Constellation Strategy:

Managing Alliance Groups

Dr. S.Balasubrahmanyam, IIM Kozhikode
PGP-II (SAJVA)

Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Constellations >>>>> Corporations

Constellation: A set of firms linked through alliances and

competing in a specific business domain

A Constellation is a group / web / coalition / network of

multilateral alliances with multiple partners competing
against other such groups and against traditional single
firms [e.g., Airbus, Boeing, Coke, Pepsi,Visa, MasterCard]

Examples of Constellations: R & D Consortia, Joint

Bidding, Code Sharing in Airlines etc.

Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Basic Motivations behind Constellations

Linking Markets (e.g., Star Alliance, One World etc)

Combining Skills (e.g., PDA)

Building Momentum (e.g., GM, Ford, Chrysler Web-based

Component exchange Combined Market Power);
(Modis + JK + Apollo)Rs.1000 Crore Joint Venture
(Technology of Continental)Radial-T

Reducing Costs (Multi-partner JVs Few Japanese Chemical

Firms, Purchasing Cooperatives); Coke-Pepsi-Aspartame;

Sharing Risks (MJVs Oil Companies, Semiconductor Mfrs,

Pharmaceutical Companies, Photographic firms etc)
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Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Design Dimensions Modus Operandi

Group Size No. of Member firms = f(CSFs); Phased

Membership Mix - Combination of Multiple Skills and

Capabilities = f(Diversity, B-Spanning, Complementation)

Internal Rivalry Degree to which partners compete

with one another = f(Duplication / Exclusion)

Governance Structure = f [(Formal + Informal) Mix]

General Assembly (e.g., UN Approach towards nations)

Core and Periphery (e.g., UA and Lufthansa in Star Alliance)
Lead Firm (e.g., GM, Boeing or IBM)
Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Alliances in Cable Converters

Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Alliances in Interactive TV

Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Alliances in Personal Communications

Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Alliances in Imaging Applications

Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Managing Constellations

Evaluate Design Trade-offs between Group Size,

Membership Mix, Internal Rivalry & Governance Structure

Map your constellation and those of your rivals (Visual Map)

Be clear about benchmarking, trail-blazing and tweaking

Adjust constellation structure to respond to new conditions

Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Alliance Success: Top Ten Factors [1-5]

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Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Alliance Success: Top Ten Factors [6-10]

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Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014

Partner Selection:
Balance Capabilities and Goals

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Dr. S.Balasubrahmanyam, IIM Kozhikode

9/18/2014