...CHAPTER 9. STRATEGIC ALLIANCES 1. One reason why firms might want to pursue a strategic alliance strategy is to exploit economics of scale. Exploiting economies of scale should reduce a firm’ costs. Does this mean that a firm pursuing an alliance strategy to exploit economies of scale is actually pursuing a cost leadership strategy? Why or why not? Yes, firm pursuing an alliance strategy to exploit economies of scale is actually pursuing a cost leadership strategy , according to the transactions Cost Theory, firms enter into strategic alliance in order to reduce their production and management cost. It is shown clearly that the movement collaboration between firms in industry is because there is a need to complement their short comings and weakness and to reinforce the competitive advantage of the collaborating companies and to promote in order to maintain a competitive market. They also need to reduce cost though the cooperation in different tasks and projects, to solve technical or financial shortcomings to be able to conduct the main task or project and to ensure large access to the market, export or enter in a new sector on which large investments are required. HAL dari internet 2. Consider the joint venture between GM and Toyota. General Motors have been interested in learning how to profitably manufacture high-quality small cars from its alliance with Toyota. Toyota has been interested in gaining access to GM’s U.S. distribution network and in reducing the political...
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...Learning in Strategic Alliances Strategic alliances that bring organizations together promise unique opportunities for partners. The reality is often otherwise. Successful strategic alliances manage the partnership, not just the agreement, for collaborative advantage. Above all, they also pay attention to learning priorities in alliance evolution. The resource-based view of the firm that gained currency in the mid-1980s considered that the competitive advantage of an organization rests on the application of the strategic resources1 at its disposal. These days, orthodoxy recognizes the merits of the dynamic, knowledge-based capabilities2 underpinning the positions organizations occupy in a sector or market. Strategic alliances—meaning cooperative agreements between two or more organizations—are a means to enhance strategic resources: self-sufficiency is becoming increasingly difficult in a complex, uncertain, and discontinuous external environment that calls for focus and flexibility in equal measure. Everywhere, organizations are discovering that they cannot “go” it alone and must now often turn to others to survive.3 Preamble 1 2 3 The resources that the theory deemed of strategic importance were valuable, rare, inimitable, and nonsubstitutable (leading to charges of tautology). Importantly, the list of what constitutes a resource was expanded in the 1990s with the refinement that the encompassing construct previously called resources should be segregated into...
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...Presentation No. 5 1.0 Strategic Alliance in Automotive Industry 1.1 Presentation Content Emerging of strategic alliance unarguably provides several major benefits to a business. It is a kind of strategic strategy to gain competitive advantages and remain sustainable in the industry. The presenter underlined the strategic alliance in the automotive industry with the real case of Proton and Prince Engine. Functional, dynamic and trading are the basic classification of strategic alliance. It is calls for the mutual bilateral benefits for both parties in the alliances. Success and failure of strategic alliance determines on the performance for both parties. Many of success story across the globe enjoying benefits from the strategic alliance over the past decade. In local automotive industry, Proton has started the strategic alliance with Mitsubishi and come out with "Proton Saga". At beginning, the alliance brought a good significant impact on the sales of "Proton Saga". However, the alliance with MG Roger did not seem worked well in the long run as it was collapse and acquired by other European Company. The presenter conclude that to deal with strategic alliance need to consider may factors so that it not may end up with failure. 1.2 Discussions There were several issue need to be further clarified. One of the issues was in dealing with strategic alliance, which part of business need to go for strategic alliance. The presenter has underpinned that strategic alliance can be done at...
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...CHAPTER ONE 1. Introduction to the study The purpose of study is to evaluate the effects of strategic buyer-supplier alliances and partnerships in the South African clothing stores, sector and industry. Strategic Alliances, Partnerships and Joint Ventures involve the establishment of informal and formal relationships with other individuals or businesses to share resources, ideas or capital (Hugo, Badenhorst-Weiss & Biljon 2007). The research indicates that during the past decade, companies in all types of industries and all parts of the world have elected to form strategic alliances and partnerships to complement their own strategic initiatives and strengthen their competitiveness in domestic and international markets (Thompson Jr, Gamble & Strickland, 2006), the statement confirms that some of the companies realize the importance of strategic alliances and partnerships. The current situation in South Africa indicates that the government is imposing Quotas on Chinese imports with intent to influence the South Africa retailers to buy from local suppliers (Sandrey & Fundra, 2008). The quotas have encouraged the major retailers in South Africa to procure more from local suppliers than ever before given the growth in their collective businesses over the last four years. Preliminary investigation between the retailers and clothing manufacturers confirm the retailers’ expectations that local companies will be unable to make up the expected shortfall the quotas will inflict...
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...Global Airline Alliance . Airline business is a billion dollar business and employs hundreds of thousands around the globe . Passenger demand has also been increased lately after the economic turmoil showing positive signs for a comeback. As operational costs is the biggest slice in the budget pie , there has never been a more important time for airline carriers to explore the benefits of joining a global airline alliance such as Sky Team , Star Alliance or One World.(Bamberger , Carlton and Neumann, 2001) basically gave a breakthrough study on how alliances was formed. The foundation of an alliance started only on a code share basis and a share of marketing exercises. They focused more on the American market as opposed to other markets around the world as American carriers was the anchors of what we know now as a global airline alliance. Studies was done based on data from the mid 90's and gives us an idea on how and why it was formed. Their study focused more on the domestic market rather then international and it can't be proven on the global market. This research is essential for the topic as this gives us a brief of history on what was the foundation of a global airline alliance. They also emphasized only on the operators point of view which can perceived as opinion based information. No survey was done on population or sample to determine the benefits on the alliance from a consumer point of view to give an overview on the benefits of forming an alliance .In terms of air...
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...New Entry and Strategic Alliances 2 While conducting my research and reviewing chapter nine, it was found that alliances have become a core element of today’s business strategies in competing for a market leadership position when entering into a new industry. When a firm enters an alliance with an, arrangement it can save costs and gain access to new markets, which otherwise would not be possible for many firms. Strategic Alliance is an agreement between two companies working on the same horizontal level in the market that share resources to carry out a desired project, in both parties which have some common interest (Barney & Hesterly, 2012). In a strategic alliance, each firm maintains its autonomy while gaining a new opportunity. A strategic alliance could also help a firm develop a more effective process, expand into a new market or develop an advantage over a competitor, among other possibilities. This research indicates that a firm would benefit more from strategic alliance because the firm can achieve a high market share through the help of strategic alliances that would be difficult to achieve alone. Although a firm can hire its own management and staff, it would be more beneficial for a new firm...
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...Strategic Alliance Abstract Organizations are facing exciting and dynamic challenges in the 21st century. In the globalized business, companies require strategic thinking and only by evolving good corporate strategies can they become strategically competitive. A sustained or sustainable competitive advantage occurs when firm implements a value – creating strategy of which other companies are unable to duplicate the benefits or find it too costly to initiate. Corporate strategy includes the commitments, decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns. The goals of corporate strategy are challenging not only for large firms like Microsoft but also for small local computer retail outlets or even dry cleaners. I hope to offer a concise description of strategic alliances as well as a picture of who is participating in them and why. The states of affairs that encouraged this “rising era of collaboration” will be reviewed and the necessary steps in formulating alliances. Examples of companies that are or were involved in strategic alliances will be discussed, others of which were thriving and the others of which they were not. This paper is not intended to serve as a comprehensive study of strategic alliances. Introduction Corporate alliances, which are now called “strategic”, are in fact not new. Westinghouse Electric and Mitsubishi were allied for seventy years. The alliance between Ford and Mazda dates...
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...QUESTION 1 Which developments in the global airline industry made possible the creation of S.A. ? The creation of Star Alliance had first been considered to remedee a situation of radical change in the airline industry’s financing sources. For decades, world governments overpassed the consequences of a substantial cash investment in their National Airline. At the time, State incentives to possess its own flag carrier were numerous. It was question of national pride as well as a sign of economic prosperity and power. But times have changed. As State capital investment became the norm rather than the exception, most of the developped countries had been able to run their own Airline, making it the norm. If governments had been burying their hands in the sands up to this point, they suddenly started questioning the worthiness of the investment. By cuting subventions, they would let airline companies face the harsh reality of competition. Both the government-owned carriers and those who had long been operating under a situation of false profitability filled for bankrupcy (i. e. Sabena, Swissair). Other, more solid carriers (i. e. Lufthansa, United, British Airways, American) were left with no other choice but to form alliances. 2 In addition, the phenomenon of deregulation forced leading carriers to take strategic decisions in order to avoid significant loss in market share. With the signature of open skies agreements that liberalized the rules of the international...
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...Strategic Alliance – Whirlpool Corporation and Inland Steel CASE Faced with intense competition, increasing expectations from customers, reduced product life cycles, and localized geographic markets, Whirlpool Corporation (a Fortune 500 manufacturer of appliances) realized that the need to achieve a competitive advantage from its sourcing and material efforts was greater than ever. Part of the strategy to achieve this advantage involved pursuing an alliance with a key steel supplier. Steel is a major component used across all of the company’s finished products (such as washing machines, dishwashers, refrigerators, and others). The purchasing managers at Whirlpool faced a number of questions with regard to their purchasing strategy: • What do we need to do to be competitive? • Who is best suited to be the primary steel supplier? • What do we need to know, and how do we get the information required to answer this question, especially with regard to our organizational culture, technological roadmap, and where both organizations are moving in the long term? • How do we implement a strategic alliance? • How do we establish a strategic alliance in terms of confidentiality agreements, termination agreements, and negotiation strategies? • How do we provide the supplier with evaluations to ensure that this alliance continues, with regard to continuous performance, goal achievement, and commitment? • What do we do if we do not meet our objectives—change the situation or simply...
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...STRATEGIC ALLIANCE: 1. This strategy seeks to enhance the long-term competitive advantage of a company by forming alliance with its competitors. 2. The objective of this alliance is to leverage critical capabilities, increase the flow of innovation and flexibility in responding to market and technological changes. 3. Similarly, a company may enter a foreign market by forming alliance with a company in the foreign market for marketing or distributing its products. 4. Strategic alliance, more than entry strategy, is a competitive strategy. 5. It enables companies to increase resource productivity and profitability by avoiding unnecessary fragmentation of resources and duplication of investment and efforts. 6. Such alliances are normally used in pharmaceutical, computer, nuclear and telematics industries, which have high fixed costs in research and development and manufacturing and high and fast changing technology. 7. The automobile industry has been witnessing several alliances for overseas operations. 8. An alliance in the telematics sector which essentially brings together two separate streams of technology related to information gathering and processing and also related to information transmission. 9. An example is IBM’s agreements with STET, Italy’s state owned Telecommunication Company and Nippon Telegraph and Telephone to develop computer communications services and a joint research venture with Ericson (Sweden) to explore...
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...Discuss the concept of strategic drift and from the viewpoint of Refreshment PLC, identify the likely main strategic drivers that are likely to apply in the case of the proposed strategic alliance. Whenever strategy is discussed, there has to be a starting point and a desired end point in a given timescale. Strategy is the process or way of getting to the desired state or end point. Strategic drift occurs when external and internal events, foreseeable and unforeseeable impact and alter the course of the strategy, thus effectively misaligning the strategy with the desired outcomes and achieving an altered course of action. This veering off from the set path or strategy is called strategic drift. Basically, Refreshment PLC aims to infiltrate new Asian markets for its flagship product line which markets its product as low calorie and sugar free. Refreshment sees the Asian market as huge marketing potential and as per strategy, following strategic drivers have been identified: Strategic Drivers: The alliance which is being formed will help both Refreshment PLC and Scorpion in attaining mutual strategic objectives which are relevant to each partner respectively. Evolutionary Drivers: As refreshment PLC found out the market for its products in Europe is saturated, so it needs to go for greener pastures, in essence market its products in larger markets. It is a very feasible option as information flow mechanisms and the internet have made it possible for alliances to be formed between...
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...An overview of strategic alliances Dean Elmuti Lumpkin College of Business and Applied Sciences, Eastern Illinois University, Charleston, Illinois, USA Yunus Kathawala Lumpkin College of Business and Applied Sciences, Eastern Illinois University, Charleston, Illinois, USA Keywords Strategic alliances, Competitive advantage, Success Introduction Nike, the largest producer of athletic footwear in the world, does not manufacture a single shoe. Gallo, the largest wine company on earth, does not grow a single grape. Boeing, the pre-eminent aircraft manufacturer, makes little more than cockpits and wing bits (Quinn, 1995, p. 1). Abstract Strategic alliances can be effective ways to diffuse new technologies rapidly, to enter a new market, to bypass governmental restrictions expeditiously, and to learn quickly from the leading firms in a given field. However, strategic alliances are not simple or easy to create, develop, and support. Strategic alliances projects often fail because of tactical errors made by management. By using a well managed strategic alliances agreement, companies can gain in markets that would otherwise be uneconomical. Considerable time and energy must be put forth by all involved in order to create a successful alliance. It is essential that corporations enter into strategic alliances arrangements with a comprehensive plan outlining detailed expectations, requirements, and expected benefits. ``How can this be?'' you ask. These companies, like...
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...An overview of strategic alliances Dean Elmuti Lumpkin College of Business and Applied Sciences, Eastern Illinois University, Charleston, Illinois, USA Yunus Kathawala Lumpkin College of Business and Applied Sciences, Eastern Illinois University, Charleston, Illinois, USA Keywords Strategic alliances, Competitive advantage, Success Introduction Nike, the largest producer of athletic footwear in the world, does not manufacture a single shoe. Gallo, the largest wine company on earth, does not grow a single grape. Boeing, the pre-eminent aircraft manufacturer, makes little more than cockpits and wing bits (Quinn, 1995, p. 1). Abstract Strategic alliances can be effective ways to diffuse new technologies rapidly, to enter a new market, to bypass governmental restrictions expeditiously, and to learn quickly from the leading firms in a given field. However, strategic alliances are not simple or easy to create, develop, and support. Strategic alliances projects often fail because of tactical errors made by management. By using a well managed strategic alliances agreement, companies can gain in markets that would otherwise be uneconomical. Considerable time and energy must be put forth by all involved in order to create a successful alliance. It is essential that corporations enter into strategic alliances arrangements with a comprehensive plan outlining detailed expectations, requirements, and expected benefits. ``How can this be?'' you ask. These companies, like...
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...Assessment: Aegis Analytical was a start-up, manufacturing process software provider, developing solutions for the pharmaceutical industry. The company was founded on managerial know-how, established by two co-founders with in-depth knowledge of the manufacturing domain and software know-how, developed their flagship product called Discoverant. Discoverant was a revolutionary product that offered a solution to highly complex problems in the manufacturing process of pharmaceutical companies. The software had the following features: it collected data during the production process, tracked failures and then analyzed the data to give sophisticated bases for solutions to managers. Aegis aspired to be the recognized leader in the process manufacturing technology by providing software that could be used to integrate all major functions and provide system wide information. Environment: The externalities were in favor of the development of a product like Discoverant: 1) The potential customers were facing serious failures during manufacturing process, without being able to collect the data in timely manner and analyze it properly. 2) Pressure from consumer groups and the government were increasing, with fines and legal actions related to quality control reaching severe heights. 3) Pharmaceutical manufactures with annual revenues of $1 billion were the target customer for the Discoverant product. Such companies accounted for 77 percent or $464 million of the total potential...
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...Chapter 9: Global Market Entry Strategies The need for a solid market entry decision is an integral part of a global market entry strategy. Entry decisions will heavily influence the firm’s other marketing-mix decisions. Global marketers have to make a multitude of decisions regarding the entry mode, which may include: * (1) The target product/market * (2) The goals of the target markets * (3) The mode of entry * (4) The time of entry * (5) A marketing-mix plan * (6) A control system to check the performance in the entered markets 1. Target Market Selection A crucial step in developing a global expansion strategy is the selection of potential target markets. A four-step procedure for the initial screening process: 1. Select indicators and collect data 2. Determine importance of country indicators 3. Rate the countries in the pool on each indicator 4. Compute overall score for each country 2. Choosing the Mode of Entry Decision Criteria for Mode of Entry: * Market Size and Growth * Risk * Government Regulations * Competitive Environment/Cultural Distance * Local Infrastructure Classification of Markets: * Platform Countries (Singapore & Hong Kong) * Emerging Countries (Vietnam & the Philippines) * Growth Countries (China & India) * Maturing and established countries (examples: South Korea, Taiwan & Japan) Key criteria for choosing entry modes: * Company Objectives ...
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