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Reasons to alignMutual Benefit between the two parties.
Once we build up the alliance, which part of our organization may get improved.
The Seven General Areas
What IS In IT For You ? Back to Porter’s Five Forces WHERE & WHO
Why we build ALLIANCE ??
7 general areas in which you can profit from building alliances
Products
Access
Operations
Technology
Strategic Growth
Organization
Financial Stability
What Is In It For You???• Technological Sophistication
• Training
• Increased Market Share
• Improved Customer Service
• Innovation
• Cost Savings
• Financial Stability
• Buying Parity with Giants
• Supply Chain Improvements
• Productivity Increases
Technological Sophistication
Lack of technological capability.
By Exchanging Technology Compliment Basic Strengths Shore Up Weaknesses Improve Production Capability
Case: Kinko’s Service Corp. (copy centers) and Xerox Engineering Systems
Kinko’s Product Xerox’s Finance
TrainingLearning Curve Commitment
Obviously in Production Facility Employees perform task more Efficiently Cost savings passes along the curve as experiences
are increased
May consider to Align with suppliers
Case: Toyota and its auto part suppliers Toyota gave training to its suppliers to develop auto
parts to achieve low cost strategy
Training regarding the usage of products being sold is important to dealers.
Dealers can better serve end consumers Higher Customer Satisfaction Higher Sales Improved internal structure
Case: Guggenheim Dental (dental supplier distributor) and their top customers
Training (contd.)
Major factor that organizations partner with each other to form an alliance.
Many approaches to increase market share could be:Co-Branding
Case: Barcadi and Coca Cola Case: Nestle and Rold Gold Pretzels
Access to new market Case: Copeland Corp. and Kirloskar
Decrease Direct Competition Case: Sunmicrosystem and IBM
Barriers to entry by new entrant Case: GTE and Pacific Bell
Increased Market Share
• Provide better and quicker customer service while keeping their costs manageable.• Improved attitude toward customer service• Improved customer loyalty
• Case: United Airlines & Starbucks
• Improved product offering• Case: Associated Building Services
Improved Customer Service
To differentiate oneself from competition
Invent new product to the Market
Case: Steel case and Peerless Lighting Developed state-of-the-art Office Lighting Annual sales furniture jumped from $15 billion to
$35 billion Differentiation and Less direct competition
Innovation
Cost can be saved up in many areasManufacturing : Sharing resources, outsourcing
Case: Airbus and Rolls-Royce
Shared Location : Stores within stores have become common place through alliance relationships
Case: McDonalds and Wal-Mart
Cost Savings
Risks are also be Shared among partnersAccess to capital Achieving EoS Partnering with poor economy or recession
• Case: Continental Airlines and Swan Optical
Financial Stability
Better deal in parity with giants in their industry
Additional discounts and services for in-depth marketing and technical expertise.
Win/Win pricing between long term buyer/seller alliance
Case: American Dental Cooperative members (dental distributors)
Buying Parity with Giants
Just-in-time inventory purchasing and supplying
Case: Wal-Mart and Proctor & GambleOther Benefits:
Management of supply channel conflictOn-time product deliveryPrompt response to complaintsImproved supply chain productivity
Supply Chain Improvements
Increase the ability for the companies to pull up their quality as well as the number of units being produced• Case: Brown & Root/Braun’s with Union Carbide
Corp. • Partnering with the Experienced
Alliance can also increase productivity by:Improve product qualityImprove working relationshipsImprove communicationImprovement of products/services
Productivity Increases
ConclusionAs from the article, we can observe that
most of the areas are within realistic concerns and therefore could be overcome by forming an alliance and then we will be able to answer that “what’s in it for you!”