Transcript What is an Alliance Strategy?

What is an Alliance
Strategy?
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What is an Alliance Strategy?
Why do companies engage into an Alliance?
Why do Alliance sometimes fail?
Four Elements of Alliance Strategy:
Alliance Design
Alliance Management
Alliance Constellation
Alliance Capability
Conclusion
References
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Strategic Alliance
This is a formal relationship or a deal (new
venture) between two or more parties to
pursue a set of agreed goals to meet critical
business needs while remaining independent
organizations.
Alliance Strategy
An alliance strategy represents much more
than a deal. It is an intent, a dynamic process,
and a logic that guides alliance decisions.
A Strategic Alliance
without an Alliance
Strategy is
condemned to fail
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To enter restricted overseas market.
To gain Competitive Advantage.
Facts: Today, Alliances account for 20- 50%
of corporate value; whether it is measured in
terms of revenue, assets, income or market
capitalization.
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Over the years, numerous studies have shown
30- 70% of Alliances fail.
Do not meet the goals of the parent
companies.
Clashing corporate cultures and goals.
Unclear strategies
Weak or unbalanced alliance economics.
Lack of sufficient operating staff skills and
parent commitment.
Four Elements of Alliance Strategy
Alliance Design
Alliance Management
Alliance Constellation
Alliance Capability
Alliance Design
• Why use an alliance?
• What is the scope of
the alliance?
• Criteria and methods of
selecting partners
• Options for structuring
the alliance
Four Elements of Alliance Strategy
Alliance Design
Alliance Management
Alliance Constellation
Alliance Capability
Example, Venture between
Xerox and Fuji Photo Film
was created to help Xerox
sell copiers in Japan.
Alliance Management
• Process of making
decisions
• Operational decisions
• Performance and
relationship between the
parent company and
other company
Four Elements of Alliance Strategy
Alliance Design
Alliance Management
Alliance Constellation
Alliance Capability
Example, The global airline
business case between
Lufthansa and United .
Alliance Constellation
• Should the alliance be
formed?
• How many and what
type?
• Interaction among
alliances
Four Elements of Alliance Strategy
Alliance Design
Alliance Management
Alliance Constellation
Alliance Capability
Alliance Capability
• Who in the corporation
should be responsible
for specific tasks?
• The success of external
alliances often depends
on having a supportive
internal infrastructure
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The Success of an Alliance Strategy depends
much on the unfolding relationship between
the partners.
Companies will not survive if they try to do
everything themselves.
Alliance Strategy wins the race!!!!!
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http://www.alliancestrategy.com/PDFs/BGC%20AllianceStrategy%20CriticalEYE04.pdf
www.google.com
Alliance Strategy: Fundamentals for Success, Ben Gomes-Casseres (2003) : The Arc of
Alliance Strategy
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Over time, Xerox’s strategy and Fuji Xerox’s
capabilities evolved so the venture became a
supplier of products to Xerox globally and a
partner in developing technologies.
The joint venture was profitable, grew in size
and issued modest dividends to Xerox. Today,
this forty two year old joint venture is arguably
the most successful US-Japanese alliance on
record, because of the way it helped Xerox
compete globally. The alliance’s role in
corporate strategy is much bigger than the
partnership itself.
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The global airline business today provides excellent
examples of the importance of alliance constellations.
Every major airline today is part of one of the global
constellations.
Lufthansa and United form the core of the Star
constellation, but other partners, such as Singapore
Airlines, ANA, Air Canada, and Varig fill important roles in
regional markets.
Similarly, American Airlines and British Airways form the
core of one world, and Air France & Delta the core of Sky
Team.
The battle in global air travel, increasingly, is between
these constellations of allies, rather than between
individual firms. So, the design and management of these
constellations is critical to the success of the member
firms.