Developing Strategic Business Alliances

Based upon presentation made by Dr Cheryl Shavers Director of Emerging Technologies Intel Corporation

Why Have Alliances

Supplier Base Management Productivity Transfer Competitive Alliances

A Strategic Business Alliance

A strategic business alliance is the process (agreement) by which organizations work with other organizations to leverage capabilities and create durable productive relationships over time

Different Types of Strategic Alliances

Type Collaborative Advertising Example American Express and Toys R Us (cooperative effort for Television advertising and promotion) Cigna and United Motor Works (arrangement to provide franchising services for non US firms and Governments)

Lease Service Agreement

Different Types of Strategic Alliances

Type Shared Distribution Example Nissan and Volkswagen (Nissan sells Volkswagens and Volkswagen distributes Nissan cars in Europe) Hewlett Packard and Intel (arrangement to develop and distribute next generation microprocessors)

Technical Collaboration

Different Types of Strategic Alliances

Type Cross manufacturer Example Ford and Mazda (similar cars made on same assembly line) DuPont and National Cancer Institute (both working together on first phase of clinical trials in laboratory in Illinois)

Government and Industry

Different Types of Strategic Alliances

Type Internal Spin offs Examples Cummins and Toshiba (new company to develop market selection nitride products) Hoffman & La Roche and Glaxo (HL & Glaxo agreed to sell Zantac, an ulcer reducing drug in US)

Cross Licensing

Strategic Alliances
A
Strategy

B
Assessment

C
Negotiation

D
Alliance

A Assessing feasibility of objectives and rationale B Preparing appropriate alliances selection criteria

C Establishing realistic objectives and expectations D Addressing management commitment,

dedicated resources, budgeting & mechanisms for measuring & rewarding performance

Critical Factors For Success

IMPACT Adding real productivity and value VISION A compelling picture of responsibilities INTIMACY Closeness, sharing and mutual trust

Impact: The capability to deliver tangible results Intimacy: The ability to achieve a level of value-based kinship Vision: A compelling picture of what can be achieved and how

Source of Impact
Eliminating duplication and inefficiency Leveraging core competencies Creating new opportunities

Intimacy: Reaching Beyond Transactional Relationships

Building Trust Information Sharing
Value-based Team Building

Creating the Vision

Assess Partnering Potential

Develop the Partnering Proposition (each party)

Establish Joint Feasibility

Create a Shared Vision

Describes the impact each party will gain as a result of the proposition Specifies the major change that each party must make in order to achieve the impact

Choosing the Alliance Partner

Potential for Impact Common Value Favorable Atmosphere for Alliance (more than just having similar cultures) Consistency of Goals

Potential for Impact

Is there something that can be achieved in an alliance that could not otherwise be accomplished independently? Is the alliance partner able to change?

Is the alliance partner willing to change?

Common Values
Do both organizations share a win-win approach? Do both organizations share similar values about quality?

Are there any values unique to the alliance partners?

Favorable Atmosphere for Alliance

Affinity Toward Alliances Time Horizon
Corporate Culture Synergy

Consistency of Goals
Industry Focus Product/Service Direction
Position in Marketplace

Defining Alliance Roles with Clarity

Identify all possible roles to guarantee full coverage of responsibilities Isolate areas of disagreement Direct differences of opinion and negotiate the resolution

Achieving Balance
Contributions Expertise Time Resources Credibility and Name Recognition Access to New Opportinities Rewards Revenue Desirable Work Future Opportunities Access to Technology/Products

Getting It Right
Impact: Finding ways for both organizations to change together is a sure way of affecting productivity and profitability for both alliance partners Intimacy: Impact cannot be achieved without a fundamentally different approach to the interaction between organizations Vision: A shared vision puts both partners on a path that helps them achieve the highest possible impact with measurable results