Scope, implementation and pitfalls of strategic alliances
4 important questions on Scope, implementation and pitfalls of strategic alliances
When entering a strategic alliance a company should consider at least these four factors:
- Compatibility
- Nature of a potential partner's products or services
- The relative safeness of the alliance
- The learning potential of the alliance
Describe the four factors in choosing a partner
- Compatibility
- Mutual trust
- Effective work
- Nature of a potential partner's products or services
- Competitiveness of the firms on markets
- Chose a partner that is not in directly competitive
- The relative safeness of the alliance
- Success or failure of previous alliances of the potential partner
- The learning potential of the alliance
- What does each partner hope to learn from the other?
- Not share information that can result in competitive disadvantage
When entering a strategic alliance there are tree approaches on how to manage the alliance;
- Shared management agreement
- Assigned arrangement
- Delegated arrangement
Describe the three types of management
- Shared management agreement
- Both partners participate actively
- Assigned arrangement
- One partner takes primary responsibility
- Delegated arrangement
- Executives are hired to solely for the purpose of the JV or transferred from the participating firms. Responsible for day-to-day decision-making.
When entering a JV there are usually three types of ownerships:
- Corporate form
- Limited partnership
- Public-private venture
Describe the different forms of ownership.
Furthermore, describe the opportunities and challenges in a public-private venture
- Corporate form
- Form where the partners can protect their own assets from those of their partners
- Limited partnership
- Managing partner assumes full financial responsibility regardless to the amount of its own investment. The other partner has liability limited to its own investment.
- Is risky for the managing partner
- Public-private venture
- Partnership between a privately owner firm and a government
- Opportunities:
- New market
- Government support
- Reduced competition
- Challenges:
- Investment lost
- Assets seized
- Operation closed
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When entering a functional alliance there are four different types:
- Production alliances
- Marketing alliances
- Financial alliances
- R&D alliances
Describe each type of functional alliance.
- Production alliances
- When two ore more firms manufacture products or provide services in a shared or common facility
- Marketing alliances
- Two or more firms share marketing services or expertise
- Established company helps the partner enter a market through its expertise in exchange for a fee or share in profit.
- Financial alliances
- Sharing financial risks in a project.
- Either divide financial risks or one carries the financials and the other shares expertise.
- R&D alliances
- Joint research to develop new products or services
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