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parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations. This form of cooperation lies between M&A (Mergers and acquisitions) and organic growth.
Strategic alliance is a co-operative & collaborative approach to
aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture. The distinction between a "merger" and an "acquisition" has become increasingly blurred in various respects (particularly in terms of the ultimate economic outcome), although it has not completely disappeared in all situations.
FUNCTIONAL ALLIANCES
PRODUCTION ALLIANCES MARKETING ALLIANCES
FINANCIAL ALLIANCES
RESEARCH & DEVOLOPMENT ALLIANCES
share the common manufacturing facilities in production. Ex. Toyota and general motors joint ventures. They used general motors assembly plant in california. MARKETING ALLIANCES : Two or more companies Share marketing services expertise and facilities. Ex. St. louis pharmaceutical established M.A with INDIAs Cadila pharmaceutical. Used medical, pharmaceutical & lab products. Mahindra & mahindra with Yamaha motors are joined together for share there market services.
of R&D & fast changing technology. Ex. Siemens, motorola, IBM & toshiba joined together in designing a 1gb DRAM semiconductor chip.
where their
Firm A
Firm B
Capabilities
Core Competencies
Goods
Services
create a legally independent company to share some of their resources and capabilities to develop a competitive advantage. Equity strategic alliance is an alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities to create a competitive advantage. Non-equity strategic alliance is an alliance in which two or more firms develop a contractual-relationship to share some of their unique resources and capabilities to create a competitive advantage. Global Strategic Alliances working partnerships between companies (often more than two) across national boundaries and increasingly across industries, sometimes formed between company and a foreign government, or among companies and governments.
resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. The alliance is a cooperation or collaboration which aims for a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts. The alliance often involves technology transfer (access to knowledge and expertise), economic specialization, shared expenses and shared risk.
whether all parties have realistic objectives, forming high calibre negotiating teams, defining each partners contributions and rewards as well as protect any proprietary information, addressing termination clauses, penalties for poor performance, and highlighting the degree to which arbitration procedures are clearly stated and understood. Alliance Operation: Alliance operations involves addressing senior managements commitment, finding the calibre of resources devoted to the alliance, linking of budgets and resources with strategic priorities, measuring and rewarding alliance performance, and assessing the performance and results of the alliance. Alliance Termination: Alliance termination involves winding down the alliance, for instance when its objectives have been met or cannot be met, or when a partner adjusts priorities or re-allocates resources elsewhere.
match their capabilities. Learning from partners & developing competences that may be more widely exploited elsewhere. Adequate suitability of the resources & competencies of an organization for it to survive. Strategic Alliances Help Your Company Raise Capital Faster
Ex a UK company and the siemens of germany failed due to incompatibility of mgmt styles.
Nature of potential partners products & services. Companies
BREAKUP OF ALLIANCE:
Incompatibility of partners: Mgmt styles, financial position, cultures, business interests etc. Ex. Above Access to information: Ex. Ford & mazda Motor Corporation. to work on the design of the new ford Escort almost stalled
Strategic alliance
alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. Ex : Star Alliance
MarutiSuzuki Ltd.
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PRESENTED BY: YASHWANT YADAV VISHWA VISHWANI INSTITUTE OF SYSTEMS & MANAGEMENT HYDERABAD.