Today’s learning objectives
Develop an understanding of cooperative strategies
Discuss strategic alliances
Understand different types of cooperation
Explain risks of cooperative strategies
Strategic alliances
Alliances
“voluntary arrangements between firms involving exchange, sharing, or codevelopment of products, technologies, or services.” (Gulati 1998) • Access to partner resources and capabilities
Equity alliance
Existing companies take ownership stakes in each other and work jointly (alliance)
Creating of a new company jointly owned by the venture partners (joint venture)
Each partner contributes resources or capabilities
Non-equity alliance (contractual)
Licensing
Distribution
Long term contracts (but not all long term contracts are alliances)
Outsourcing
Franchising
‘Informal’ cooperation
Procter & Gamble Connect & Develop
Licensing
technologies
from other
companies
E.g. technologies for
the Swiffer duster and
Crest Whitestrips
Advanced Seal have
been licensed from
external partners
E.g. Cotton Buds, Inc
was granted the license
to produce, market
and distribute single
–
use
packets of Tide detergent
The idea
•
Web platform where interested parties can submit technologies and browse for P&G technologies to licence
•
Encompasses marketing models, packaging, engineering, business services, market research methods etc.
Results
•
Surpassed goal of creating 50% of P&G’s innovations with outside partners (initially 15%)
•
R&D productivity up with 85%, over 1000 active agreements
Licensing P&G’s
unnecessary
technologies
to interested
buyers
Licensing
technologies
from other
companies
E.g. technologies for
the Swiffer duster and
Crest Whitestrips
Advanced Seal have
been licensed from
external partners
E.g. Cotton Buds, Inc
was granted the license
to produce, market
and distribute single
–
use
packets of Tide detergent
The idea
•
Web platform where interested parties can submit technologies and browse for P&G technologies to licence
•
Encompasses marketing models, packaging, engineering, business services, market research methods etc.
Results
•
Surpassed goal of creating 50% of P&G’s innovations with outside partners (initially 15%)
•
R&D productivity up with 85%, over 1000 active agreements
Licensing P&G’s
unnecessary
technologies
to interested
buyers
Alliance process
•
Finding the
right partner
Courtship
•
Agreeing roles, ownership,
profit share and
responsibilities
Negotiation
•
Committing
resources,
establishing
systems, making
adjustments
Start
–
up
•
Ongoing investment and
operations
•
Evolving with change
Maintenance
•
Finding an exit
strategy (sometimes
friendly but
sometimes not)
Termination
•
Finding the
right partner
Courtship
•
Agreeing roles, ownership,
profit share and
responsibilities
Negotiation
•
Committing
resources,
establishing
systems, making
adjustments
Start
–
up
•
Ongoing investment and
operations
•
Evolving with change
Maintenance
•
Finding an exit
strategy (sometimes
friendly but
sometimes not)
Termination
Alliance motives
Scale alliance
Lower cost, share risk, increase bargaining power
Access alliance
Access to capabilities/assets
Complementary/learning alliances
Access/learn from partner strength
Collusive alliance
Increase market power (can be illegal)
Vertical/horizontal
Legal requirements
Strategy fit
What are the key objectives of this alliance from the standpoint
of each partner?
Resource fit
What resources does each partner contribute to the relationship?
Are they similar or different?
Organisation fit
What are the organizational structures of
each firm
? Are
they similar or different?
Culture fit
What are the cultural values and belief systems of each
partner? Are they similar or different?
Source: Cummings and Holmberg (2012)
Strategy fit
What are the key objectives of this alliance from the standpoint
of each partner?
Resource fit
What resources does each partner contribute to the relationship?
Are they similar or different?
Organisation fit
What are the organizational structures of
each firm
? Are
they similar or different?
Culture fit
What are the cultural values and belief systems of each
partner? Are they similar or different?
Source: Cummings and Holmberg (2012)Partner selection
Factors affecting alliance outcomes
Justice Conflict Control Trust
Perceptions of fairness Creates tensions/gives diversity of Many different types strategic, Trust evolves over time though
Distributive, procedural, ideas operational, structural, output, repeated successful interactions interactional Moderate task conflict may be process, social Hard and soft commitments
Cultural perceptions/differences? beneficial Bargaining power Ability based, benevolence based, Relationship conflict is a problem integrity based
Conflict resolution mechanisms
Cultural perceptions/differences?
• Commitment cooperation
Collaborating with competitors
•
Cognitive
(
similarity of the knowledge base
)
•
Geographical
(
distance between partners
)
•
Social
(
embeddedness of partners, trust, personal experiences
)
•
Organisational
(
similarity of incentives and organizational routines
)
•
Institutional
(
similarity of values and norms on a macro level, e.g.,
national culture and legal system)
With whom
to collaborate: proximity*
•
Cognitive
(
similarity of the knowledge base
)
•
Geographical
(
distance between partners
)
•
Social
(
embeddedness of partners, trust, personal experiences
)
•
Organisational
(
similarity of incentives and organizational routines
)
•
Institutional
(
similarity of values and norms on a macro level, e.g.,
national culture and legal system)
With whom
to collaborate: proximity*
*)
Boschma (2005): Proximity and innovation: a critical assessment.
Regional Studies
, 39, pp. 61
–
74
•
You & your competitor win:
pre
–
requisite
for longer
–
term collaboration
•
Customers win:
insurance against collusion
–
and thus regulatory action
•
Limited scope
usually needed to achieve all these wins
How to collaborate:
win
–
win
–
win
*)
Boschma (2005): Proximity and innovation: a critical assessment.
Regional Studies
, 39, pp. 61
–
74
•
You & your competitor win:
pre
–
requisite
for longer
–
term collaboration
•
Customers win:
insurance against collusion
–
and thus regulatory action
•
Limited scope
usually needed to achieve all these wins
How to collaborate:
win
–
win
–
win
Co-opetition: competitors collaborating
All major regions & varieties:
Ata Rangi
Craggy Range
Felton Road
Fromm Winery
Kumeu River
Lawson’s Dry Hills
Nautilus Estate
Neudorf Vineyards
Palliser Estate
Pegasus Bay
The Millton Vineyards
Villa Maria Winery
Selection criteria:
Minimal direct overlap
Similar cultures
(quality focus, family-owned)
Source: William Hoare’s presentation 14.9.2015
Next week
International strategy
Required reading: Chapter 8
Required reading: Case 3: Nyrstar NV
Don’t forget your preparation (poste one comment).
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