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Strategic Alliances
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Strategic Alliances
Mission
Objectives
Strategy Implementation
Competitive Advantage
Internal Analysis
Vertical Integration
Diversification Strategic Alliances mode of entry
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
Strategic Alliance:
Any cooperative effort between two or more independent organizations to develop, manufacture, or sell products or services
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
Implication: Choose partners that are better at something than you are (complementary resources)
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
Mexico 1 5
Exchange Rate: 1 bu. = 1 lb.
Bananas
lbs./hr.
Canada: 2 hrs. = 6 bu. Wheat and 4 lbs. Banana, or 2 hrs. = 12 bu. Wheat By trading, Canada can get: 6 bu. Wheat and 6 lbs. Bananas
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
Strategic Alliances
Mexico 1 5
Exchange Rate: 1 bu. = 1 lb.
Bananas
lbs./hr.
Mexico: 2 hrs. = 1 bu. Wheat and 5 lbs. Bananas, or 2 hrs. = 10 lbs. Bananas By trading, Mexico can get: 5 bu. Wheat and 5 lbs. Bananas
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
Strategic Alliances
Three Types Of Alliances Nonequity Alliance Contracts licensing supply & distribution agreements Equity Alliance Cross Equity Holdings partners own stakes in eachother
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
Value Creation
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
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Strategic Alliances
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Strategic Alliances
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Strategic Alliances
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
Adverse Selection
Holdup
Moral Hazard
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Strategic Alliances
However,
The sources of value creation within alliances may be rare. firms may form a combination of complementary resources within an alliance that is rare the stock of such complementary resources may be limited so that first movers have a rare combination
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
However,
The resource combinations that create value in alliances may be very costly, if not impossible, to imitate if: the value creating combination depends on social complexity (trust), causal ambiguity, and/or historical uniqueness
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
If:
there are no anti-trust issues low uncertainty about the investment firms can be integrated easily value of combined firms is not tied to independence
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Strategic Alliances
Joint Ventures
aligns interests of partners through ownership of independent firm direct effect
Equity Investments aligns interests of partners through ownership in each other indirect effect
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Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
Strategic Alliances
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
Reputation and trust may be sources of competitive advantage because they are costly to imitate
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
Summary
Successful alliance managers will: create alliances that will produce gains from tradecomplementary resources
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
Summary
Alliances may generate competitive advantage if:
combinations of complementary resources meet the VRIO criteria
The Big Challenge of Strategic Alliances: Maximizing gains from trade while minimizing the threat of cheating
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
Payoff Matrix
Team I
Strategy A Strategy A I. $3,000 II. $3,000 Strategy B I. $5,000 II. $-0-
Team II
Strategy B
I. $-0II. $5,000
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
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Strategic Alliances
Payoff Schedule
Team I Round 1 _____________ Team II _____________
Round 2
Round 3 Round 4
_____________
_____________ _____________
_____________
_____________ _____________
Round 5
Round 6
_____________
_____________
_____________
_____________
Total
_____________
_____________
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Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall. Strategic Management & Competitive
Strategic Alliances
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
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