined objectives (47%)
5. Good communication between partners (40%)
6. Relationship building (35%)
7. Thorough planning (31%)
Complementary alliance
Types of classification
Alliances come in many shapes and sizes.
Terms commonly used are
joint ventures, collaborations , formal and
informal, equity and non equity ,partnering,
and partnerships.
You may also have heard the terms
merger, acquisition, and outsourcing. Some
feel that these are not true “strategic
alliances”
Pyramid Of Alliances
/Acquisition
Merger
Joint Venture
Licensing/Private Label
Joint Marketing
Vendor
Suppliers
Types of Strategic Alliances
Joint Ventures
Outsourcing
Affiliate Marketing
Technology Licensing
Product Licensing
Franchising
R&D
Distributors
Joint Ventures
A joint venture is an agreement by two or more
parties to form a single entity to undertake a
certain project. Each of the businesses has an
equity stake in the individual business and share
revenues, expenses and profits.
Joint Ventures are agreements between parties or firms
for a particular purpose or venture. Their formation may
be very informal, such as a handshake and an
agreement for two firms to share a booth at a trade
show. Other arrangements can be extremely complex,
such as the consortium of major U.S. electronics firms to
develop new microchips,
Franchising
Franchising is an excellent way of quickly rolling out a
successful concept nationwide. Franchisees pay a set-up fee
and agree to ongoing payments so the process is financially
risk-free for the company. However, downsides do exist,
particularly with the loss of control over how franchisees run
their franchise.
R&D
Strategic alliances based around R&D tend to fall into
the joint venture category, where two or more
businesses decide to embark on a research venture
through forming a new entity.
Host Country Home Country
Pharmaceutical Pharmaceutical
Firm Firm
R&D R&D
R&D
Joint Venture
Distributors
If you have a product one of the best ways to market it is to recruit
distributors, where each one has its own geographical area or
type of product. This ensures that each distributor’s success can
be easily measured against other distributors.
Distribution Relationships
This is perhaps the most common form of alliance. Strategic
alliances are usually formed because the businesses involved
want more customers. The result is that cross-promotion
agreements are established.
Consider the case of a bank. They send out bank statements
every month. A home insurance company may approach the
bank and offer to make an exclusive available to their customers
if they can include it along with the next bank statement that is
sent out.
It’s a win-win agreement – the bank gains through offering a
great deal to their customers, the insurance company benefits
through increased customer numbers, and customers gain
through receiving an exclusive offer.
Another Types of strategic alliances
classification
Vertical Alliances:
Vertical alliances are relationships between organizations in
different industries. This is a type of alliance most commonly found in
the service sector where collaboration of expertise can be
coordinated to offer complete solutions to clients.
Example:
Individuals from a civil engineering, project management,
construction, landscaping and interior design firms all have different
areas of expertise, yet together can deliver a complete building
solution. None of the firms could bid on a job of this magnitude
independently, but as a team they can combine their expertise for
as long as necessary.
Horizontal Alliance:
Horizontal alliances include firms from the same industry.
Alliances are usually used to achieve scale, to adjust for
seasonal changes or handle niche areas of expertise.
:Example
A communications consulting firm submits a proposal to create a
communications plan for an organization that handles politically
sensitive issues. The consulting firm decides to include a
.political advisor in its proposal
: Administrative Alliance
Generally involves one organization entering into an
agreement with another for the provision of administrative
services, space or products. The main purpose is to share
functions, increase operational efficiency and to reduce costs
:Example
sharing office space and a receptionist
Joint Programming or Business Network
:Alliance
Two or more organizations
form an alliance/joint venture for the purpose of delivering
a joint program. The two business entities are taking
advantage of their different skills and abilities in an
.effective manner
:Example
A group of independent consultants come together to develop a
management-training program. This may include individuals with
expertise indifferent areas such as human resources,
leadership and communications skills, and conflict resolution.
These consultants will utilize their different skills to develop the
program and may then market it by using their respective
.client/contacts list
Merger:
This involves the amalgamation or joining together of
two or more organizations, which typically share
similar objects, goals, principals and/or
services/products. This collaboration typically
results in the dissolution of one or both of the initial
organization
Examples:
Two large organizations such as a financial institution or an
insurance
company may merge, which effectively eliminates a primary
competitor. Or on a smaller scale, a group of consultants with
different expertise merge to form one company. The individual
companies are dissolved.
Another Types of Alliance
Third-party logistics (3PL)
Fourth-party logistics (4PL)
Retailer-supplier partnerships (RSP)
Distributor integration (DI)
Examples of SA Successes and
Failures
Women.com Partners with Procter &
Gamble
August 29, 2000
The water also will be served on the Disney Cruise Line. The alliance
includes sponsorship and promotional opportunities, including
advertising buys across Disney's media properties through ABC
Unlimited.
Renault-Volvo
alliance
In 1990 Volvo and Renault agreed to establish a
strategic alliance. They knew each other well
through 20 years of industrial co-operation. The
motives for the alliance were to exploit sizable
potential synergies in joint product development,
purchasing and manufacturing and to create
complementary firms to compete in the global
marketplace.
Chrysler-Fiat Sign Global