GROUP 4

WHAT IS ALLIANCE STRATEGY?

C O N T E N T

DEFINITION OF ALLIANCE

What is alliance?Answer: a strategy that used to fulfill a broad range of corporate goal, including;

• Gaining scale.• Reducing costs.• Accessing new skills.• Product or market.• Sharing risk.

Characteristics of Alliance•Agreements between 2 or more separate firms.• Flexible contract.•Joint decision making.

INTRODUCTION

• Todays, about 20-50% of alliance are being implement in corporate value.

• Many firms have been successful in implementing alliance into their company, such as Starbuck, IBM, Eli Lilly, and Corning Glass.

• However, up to 30-70% of alliance failed.

• So, what are the reasons behind the failure of those alliances?

WHAT MAKE THE ALLIANCE FAILED?

• Unclear Strategies.• Poor partner choice.• Unbalanced alliance economics.• Dysfunctional governance.• Clashing corporate culture & goal.• Lack of sufficient operating staff skill and

parent commitment.

GET TO THE RIGHT DIRECTION!!!

• Instead of focusing on the “ strategic alliance”, managers should focus on “alliance strategy”, because strategic alliance without an alliance strategy is likely to failed.

• Strategic Alliance: A deal, a new venture, an organization.• Alliance strategy: an intent, a dynamic process,

a logic that guide alliance decisions.

1. Let business strategy drive the alliance logic.2. Design the alliance to fit the strategy.3. Grow relationships, don’t just “do deals”.4. Use constellations of alliances, not stand-alones.5. Organize internally to cooperate externally.

Develop “alliance strategies,”not “strategic alliances” . . .

THE 4 FACTORS OF ALLIANCE STRATEGY

THE 4 FACTORS OF ALLIANCE STRATEGY

THE 4 FACTORS OF ALLIANCE DESIGN

• What are the goals of the company?• Which partner should the company select

to alliance with in order to meet the goals?• How should the Alliance be structured?• Which type of Alliance would be suitable?• What is the process of adjusting or

terminating an alliance ?

THE 4 FACTORS OF ALLIANCE STRATEGY

• Alliance management: how partners of alliance make continual investment of effort and adjust their relationship in response to new circumstances.

• The success of alliance depends much on the unfolding relationship between the partners.

• What will be the process of making decisions?

• Example: will there be a meeting with a CEO every time a decision has to be made or are the mangers of the department allowed to make the decisions?

THE 4 FACTORS OF ALLIANCE STRATEGY

• What are the terms & relationship between the parent company and our company?

THE 4 FACTORS OF ALLIANCE STRATEGY

• Alliance Constellation: the collection of alliance that fits together, collection are often important for companies-in-system-on-network-type business.

• How many and what type?• Should the alliance be formed?

•

THE 4 FACTORS OF ALLIANCE STRATEGY

• Alliance capability: how a supportive internal infrastructure can create a successful of external alliance.

• Alliance capacity normally seek ways to share best practices among it business units and to develop special expertise where it is needed.

• The more capability the more selections of partners.

The success of one depends on the other.

MASTERING ALLIANCE STRATEGY

Determine how alliances fit in your strategy. Collect and analyze your own experience. Develop and introduce alliance tools. Coordinate your alliance activities. Find and internalize “best thinking”.