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Putting Strategy Before Structure

In: Business and Management

Submitted By vik76gosai
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Putting Strategy Before Structure

Analysts and managers will argue eternally over what caused most alliances to fail. Some will

blame egos and clashing cultures; while others will cite business conflicts and ruthless competition.

“Strategic alliances”, the creation of alliances comes to be seen as an end in itself, rather than as means to a broader strategic end. The failure of these deals teaches one clear lesson: it is the strategy behind the deal that matters, not the structure of the deal. All strategy should grow out of an assessment of the firm's external competitive environment, its internal capabilities and its desired goals. Only once these are meshed should executives develop tactics and policies.

Alliance Success: Top Ten Factors.

1. Have a clear strategic purpose. Alliances are never an end in themselves, they are tools in service of a business strategy.

2. Find a fitting partner. You need a partner with compatible goals and complementary capabilities.

3. Specialize. Allocate tasks and responsibilities in the alliances in a way that enables each party to do what it does best.

4. Create incentives for cooperation. Working together never happens automatically, particularly when partners were formerly rivals.

5. Minimize conflicts between partners. The scope of the alliance and of partners’ roles should avoid pitting one against the other in the market.

6. Share information. Continual communication develops trust and keeps joint projects on target.

7. Exchange personnel. Regardless of the form of the alliance, personal contact and site visits are essential for maintaining communication and trust.

8. Operate with long time-horizons. Mutual forbearance in solving short-run conflicts in enhanced by the expectation of long-term gains.

9. Develop multiple joint projects. Successful...

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