1. Cornings general preference for alliances over acquisitions has been driven by a number of factors.

First, Corning operates in diverse, unrelated, business areas (e.g. cookware, fiber optics); acquiring companies would not allow the company to capture added value through economies of scope or scale. Second, Corning does not possess the internal resources that it needs, particularly in the technology area, and alliances allow the company to form partnerships that provide Corning access to these resources, reduce risk by splitting investment and control, and allow Corning to hit financial goals without investing heavily in acquiring companies or technologies. Third, Cornings historical success with alliances (i.e. its firm-level alliance capability) along with its ability to find partners with similar culture/values has allowed Corning to continue to build profitable alliances. Finally, Corning provides a governance structure that enables independent decision making. Alternatively, acquisitions could prove advantageous for Corning for the following reasons: providing more decision-making control to managers, distributing R&D costs more evenly, and removing Cornings need to manage both core operations and its alliances. Ultimately, alliances are appropriate for Corning because of the companys historical success in forming alliances, their lack of financial resources to invest/acquire new technologies or companies, and their ability to develop economies of scope and scale through alliances in lieu of acquisition (Exhibit 1). 2. Cornings evolving network of alliances provides costs and benefits to the companys operations. Although alliances allow autonomous joint ventures freedom and flexibility, one concern is that alliances could complicate the scope of responsibilities for Corning managers as they must manage alliances and its relationships in addition to their own operations. In addition, a network of alliances might affect motivation if the managers are held accountable for the alliances full results when they only have partial control over the decisions made at the JV.

Managers ability to make quick and decisive decisions will also be hampered by the need for group consensus. A few positives of this network of alliances, however, is that it encourages Corning managers to work collaboratively with their partners, see both sides of an issue, and establish better alliance relationships. Corning has built up alliance management competencies by putting key management with strong ties to Corning on the boards of their alliance partners and encouraging the free movement of personnel from alliance to the company and vice versa. This structure has led to a more efficient, flatter organization with an emphasis on bright energetic individuals open to change. An alternative to their current method might be to have a dedicated alliance function that would coordinate and manage all of the companys alliances. Assigning an alliance manager and placing them on the management committee would still ensure that joint venture issues are addressed, would take the pressure off Corning managers, and ensure that potential alliance efficiencies (e.g. economies of scope) are identified. 3. Exhibit 2 outlines three broad criteria that should be used to evaluate the proposals. First, the management committee must evaluate the big picture by measuring the financial costs and benefits for each industry while evaluating costs and trade-offs. Second, Corning must evaluate whether they possess key resources and capabilities to enter and if the other companies possess resources (e.g. technology) that will complement its current set of alliances or acquisitions. Lastly, the companies should possess similar cultures to ensure successful integration. Laboratory Sciences - We must recognize that the Ciba Corning joint venture is a small player in its industry with sales of $150 million compared to its largest competitor (Abbott) at $800 million. Abbotts R&D budget is approximately 2/3 of Cornings total expected 1985 revenues making it difficult for Corning to maintain pace with industry leaders. As Ciba-Corning does not

have the same revenues as its main competitors, its long term growth will be hindered by its inability to reinvest into R&D. Corning should strongly consider the acquisition of the three laboratory testing companies for $475 million because it will align with current laboratory testing subsidiaries. By acquiring these other laboratory testing companies, they can capitalize on economies of scope as they share technology and knowledge of the industry and incorporate these acquisitions into current business lines. Finally, this industrys growth potential is larger than the medical diagnostics industry. However, the option to purchase the three laboratory testing companies may be difficult as current liabilities are $500 million while cash and accounts receivables are $430 million (Case exhibit 7). However the potential for industry growth makes these acquisitions attractive. Communications Sector - This proposal has a two-part focus: the fiber-optic industry and related peripheral devices. Exhibit 2 outlines criteria showing the telecommunications industry as a high-growth, high-tech industry with the residential fiberoptics market projected to grow rapidly. On the other hand, recent prices have fallen more than 70%, hurting revenues and profit margins. Furthermore, PlessCor Optronics (PCO) is currently not profitable despite $10 million in annual revenues. Next, our evaluation indicates some complementary needs and resources may exist. Corning has products that IBM could use while it develops its own production capabilities and Corning would benefit from IBMs brand name, technology, and market knowledge in the peripheral business while ensuring that its considered IBMs second choice supplier. However, the third criterion raises some concerns that an IBM partnership that appears strong at face value, but might not necessarily signal success once we consider IBMs bureaucratic culture meshing with Cornings open approach to alliances. In conclusion, the management styles, incentive schemes, and corporate structures might not facilitate a successful alliance.

Television Glass - The historical success of Iwaki (Asahi and Corning joint venture) is due to both Asahi and Corning having similar values and strategy. This has enabled them to work together and be profitable. In this partnership, Corning will gain expertise in large size television bulb, HDTV technology (glass delivery system and forming technology) and have access to the Japanese TV manufacturers that have set up facilities in the U.S. This would also allow Corning to invest and develop liquid crystal display (LCD) which is viewed as the future of the television world. The company has to consider the following; First, Corning should identify the possibility of re-aligning both companies objectives such that the partnership is healthy. Then it should look within its alliances to see whether this company will complement or compete with its other alliances in maintaining trust across different alliances, coordinating strategies and operations and sharing operational know-how across alliances and how this will allow for extra benefits and lower costs. Finally, Corning must decide if they are willing to sacrifice short-term profits for long term potential as they will need to invest deeply in R&D initially in order to succeed in this industry. Each proposal has both negative and positive effects on Cornings business. The partnership with IBM is the most worrying because of the great difference in culture and philosophies and the push for fiber optic expansion will require considerable investment. The laboratory testing proposal presents the most compelling story for growth, however initial investment needs make it really risky for Corning. Finally the Asahi proposal seems most logical for Corning given both companies history with alliances. It would require greater integration with the Asahi team and a redefining and strengthening of their mutual goals. In conclusion, the Asahi proposal appears to be the most feasible given Cornings current cash situation and the laboratory testing proposal is a distinct choice on if they can raise the needed cash in the capital markets.

Agnew, Lewis Hasan, Ammar Mak, Timothy Opoku-Acquah, Abena Valenzuela, Edith