FORMING STRATEGIC PARTNERSHIPS AND

ALLIENCES

PRESENTED By, MOHAMMAD YOUNUS (08IN70)

(G.L)

Contents… Introduction …? ?? What is partnerships & Alliance ??? Why do people join partnerships ???? Collaborative advantage. Kentres EIGHT criteria’s for successful

partnerships . Process methodology. Interference indicator. Interdependence Assessment Strategic Partnership Methodology.

INTRODUCTION

Decision concerning the selection of channel intermediaries, and the subsequent working with this is effectively forming a strategic partnership.

As the business is modernized, and there is no monopoly so now it is extremely difficult to rum business by the single person therefore the partnership concept is said to occur.

In strategic partnership and alliances the emphasis is on cooperation & partnership b/w the parties, not competition & conflict as the basis upon which the joint competitive advantage is developed.

WHAT IS PARTNERSHIP & ALLIENCE ?????

The partnership & alliance use as interchange but in raw sense both give the almost same meanings.

But there is difference b/w partnership & alliance and this difference come in relationship among people.

The vertical relation between supplier and customer / buyer are known as the PARTNERSHIP.

The horizontal relationships such as those b/w two suppliers are known as known as ALLIENCE.

Market +

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Strategy

Culture

Leadership Style

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Supplier Supplier

HORIZAONTAL

GRAPHICALLY ALLIENCE

Market +

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Strategy

Culture

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SupplierCustomer/ Buyer

VERTICAL

Leadership style

GRAPHICALLY PARTNRESHIP

COLLABORATIVE ADVANTAGE Alliance b/w companies, whether they are from different parts of the world or different ends of the supply chain, are a fact of life in business today. Whatever the duration & objectives of business alliance, being a good partner has become a key corporate assets. I call it a company’s COLLABORATIVE ADVATNGE.

KENTRE reports on research project based on 37 companies & their partners from 11 countries of both manufacturing & service industires.

KENTRE give three fundametal concept ,…..

COLLABORATIVE ADVANTAGEcontinue ………. FUNDAMENTAL’S OF COLLABORATIVE ADVANTAGE …..

1. 1) Immediate short term benefits for the partners but also extends into the future.

2. 2) successful arrangement involve collaboration rather than just exchange.

3. 3) Relationship cannot be controlled by formal system but requires interpersonal connection.

KENTRE’S EIGHT CRITERIA ….

CRITERIA NO. 1 : INDIVIDUAL EXCELLENCEBoth partners require to be strong and can contribute something of value to the relationship. Both have the positive motive and attitudes.

CRITERIA NO. 1 : INDIVIDUAL EXCELLENCEBoth partners require to be strong and can contribute something of value to the relationship. Both have the positive motive and attitudes.

Kentre suggest there are eight criteria which are necessary for organizational relationships…………

CRITERIA NO. 2 : IMPORTANCEThe relationship should be congruent ( similar ) with the strategic objectives of both partners.

CRITERIA NO. 2 : IMPORTANCEThe relationship should be congruent ( similar ) with the strategic objectives of both partners.

KENTRE’S EIGHT CRITERIA ….CRITERIA NO. 3 : INTERDEPENDENCE There should be mutual need of each partner; they ideally have complementary assets and skills.

CRITERIA NO. 3 : INTERDEPENDENCE There should be mutual need of each partner; they ideally have complementary assets and skills.

CRITERIA NO. 4 : INVESTMENTIf each invests in the other, this signifies their respective stake in the relationship and commitment to the long term prosperity of the venture.

CRITERIA NO. 4 : INVESTMENTIf each invests in the other, this signifies their respective stake in the relationship and commitment to the long term prosperity of the venture.

CRITERIA NO. 5 : INFORMATIONShared information is an essential feature of the success of partnerships. Information concerned their specific, individual, objectives and goals as well as technical data, performance data and information concerning changed circumstances.

CRITERIA NO. 5 : INFORMATIONShared information is an essential feature of the success of partnerships. Information concerned their specific, individual, objectives and goals as well as technical data, performance data and information concerning changed circumstances.

KENTRE’S EIGHT CRITERIA ….CRITERIA NO. 6 : INTEGRATION In which partners develop linkages and shared ways of operating to facilitate their working together easily. Connections are formed between the organizations at various (but important ) levels.

CRITERIA NO. 6 : INTEGRATION In which partners develop linkages and shared ways of operating to facilitate their working together easily. Connections are formed between the organizations at various (but important ) levels.

CRITERIA NO. 7 : INSTITUTIONALIZATIONWhereby the relationship is formalized, with clear responsibility and decision process. It thereby extends beyond the originators.

CRITERIA NO. 7 : INSTITUTIONALIZATIONWhereby the relationship is formalized, with clear responsibility and decision process. It thereby extends beyond the originators.

CRITERIA NO. 8 : INTEGRITYIt exist and the partners behave towards each other in ways which justify, and enhance, mutual trust; they do not abuse the confidence they are privy to, nor do they undermine each other.

CRITERIA NO. 8 : INTEGRITYIt exist and the partners behave towards each other in ways which justify, and enhance, mutual trust; they do not abuse the confidence they are privy to, nor do they undermine each other.

PROCESS MATHODOLOGYo Any company considering strategic partnership should do so

only after an analysis of what is sees as its critical strategic issues and how these may be resolved.

o Critical issues should first be identified and then prioritized by their likely impact ( low, significant, to high) and their urgency ( from low (long term), significant (medium term), to pressing (short term)- the length of time is dependent upon planning cycles.

o Having completed this part of the analysis, the next step is to re-evaluate the critical issues by reviewing them alongside a prospective partner ( or partners) to ascertain the impact of partnership on the issues.

o Criteria will be required and these should include revenue growth, profit growth, operating margins, cash generation and return to the share holders.

INTERDEPENDENCE INDICATOR

BUYERS SUPPLIER% of business involved.Level of risk supplier fails.Cost of changing suppliers (“exit-cost:”).Availability of alternative suppliers. Strategic signifance of business.This supplier annual cost versus all suppliers.Total category cost as a proportion of sales ( e.g distribution / cost / sales).

% of supplier’s business this buyer represents.Impact of business lost.Strategic significance of business.Number of direct competitors.Degree of differentiation of product/ service.Price advantage / disadvantage in relation to competitors.

HIGH DEPENDENCE

LOW DEPENDENCE

HIGH DEPENDENCE

LOW DEPENDENCE

BUYER SUPPLIER

INTERDEPENDENCE ASSESMENT

RELATIONSHIP

LEVEL – 1

STRATEGIC RESPONSE

Buyer- high dependence

Supplier - high dependence

• A common strategy aligned to end user

• (buyer’s customer)• A partnership culture aligned to end

user.• Business plan for partnership• Structured communication

framework• Integrated information• Open book negotiations• Interchanging personnel• Long term contracts.

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RELATIONSHIP

LEVEL – 2

STRATEGIC RESPONSE

Buyer- low dependence

Supplier - high dependence

• Seller develops a strategy aligned to the culture of the buyer

• Subculture un the seller to minor that un buyer.

• Regular feedback system seller to buyer versus two-way communication.

• Seller’s strategy includes differentiation to build dependence.

• Contract term- from seller’s view, as long as possible

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RELATIONSHIP

LEVEL – 3

STRATEGIC RESPONSE

Buyer- high dependence

Supplier - low dependence

• Seller strategy focused on synergy with other business.

• Buyer strategy aims at exclusively agreements and contingency.

• Seller recognizes buyer logics but does not necessarily change culture.

• Pricing should reflect imbalance

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RELATIONSHIP

LEVEL – 4

STRATEGIC RESPONSE

Buyer- low dependence

Supplier - low dependence

STRATEGIC PARTNERSHIP NOT APPROPRIATE

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STRATEGIC PARTNERSHIP METHODLOGY

COMPANYA

JOIN

(ENVIRONMENTAL SCAN)

COMPANYB

Flush out and listCRITICAL ISSUES

COMPANYB

COMPANYA

STEPS MODULES

1. Vision Formulation

2. Looking

external / internal

4. Issues Listing & Issues Articulation

3. IssuesFormulation

1.

2.

5.

6.

9.

10.

low Sig High

low .Sig . . .Press . . .

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ISSUE OBJECTIVE

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GE

NC

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IMPACT

(Why Test ) (Quantify )

Strategies

STEPS

6. Issue break Out

objectives/ strategies/ action plans

5. Issues prioritization

MODULES

Thank You