Description
different types of joint ventures, benefits of joint ventures, drawbacks of joint ventures. It also explains what is strategic alliance, advantages of strategic alliance. It also explains horizontal and vertical complementary alliance, and various cooperative strategies.
Prof. S.S.Sharma
? Activity
uneconomical for single organisation. ? Sharing of risks and resources. ? Bringing together distinctive competencies. ? Overcoming hurdles.
? Between
the two companies in one industry. ? Between the two companies across different industries. ? Between an Indian company and a foreign company in india. ? Between an Indian company and a foreign company in that foreign country. ? Between an Indian company and a foreign company in a third country.
? Achieving
objectives mutually. ? Eliminating/Reducing competition. ? Increase in market share. ? Diversification. ? Access to technology. ? Overcoming legal and regulatory hurdles to expansion. ? Sidestepping threats and exploiting opportunities.
? Minimising
risk. ? Reducing Investment. ? Access to foreign technology. ? Broad-based equity participation. ? Access to governmental and political support. ? Entering new business. ? Synergistic advantages. ? Learning new ways of doing business. ? Accessing new markets.
? Problems
in equity participation. ? Foreign exchange regulations. ? Lack of proper coordination. ? Cultural and behavioral differences ? Possibilities of conflict. ? Risk of JV partners growing into a competitor. ? Sharing of profits with JV partner.
? Agreed
Goals pursued while remaining independent. ? Sharing the benefits and control over performance of the assigned task. ? Contribution on continuing basis in one/more key areas - Yoshino & Rangan
?A
? ? ?
cooperative arrangement between two or more firms having:
A common strategy and a win-win attitude. Reciprocal relationship for sharing specified strengths. Pooling of resources, investments and risks
- Lando Zeppei
? STRATEGIC
ALLIANCES are a “Cooperation between two or more independent firms involving shared control and continuing contributions by all partners for mutual benefit” – Mehta & Samanta
Developing global quality consciousness. ? Creating adherence to international quality standards. ? Providing access to the state-of-art technology. ? Gaining entry to world-wide mass markets. ? Gaining funds for expansion. ? Availability of professional management expertise. ? International reputation. ? Global brand name and brand equity. ? Confidence to enter international markets.
?
? Pro-Competitive
alliances.(Low interaction/Low conflict) ? Non-Competitive alliances.(High interaction/High conflict) ? Competitive alliances.(High Interaction-High Conflict) ? Pre-Competitive alliances.(Low InteractionHigh Conflict)
? Business
Level Alliances
Complementary Alliances
?
Complementary strategic alliances are designed to take advantage of market opportunities by combining partner firms’ assets in complementary ways to create new value
?
These include distribution, supplier or outsourcing alliances where firms rely on upstream or downstream partners to build competitive advantage
Buyer
Technological Development Human Resource Mgmt.
•
Support Activities
Firm Infrastructure
Service Marketing & Sales Procurement Outbound Logistics Operations Inbound Logistics
Vertical Alliance
• •
Vertical complementary strategic alliance is formed between firms that agree to use their skills and capabilities in different stages of the value chain to create value for both firms. Outsourcing is one example of this type of alliance. Examples:
Primary Activities
Supplier
Technological Development Human Resource Mgmt.
• •
Marks & Spencer McDonald’s alliances with oil companies and independent store operators. With just one stop, customers can fill up car, buy a meal, and pick up items for the home.
Support Activities
Firm Infrastructure
Service Marketing & Sales Procurement Outbound Logistics Operations Inbound Logistics
Primary Activities
Buyer
Technological Development Human Resource Mgmt.
Horizontal Alliance
Potential Competitors
Human Resource Mgmt.
Buyer
Technological Development
Support Activities
Firm Infrastructure
Marketing & Sales
Procurement Outbound Logistics Operations Inbound Logistics
Firm Infrastructure
Service
Support Activities
Service
Marketing & Sales
Procurement Outbound Logistics Operations Inbound Logistics
Primary Activities
Primary Activities
• Horizontal complementary strategic alliance is formed between • Focus on long-term product development and distribution • The partners may become competitors. • Requires a great deal of trust between the partners.
opportunities.
partners who agree to combine their resources and skills to create value in the same stage of the value chain.
? Horizontal
?
complementary alliance:
Examples
? ?
?
?
Microsoft & Dream Works. Compaq and Fisher-Price. Joint marketing agreements (Delta, Swissair & Singapore Air). CSK Auto Inc. and Advance Auto Parts established PartsAmerica.com. The venture provides easy access to nearly $1.5 billion in inventory and 3,000 locations in all 50 states, where buyers can use either stores to pick up and return parts ordered online.
Complementary Alliances
Competition Response Alliances
?
?
Competition response strategic alliances occur when firms join forces to respond to a strategic action of another competitor. Marathon Oil and Russia’s Yukos formed an alliance to achieve international expansion and as a response to rivals’ alliances.
•
Complementary Alliances
Competition Response Alliances Uncertainty Reducing Alliances
• •
Uncertainty reducing strategic alliances are used to hedge against risk and uncertainty. These alliances are most noticed in fast-cycle markets. Alliance may be formed to reduce the uncertainty associated with developing new product or technology standards.
?
GM and Toyota (# 1 U.S. & Japanese automakers) formed an R&D alliance to develop and standardize alternative power cars. GM, Toyota, Ford, DaimlerChrysler, and
?
Renault joined to develop a standard for
communications and entertainment equipment for automobiles.
Complementary Alliances Competition Response Alliances Uncertainty Reducing Alliances
• •
Competition reducing strategic alliances may be created to avoid destructive or excessive competition. Explicit collusion exists when firms directly negotiate production output and pricing agreements in order to reduce competition (ADM price fixing). Tacit collusion exists when several firms in an industry indirectly coordinate their production and pricing decisions by observing each other’s competitive actions and responses (OPEC, Japan – kieretsu).
•
Competition Reducing Alliances
? Entering
new markets. ? Reducing manufacturing costs. ? Developing and diffusing technology. ? Accelerate product introduction. ? Overcome legal and trade barriers.
?
Reasons for alliances – Determined by market situation
? ? ?
Slow-cycle markets Standard-cycle markets Fast-cycle markets
Market
Slow Cycle
Reason
• Gain access to a restricted market • Establish a franchise in a new market • Maintain market stability (e.g., establishing standards) • Railroads, utilities and historically telecommunications.
Market
Standard Cycle
Reason
• Gain market power (reduce industry overcapacity) • Gain access to complementary resources • Establish economies of scale • Overcome trade barriers • Meet competitive challenges from other competitors • Pool resources for very large capital projects (Airbus Industries). • Learn new business techniques
Market
Fast Cycle
Reason
• Speed up development of new goods or service • Speed up new market entry • Maintain market leadership • Form an industry technology standard (Sematech – UNIX). • Share risky R&D expenses • Overcome uncertainty
? Clearly
define a strategy and assign responsibilities. ? Blend the cultural partners. ? Phase in the relationship between the partners. ? Provide an exit strategy.
? Lack
of trust and commitment causing misunderstanding. ? Conflicting goals and interests. ? Inadequate preparation. ? Focussing on controlling than managing relationship. ? Change in external conditions.
?
Partner selection
? ? ?
Having capabilities that the company values but lacks. Must share the common vision. Unlikely to opportunistically exploit SA. Walling of sensitive technology. Contractual safeguards. Agree in advance to exchange wanted skills and technologies. Obtaining a credible commitment. Sensitivity to culture and management style. Encouraging interpersonal relationships. Ability and mechanism to learn from alliance partners.
?
Alliance structure
? ? ?
?
?
Managing an alliance
? ?
?
doc_146369988.pptx
different types of joint ventures, benefits of joint ventures, drawbacks of joint ventures. It also explains what is strategic alliance, advantages of strategic alliance. It also explains horizontal and vertical complementary alliance, and various cooperative strategies.
Prof. S.S.Sharma
? Activity
uneconomical for single organisation. ? Sharing of risks and resources. ? Bringing together distinctive competencies. ? Overcoming hurdles.
? Between
the two companies in one industry. ? Between the two companies across different industries. ? Between an Indian company and a foreign company in india. ? Between an Indian company and a foreign company in that foreign country. ? Between an Indian company and a foreign company in a third country.
? Achieving
objectives mutually. ? Eliminating/Reducing competition. ? Increase in market share. ? Diversification. ? Access to technology. ? Overcoming legal and regulatory hurdles to expansion. ? Sidestepping threats and exploiting opportunities.
? Minimising
risk. ? Reducing Investment. ? Access to foreign technology. ? Broad-based equity participation. ? Access to governmental and political support. ? Entering new business. ? Synergistic advantages. ? Learning new ways of doing business. ? Accessing new markets.
? Problems
in equity participation. ? Foreign exchange regulations. ? Lack of proper coordination. ? Cultural and behavioral differences ? Possibilities of conflict. ? Risk of JV partners growing into a competitor. ? Sharing of profits with JV partner.
? Agreed
Goals pursued while remaining independent. ? Sharing the benefits and control over performance of the assigned task. ? Contribution on continuing basis in one/more key areas - Yoshino & Rangan
?A
? ? ?
cooperative arrangement between two or more firms having:
A common strategy and a win-win attitude. Reciprocal relationship for sharing specified strengths. Pooling of resources, investments and risks
- Lando Zeppei
? STRATEGIC
ALLIANCES are a “Cooperation between two or more independent firms involving shared control and continuing contributions by all partners for mutual benefit” – Mehta & Samanta
Developing global quality consciousness. ? Creating adherence to international quality standards. ? Providing access to the state-of-art technology. ? Gaining entry to world-wide mass markets. ? Gaining funds for expansion. ? Availability of professional management expertise. ? International reputation. ? Global brand name and brand equity. ? Confidence to enter international markets.
?
? Pro-Competitive
alliances.(Low interaction/Low conflict) ? Non-Competitive alliances.(High interaction/High conflict) ? Competitive alliances.(High Interaction-High Conflict) ? Pre-Competitive alliances.(Low InteractionHigh Conflict)
? Business
Level Alliances
Complementary Alliances
?
Complementary strategic alliances are designed to take advantage of market opportunities by combining partner firms’ assets in complementary ways to create new value
?
These include distribution, supplier or outsourcing alliances where firms rely on upstream or downstream partners to build competitive advantage
Buyer
Technological Development Human Resource Mgmt.
•
Support Activities
Firm Infrastructure
Service Marketing & Sales Procurement Outbound Logistics Operations Inbound Logistics
Vertical Alliance
• •
Vertical complementary strategic alliance is formed between firms that agree to use their skills and capabilities in different stages of the value chain to create value for both firms. Outsourcing is one example of this type of alliance. Examples:
Primary Activities
Supplier
Technological Development Human Resource Mgmt.
• •
Marks & Spencer McDonald’s alliances with oil companies and independent store operators. With just one stop, customers can fill up car, buy a meal, and pick up items for the home.
Support Activities
Firm Infrastructure
Service Marketing & Sales Procurement Outbound Logistics Operations Inbound Logistics
Primary Activities
Buyer
Technological Development Human Resource Mgmt.
Horizontal Alliance
Potential Competitors
Human Resource Mgmt.
Buyer
Technological Development
Support Activities
Firm Infrastructure
Marketing & Sales
Procurement Outbound Logistics Operations Inbound Logistics
Firm Infrastructure
Service
Support Activities
Service
Marketing & Sales
Procurement Outbound Logistics Operations Inbound Logistics
Primary Activities
Primary Activities
• Horizontal complementary strategic alliance is formed between • Focus on long-term product development and distribution • The partners may become competitors. • Requires a great deal of trust between the partners.
opportunities.
partners who agree to combine their resources and skills to create value in the same stage of the value chain.
? Horizontal
?
complementary alliance:
Examples
? ?
?
?
Microsoft & Dream Works. Compaq and Fisher-Price. Joint marketing agreements (Delta, Swissair & Singapore Air). CSK Auto Inc. and Advance Auto Parts established PartsAmerica.com. The venture provides easy access to nearly $1.5 billion in inventory and 3,000 locations in all 50 states, where buyers can use either stores to pick up and return parts ordered online.
Complementary Alliances
Competition Response Alliances
?
?
Competition response strategic alliances occur when firms join forces to respond to a strategic action of another competitor. Marathon Oil and Russia’s Yukos formed an alliance to achieve international expansion and as a response to rivals’ alliances.
•
Complementary Alliances
Competition Response Alliances Uncertainty Reducing Alliances
• •
Uncertainty reducing strategic alliances are used to hedge against risk and uncertainty. These alliances are most noticed in fast-cycle markets. Alliance may be formed to reduce the uncertainty associated with developing new product or technology standards.
?
GM and Toyota (# 1 U.S. & Japanese automakers) formed an R&D alliance to develop and standardize alternative power cars. GM, Toyota, Ford, DaimlerChrysler, and
?
Renault joined to develop a standard for
communications and entertainment equipment for automobiles.
Complementary Alliances Competition Response Alliances Uncertainty Reducing Alliances
• •
Competition reducing strategic alliances may be created to avoid destructive or excessive competition. Explicit collusion exists when firms directly negotiate production output and pricing agreements in order to reduce competition (ADM price fixing). Tacit collusion exists when several firms in an industry indirectly coordinate their production and pricing decisions by observing each other’s competitive actions and responses (OPEC, Japan – kieretsu).
•
Competition Reducing Alliances
? Entering
new markets. ? Reducing manufacturing costs. ? Developing and diffusing technology. ? Accelerate product introduction. ? Overcome legal and trade barriers.
?
Reasons for alliances – Determined by market situation
? ? ?
Slow-cycle markets Standard-cycle markets Fast-cycle markets
Market
Slow Cycle
Reason
• Gain access to a restricted market • Establish a franchise in a new market • Maintain market stability (e.g., establishing standards) • Railroads, utilities and historically telecommunications.
Market
Standard Cycle
Reason
• Gain market power (reduce industry overcapacity) • Gain access to complementary resources • Establish economies of scale • Overcome trade barriers • Meet competitive challenges from other competitors • Pool resources for very large capital projects (Airbus Industries). • Learn new business techniques
Market
Fast Cycle
Reason
• Speed up development of new goods or service • Speed up new market entry • Maintain market leadership • Form an industry technology standard (Sematech – UNIX). • Share risky R&D expenses • Overcome uncertainty
? Clearly
define a strategy and assign responsibilities. ? Blend the cultural partners. ? Phase in the relationship between the partners. ? Provide an exit strategy.
? Lack
of trust and commitment causing misunderstanding. ? Conflicting goals and interests. ? Inadequate preparation. ? Focussing on controlling than managing relationship. ? Change in external conditions.
?
Partner selection
? ? ?
Having capabilities that the company values but lacks. Must share the common vision. Unlikely to opportunistically exploit SA. Walling of sensitive technology. Contractual safeguards. Agree in advance to exchange wanted skills and technologies. Obtaining a credible commitment. Sensitivity to culture and management style. Encouraging interpersonal relationships. Ability and mechanism to learn from alliance partners.
?
Alliance structure
? ? ?
?
?
Managing an alliance
? ?
?
doc_146369988.pptx