Reaching Global Markets by Strategic E-Business Alliances:

                        Strategy Formulation and Implementatio...
performance by sharing resources and risks. Dyer et al.’s study showed that cross-firm and cross-

industry strategic alli...
therefore the formation of strategic e-business alliances is increasingly one of the most popular

strategies available to...
As there is no consensus in the literature and practice about what strategy actually means,

primarily because strategy of...
The following mini cases provide a few exemplars of alliance strategies in e-business operations

that are taken by compan...
Snapshot 3. Woolworth and Commonwealth Bank

Woolworth Ltd (Australia), one of the largest supermarket chains in Australia...
•   Who are our principal customers, clients, suppliers, and partners?

    •   What are our principal products and/or ser...
order to devise an effective strategy for gaining a competitive edge. To survive and sustain in

today’s volatile marketpl...
comprehensive e-business alliance strategy. By taking a comprehensive e-business alliance

strategy, participating firms c...
management activities to carry out the strategy, and institute strategic controls for monitoring

progress and the extent ...
partnerships that Segil (2004) found indicate that the first partner is not always the best one and

that you should alway...
7. Do the prospective alliances have a strong leadership team or leader?

8. Most importantly, will the prospective allian...
and maintains private “word-of-mouth” trust information as well as capabilities from each user

and uses the information f...
A Balanced Portfolio Approach to Alliances



Developing a balanced portfolio approach is a popular e-business alliance st...
connectivity providers, while Bellevue, a Washington-based drugstore.com collaborated with a

dozen leading physician conn...
businesses. Leveraging the technology that powers realestate.com.au, Web Design Services has

built or powers over 2,000 w...
through the realestate.com.au website. The Home Price Guide is Australia's leading

        national source of online prop...
Simon argues that all smart businesses should work with speed, regardless of their business

environment.




The experien...
There is a general belief in the current literature that e-business allows a lesser degree of strategic

alliance planning...
Dyer, J. H., Kale, P., & Singh, H. (2001). How to make strategic alliances work, Sloan

   Management Review, 42(4), 37-43...
Segil, L. (2004). The eight golden rules of alliances. Financial Executive Magazine & Business

   Week Online, February 2...
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Reaching Global Markets by Strategic E-Business Alliances ...

  1. 1. Reaching Global Markets by Strategic E-Business Alliances: Strategy Formulation and Implementation Abstract This author posits that the success of e-business requires a well-defined and well-formulated corporate strategy of alliances. E-managers must be able to engage in network thinking, thinking globally and strategically. This paper reviews and explores various e-business alliance strategies that are currently employed by e-businesses in various cultural and national backgrounds. The paper deals with both strategic and operational strategies for e-business alliance and discusses critically a wide range of issues in the formulation and implementation of e-business alliance strategies. By resorting to a strategic management approach, this paper helps understand the complex nature of formulation and implementation of e-business alliance strategy, which may involve changes to existing business models and procedures of many organizations. The paper focuses on the strategy of e-business alliances and provides various worked examples and a case study of e-business alliances in today’s global markets, thereby providing a practical guide to e- business alliance strategy formation and implementation. Introduction Lu and Choy (2004, p. 288) maintain that “fundamentally, strategic alliances are an externally oriented business approach emphasizing on improving business performance through the linkages in a supply network”. Strategic alliances are generally defined as long-term cooperative arrangements at the strategic level between firms to improve their competitive position and
  2. 2. performance by sharing resources and risks. Dyer et al.’s study showed that cross-firm and cross- industry strategic alliances have been increasing continuously and dramatically over the past few years, and that competition tends to be between strategic alliances rather than between individual firms (Dyer et. at., 2001). Rowley’s case studies illustrate how important an e-business strategic alliance approach to reaching global markets is for four world industry leaders: Nestlé, Barnes & Noble, Merrill Lynch and AOL (Rowley 2002). A survey study of 250 companies in the U. K. that have built electronic links with their partners, suppliers, customers and the public, shows that around two thirds of large companies surveyed have established e-business alliance strategies. However, more than 50 percent of small and medium sized enterprises (SMEs) surveyed have not formed a corporate strategy for online alliances (Information Age, April 10, 2002). The survey results reveal a serious problem in the e-business partnership landscape. Companies focusing on leveraging alliance as a vehicle for value chain creation must take a strategic approach to e-business alliances. It is not enough to launch a website, rush in an alliance and hope for the best to happen. Given the unique challenges of the e-business world, strategic planning for alliances in e-business operations has its distinct features. These are characterized by a short-term orientation in terms of strategy formulation, everyone being constantly involved in environment scanning and analysis, and a faster response to environmental change in planning. Today, it is not uncommon to see that many companies have portfolios of 20 or more alliances and partnerships and some have over a hundred. In fact, it is reported that about 20-50 per cent of corporate value has been generated from corporate partnerships (Bamford et al., 2003). In the frenetically changing competitive landscape of e-business world markets, few organizations can rely only on their internal strengths to gain a competitive advantage in national and/or international markets. Even the largest organization’s resources are limited in one way or another,
  3. 3. therefore the formation of strategic e-business alliances is increasingly one of the most popular strategies available to an organization to on the one hand take advantage of the Internet highway, and share risks, capabilities and revenue with alliances on the other. Strategic e-business alliances will be a crucial factor and play a key role in the future development of e-business global markets. This author posits that the success of e-business requires a well-defined and well-formulated corporate strategy of alliances. E-managers must be able to think globally and strategically. Business partnership in whatever form has gone from being a peripheral tool of management to a centerpiece of corporate strategy and competitive advantage over the past decade (Bamford et al., 2003). This paper studies e-business alliance from a strategic management perspective because e- business alliance has become an important component of the strategy of many successful companies. From a strategic management perspective, e-business partnerships should be strategic e-business alliances. Strategic management focuses on the process whereby managers develop and implement strategies for achieving strategic goals within existing conditions, in turn helping organizations identify and achieve a competitive advantage. By resorting to a strategic management approach, this paper helps understand the complex nature of formulation and implementation of e-business alliance strategy, which may involve changes to existing business models and procedures of many organizations. The paper focuses on the strategy of e-business alliances and provides various worked examples and a case study of e-business alliances in today’s global markets, thereby providing a practical guide to e-business alliance strategy formation and implementation. E-Business Alliance Strategy
  4. 4. As there is no consensus in the literature and practice about what strategy actually means, primarily because strategy often means differently in different contexts and to different people, there are also different versions of an e-business alliance strategy. For example, de Man and der Zee (2002) defined e-business alliance strategies in terms of the goals pursued by brick-and- mortar and dotcom companies entering into e-business alliance. Based upon their analysis of over 150 e-business alliances announced in the Financial Times, they found that there were four different e-business alliance strategies: (i) electronic reimplementation, (ii) experimenting, (iii) efficient procurement, and (iv) providing solutions. Of the 150 e-partnerships surveyed, 42 per cent of companies took an electronic reimplementation strategy. That means a bricks-and-mortar selling current products and/or services on the Internet while still maintaining its traditional business operations and portfolios. This simple and less risky e-business alliance strategy provides participating organizations with extra sales channels on the Internet. An experimenting e-business alliance strategy was the second favourite strategy, chosen by 25 per cent of the companies surveyed. The strategy concerns developing new and unproven online business models next to their current business. An online joint venture falls into this category, which aims to pursue new e-business opportunities while sharing the risks with partners. As the name suggests, the strategy has more risk than the others. The third strategy, the efficient procurement, refers to the improvement of procurement efficiency in the supply chain through the use of the Internet. “Partnering on the basis of this strategy has the advantages of lowering supplier search costs, lowering prices as a result of joint procurement, or improving information exchange accuracy” (de Man et al., 2002, p.332). 18 per cent of the companies surveyed chose this strategy. The last strategy, used by only 15 per cent of the companies surveyed, provides a complete package or one-stop shopping solutions to e-customers. With this purpose, partnering companies combined their products and services with complementary offerings to customers. The main benefits of this strategy lie in its potential for cross-selling and the joint capability to engage in mass customization.
  5. 5. The following mini cases provide a few exemplars of alliance strategies in e-business operations that are taken by companies. The cases also shed some insight into why the companies resorted to e-business alliances. Snapshot 1: Global eXchange Services and 7thOnline Global eXchange Services (GXS), based in the United States, is a leading provider of B2B integration solutions. 7thOnline, also based in the United States, is a provider of web and application based supply chain solutions targeted towards the buying and planning processes in the global retail industry. The two companies have had a technology partnership for three years and recently extended the partnership to a strategic marketing partnership. The partnership aims to deliver an end-to-end supply chain execution solution for the branded apparel and footwear market. The partnership is generated on the basis of the expertise of the two companies: GXS’s data synchronization and supply chain execution solutions, and 7thOnline’s assortment planning and order placement solutions. Source: GXS (2004) Snapshot 2: American Online and Sun Microsystems A Sun-Netscape Alliance iPlanet E-Commerce Solutions was launched in 1999 by American Online (AOL) and Sun Microsystems. The strategic alliance aims to provide easy-to-deploy, comprehensive e-commerce solutions for the Internet economy. It now provides the industry’s broadest portfolio of Internet infrastructure and e-commerce applications software and services. Source: Sun Microsystems (2000)
  6. 6. Snapshot 3. Woolworth and Commonwealth Bank Woolworth Ltd (Australia), one of the largest supermarket chains in Australia, entered into an e- business alliance with the Commonwealth Bank of Australia, a leading bank in Australia, to offer their customers a convenient and simple way of banking on the Internet while shopping online for Woolworths goods, or simply doing an Internet banking transaction. The joint initiative was called “Woolworths Ezy Banking”. The banking service is aimed at providing customers with more choices in financial services and increasing convenience and simplicity in banking. Woolworths Ezy Banking rewards users with Ezy bonus points to encourage people to use the banking service. Moreover, the Ezy Banking partnership is not limited to e-commerce, so customers can get cash out or make deposits while shopping at Woolworths retail stores. Source: Woolworth (2004) Formulation of E-Business Alliance Strategy The absence of a well thought out strategy early on in an alliance may severely jeopardize later operations of collaboration, leading to failure of an alliance. When formulating a corporate strategy in general and an e-business alliance strategy in particular, the following list of key questions should be answered. In terms of overall corporate strategy, the questions might be: • What are our short-term and long-term goals? • What market should we be in? • Does our organization have the skills, resources and other assets needed to achieve the goals?
  7. 7. • Who are our principal customers, clients, suppliers, and partners? • What are our principal products and/or services, present and future? • What are our principal outlets or distribution channels, present and future? • What is unique about our organization? (Or: What is the core competency of our organization?) • Who are our competitors and what will they be doing in 3-5 years? • What will our marketplace position be in 3-5 years? In terms of e-business alliance strategy, the questions can be: • What is our e-business strategy and to what degree is it effective? • What impact is an e-partnering strategy expected to have on our whole company? • Does our e-business alliance strategy align with our e-business strategy and other organizational strategies? • With whom should we partner or network? • What are the key criteria to use to select our strategic alliances? • What is the scope of cooperation through the e-business alliances • What is our operating model for e-business alliances? • What form or structure will our e-business partnership take? • What are the potential pitfalls of e-business alliances and how can we address them? These key questions urge managers to make a competitive analysis which involves both environmental and organizational scanning and assessments. Most strategists agree that it is important to undertake the external environment analysis before the internal organizational analysis in order to reduce possible biases (Mintzberg et al., 1995). The competitive analysis helps organizations to compare their strengths and weaknesses with those of their competitors in
  8. 8. order to devise an effective strategy for gaining a competitive edge. To survive and sustain in today’s volatile marketplace, organizations must be able to seize and quickly exploit opportunities both within traditional and cyberspace businesses. They must have a well-defined mission, a clear vision and an unambiguous understanding of how they intend to achieve their organizational goals. If e-business alliance is a necessary means to help achieve the goals, the formulation of an effective strategy becomes paramount. The scope of e-business alliances should be a primary consideration in the formulation of the strategy. An e-business alliance strategy can be one that focuses on only one element of the businesses such as sales or distribution. This can be termed a functional e-business alliance strategy. The alliance between IBM and BellSouth is a classic example of e-business alliances with a clearly defined scope of cooperation, because each company has agreed to a “hands-off” approach to the other’s core competencies. “It’s all about cooperation as opposed to co- opetition”, said IBM director in describing the partnership. In the light of the alliance agreement, BellSouth provides IBM with its Atlanta and Miami data centers and its connectivity. IBM assumes responsibility for existing e-business services customers in BellSouth’s centers and also houses any of its own new customers in those markets in the centers. The attractive aspect of the alliance is that IBM does not have to compete with BellSouth for customers. BellSouth is the leader in core transport but needs specialized skills in e-business hosting services. IBM was therefore perceived to be the right alliance in that it has invested $US10 billion in its e-business on-demand play and developed its own operations system to support the service (Engebretson, 2003). There can be a broader scope of cooperation between participating firms in an alliance who agree to perform together at multiple stages of the process by which goods or services are brought to the market: product development, marketing, sales, distribution, etc. This is referred to as a
  9. 9. comprehensive e-business alliance strategy. By taking a comprehensive e-business alliance strategy, participating firms can combine and consolidate their strengths and resources to get a competitive advantage. However, integrating the different operating procedures of several participating firms over a broad range of functional areas can be a great challenge to e-business alliances E-business alliance strategy has little value in practice if it stands alone. The nexus of e-business alliance strategy with other strategies of an organization should also be a consideration in the strategy formulation process. First, the e-business alliance strategy should be an integral part of e- business strategy if an organization decides to jointly run an e-business or part of the business. Second, an e-business alliance strategy should have an interface with other organizational strategies, including corporate strategy, business strategy and functional strategy including marketing strategy, information systems strategy, operations strategy and R & D strategy. Thirdly, while an e-business alliance strategy is embedded in organizational strategies, it should be clearly defined and articulated. Implementation of E-Business Alliance Strategy A good e-business alliance strategy requires serious commitment and significant investment of participating organisations to implement and execute it. Too often, companies enter into an alliance without giving considerable thought to strategic purpose and the alliance implementation strategy. Implementation of alliance intent is often far more complicated and difficult than striking a partnership deal. Even the best alliance strategy can fail if management does not implement it and evaluate the results of implementation properly. “Corporate strategy is an organization process, in many ways inseparable from the structure, behaviour, and culture of the company in which it takes place” (Mintzberg et al. 1995, p.67). Strategy implementation involves
  10. 10. management activities to carry out the strategy, and institute strategic controls for monitoring progress and the extent to which organizational goals are achieved (Bartol et al., 2001). The same is true for the implementation of an e-business alliance strategy. The key issues to implement an e-business alliance strategy include strategic flexibility in the selection of alliances, trust, the four “Cs” (complementarity, compatibility, capacity and commitment), and a portfolio approach to alliances. To ensure successful strategy implementation, it is also important to maintain strategic control of critical environmental factors affecting the viability of strategic plan, and assess the effects of strategic actions to ensure the strategic plan achieves its goal. Selection of E-Business Alliances Given the nature of strategic alliances, selection of e-business alliances (partnering firms in an alliance) should not only take into account the need for a long-term cooperative relationship at the strategic level, but the need to have strategic flexibility in order to modify the alliance when the environment changes, or to exit the alliance when the environment no longer requires one. Understanding each organization’s dynamics is crucial to the selection as it will help you utilize it to your own advantage. With the collapse of a large number of dotcom firms and the subsequent sluggish e-commerce environment, the e-business model appears to have reverted from that of a new form of doing business, back to business as usual. For example, large automotive manufacturers are more careful in selecting partners, focusing not only on their ability to perform electronic transactions efficiently but also on the quality of their products, delivery time, and the value-added extras they can bring to the partnerships (Graham, 2001). The success of partnerships, both traditional and electronic, counts heavily on choosing the right partners. Some of the golden rules for
  11. 11. partnerships that Segil (2004) found indicate that the first partner is not always the best one and that you should always consider the partners of your partner when evaluating partnership opportunities. Segil’s study found that successful organizations strive to build a network of partners rather than bilateral relationships. By doing so, you extend the partnership links to not only your partners but also your partners’ partners who may include other stakeholders and players in the supply chain or value chain. One of the most cited reasons for partnership failure is poor partner choice. Creating a value-adding network of partnership therefore requires a consistent and systematic approach involving the ranking of each network member for risk and value, allocating sufficient resources to manage the risks and leveraging the value derived from the multi-dimensional partnerships. The crucial criteria for selecting the right alliances/partners are (i) complementarity and compatibility, (ii) core competency, (iii) electronic and technological capability, (iv) financial commitment, and (v) strong leadership and commitment. The key questions to be answered when selecting your potential alliances are: 1. Are the skills, capabilities and resources of the prospective partners complementary to those of our organization? 2. Are the prospective alliances compatible to our organization in terms of management style and organizational culture? Can we get along with them? 3. How well do the prospective alliances manage other partnerships (track record of partnerships)? 4. Do the prospective alliances have a distinctive strength (core competency) that can be leveraged to gain a competitive advantage? 5. Are the prospective alliances ready to link up their systems using their e-business infrastructure and tools? 6. Are the prospective alliances prepared to invest in the e-business partnerships? Do they have a fiscal future?
  12. 12. 7. Do the prospective alliances have a strong leadership team or leader? 8. Most importantly, will the prospective alliances be committed to partnerships? If the answers to the first three questions are no, it does not necessarily mean that you should refrain from entering into a partnership. The issue is how to approach these differences and deal with them jointly from the outset to increase the chances of success in the partnership. Operational strategies for getting the right alliances include: • Analyzing prospective alliances and identifying markets that you can enter with them; • Performing due diligence to examine prospective partners’ business, finance, technical, product and other operational aspects of fit; • Understanding your partners’ e-business strategies to match your capabilities to theirs in the form of a value proposition; • Getting to your selected alliances fast and early; • Demonstrating your distinctive strengths which form core competence; • Showing how creative, proactive and fast you are (Fox, 1999, Bamford et al., 2003). De Man and der Zee’s (2002) study indicate that the personal element is also a very important factor in selecting alliances. Trust and confidence in partner’s management and vision often play a key role in deciding on an alliance. This kind of trust and confidence is often developed through long time personal contact and relationships between the managers of partnering companies. Efforts have been made by researchers to develop various facilitating models to help find capable and trustworthy e-business alliances. For example, Ono et al. (2001, p. 1) created a model they described as a “trust-based facilitator” for selecting e-business partners. The facilitator “collects
  13. 13. and maintains private “word-of-mouth” trust information as well as capabilities from each user and uses the information for personalized trust-based facilitation for each user”. The model proposes trust metrics for e-businesses to calculate over a set of numerical trust values. For example, on eBay, sellers and buyers can check rating scores of potential partners before trading as they evaluate each other by providing feedback after their trades. Complementarity, compatibility, capacity and commitment, the so-called four “Cs”, are crucial to building and maintaining a productive e-business alliance. Complementarity refers largely to complementary skills, technologies, human and financial resources. In other words, it is the tangible and intangible strengths of the potential alliance that can be utilized to strengthen your workforce and/or financial position to achieve a certain specific objective. Compatibility concerns the similarities in operating and management structures and communication styles, business strategies, corporate vision, employees and labour policies, organizational norms, etc. Like marriage, compatibility is often crucial in the selection of alliances to make sure that partners in an alliance can get along with each other and sustain the partnership. However, it is not uncommon that the prospective partnering organizations are in different stages of growth and lifecycle – some in the developmental stage, some in high growth, and others in decline. Managing these differences is a significant challenge as it requires different managerial behaviour and strategies to fit the circumstances. Capacity refers to an organization’s financial, technological and management ability to contribute significantly to an e-business alliance. Commitment indicates how much a partner prepares to contribute to an e-partnership. These four “Cs” should be viewed in an integrative manner in selecting an alliance. The Snapshot 1 above regarding the strategic alliance between Global eXchange Services and 7thOnline is a good case in point for the four “Cs”.
  14. 14. A Balanced Portfolio Approach to Alliances Developing a balanced portfolio approach is a popular e-business alliance strategy of many companies such as Yahoo!, Covisint, and eBay. A balanced alliance portfolio has several advantages. It can provide a variety of complementary partnerships to strengthen a company’s network position through increasing and expanding its variety of products and services. It serves as a buffer to mitigate the damage caused by the loss of one alliance if the partnership goes sour, and it can also consolidate the independent status of your company by not over-relying on one alliance. The portfolio approach may increase the bargaining power of a company in negotiating prices or stabilizing the prices and better services. Other advantages of the approach may include more market opportunities, expanded customer base brought in by partners, reduction of competition, and gaining access to more social capital. Social capital is often viewed as the sum of the actual and potential resources derived from a network of relationships possessed both by individuals and organizations. However, there is a need to standardize the processes for selection of portfolio partners that span the supply chain to ensure transparency and consistency. The Snapshot below indicates a balanced portfolio approach to alliances taken by the pharmaceutical industry. Snapshot: Pharmaceutical Industry and Internet Service Provider E-business alliances between the pharmaceutical industry and electronic connectivity providers are prevalent, particularly in the United States. Both pharmacy retailers and e-prescription connectivity providers are aggressively pursuing as many connectivity partnerships as possible due to their common objectives. Pharmacies want to gain access to physicians, no matter what type of connectivity service they are using, whereas connectivity providers want to give their physician users and their patients as much flexibility as possible to connect to the pharmacies of their choice. For instance, Seattle-based CVS.com entered e-prescription partnerships with three
  15. 15. connectivity providers, while Bellevue, a Washington-based drugstore.com collaborated with a dozen leading physician connectivity companies and one major application service provider to support and enhance a single protocol for the transmission of prescriptions over the Internet. Source: Getting Connected (2000) Case Study of E-Business Alliance Strategy Realestate.com.au (REA) is Australia's leading provider of online media and advertising services to the Australian real estate industry. Launched in 1997, the REA portal is Australia's most comprehensive and most popular source of real estate listings and information, with information and listings on share accommodation, home and apartments for rent, first home purchase, homes and apartments for sale, investment properties, second lifestyle homes and retirement living. At the end of 2003, two-thirds of Australian real estate offices had bought an REA subscription, while in August 2004 the website received over 1.1 million visitors, consisting of just over 1 million Australian and 113,000 international visitors. The company has offices throughout Australia and currently has 120 employees. Realestate.com.au reported a net profit of $AU2.48 million for 2003/04 compared with a loss of $AU1.54 million in the previous year, with revenue rising to $AU19.15 million from $AU9.54 million. The company has three additional business units; realestate.com.au, realcommercial.com.au, realestate.com.au Web Design Services and realestate.com.au Home Loans. Launched in December 2002, realcommercial.com.au is Australia’s most popular site for commercial and industrial property and for businesses for sale. In June 2004, 35,000 Australian and international visitors used the site to search through 18,000 properties listed by 190 commercial agents. Realestate.com.au Web Design Services is one of Australia's leading web development
  16. 16. businesses. Leveraging the technology that powers realestate.com.au, Web Design Services has built or powers over 2,000 web sites for Australian real estate agencies. In addition, the realestate.com.au Web Design Services powers the Ray White Property Group corporate site and the Raine & Horne Queensland site. Realestate.com.au Home Loans is a 50:50 joint venture with Ray White Property Group and is now one of Australia's largest mortgage broking groups, providing an expert home loan service with access to more than 300 mortgage products from over 30 lenders. The business currently has a loan book of over $AU300 million. It uses team of mobile sales agents working closely with residential real estate agents to sell mortgages. The team also captures leads directly from the REA website. The realestate.com.au’s corporate strategy and ensuing success have been driven by strategic alliances. Some of these include: • Murdoch's News Corporation owns a 44 per cent stake in the company, after making an investment in REA in 2000. As a result the companies collaborate on the sale of advertisements (e.g. News Corporation bundles REA advertising space into packages with other channels) to provide a significant revenue stream for both companies. • REA Web Design Services is a 50:50 joint venture with the real estate group Ray White. REA also provide Ray White with hosting services using the REA technology. • REA provides a property search facility to a number of Australian finance companies and banks’ websites, including ANZ, NAB and Bankwest, and other companies such as Ninemsn.com.au and the Herald Sun newspaper. • In 2001 Destra’s Internet hosting division Ozhosting.com acquired REA’s web hosting business and also became the exclusive web-hosting partner for REA. • Australian Property Monitors (APM) and REA entered into an agreement to promote and sell APM's Home Price Guide range of real estate information products to consumers
  17. 17. through the realestate.com.au website. The Home Price Guide is Australia's leading national source of online property sales information to the consumer, professional and financial markets. • REA entered a 50:50 joint venture with eMOCA, an Australasian mortgage brokers association, to form REA Home Loans services. eMOCA is also the new administrative body for Ray White Financial Services. • REA has developed strong relationships with the majority of the Australian major real estate networks. These relationships include the implementation of data feeds from group Websites to the REA site, the recommendation of REA by head office to their franchisees and the introduction of a discounted subscription rate. • REA has attempted to foster more than a supply relationship with their real estate office customers, by actively collaborating with them to identify end-customer needs, and therefore enhance the service they provide to them. The company also provides free training and education programs on online marketing and advertising, and to date 5,000 real estate industry people have attended an REA seminar. As shown above, REA has built a portfolio of well-planned and strategically focused alliances in order to enhance their core offerings, and provide further insight into the market. The governance of REA partnerships is determined by the business area to which it belongs. For example, content distribution is managed under an online marketing manager. In this manner, the company has identified owners of the partnership, who subsequently manage the process, rather than having one centralized management team for all REA partnerships. Mr. Simon Baker, the CEO, likens a business built on partnerships to “a deck of cards” – if one falls down, the rest follow. In addition, he does not believe partnerships in the online or offline environments differ. For example, it has been suggested that one of the vital characteristics of an e-business alliance is speed, however
  18. 18. Simon argues that all smart businesses should work with speed, regardless of their business environment. The experiences of REA have demonstrated that there are a number of key elements vital to the success of e-business alliances. These include having common goals with clear benefits on both sides, and unambiguously communicated at the outset of the partnership, mutual trust, verification, constant monitoring of the partnership and allocation of people internally to manage it, and having a clear dispute resolution processes. Alliance failure is however likely to occur when there are misaligned goals, if a partner attempts to use ‘strong arm’ tactics over another, or if there is an inability to execute the deal. For instance, some years ago REA bought a 50 per cent of share in their New Zealand equivalent. However, the management at the time did not actively manage the investment, or attempt to guide the business. As a result, the NZ business pursued its own goals, which were misaligned with those of REA and the alliance failed to produce a favorable return for REA. (Source: www. realestate.com.au (REA) and Interviews with the CEO) Conclusions This paper reviews and explores various e-business alliance strategies that are currently employed by e-businesses in various cultural and national backgrounds. The paper deals with both strategic and operational strategies for e-business alliance and discusses critically a wide range of issues in the formulation and implementation of e-business alliance strategies. Given the diversity and complexity of e-business operations, the paper presents a number of empirical studies concerning key issues of e-business alliance strategies.
  19. 19. There is a general belief in the current literature that e-business allows a lesser degree of strategic alliance planning because of the uncertainties and lack of knowledge associated with e-businesses (de Man and der Zee 2002). Fox (1999, p.26) attempted to justify the belief, saying that in an e- business environment, “partnerships must move at Internet speed. There is no time to sit back, do a lengthy partner and market analysis, and develop and implement a highly defined go-to-market plan. In the e-business world, it is launch and learn or be left in the dirt”. It is a well-known fact that many dotcom firms are not fond of a strategic management approach, especially in the earlier period of dotcom hysteria period, and adhere to a launch-and-learn mentality. However, the quick demise of a myriad of dotcom firms challenges the rush-in mentality and indicates the importance of strategic planning and management. Strategic approach is an approach to dealing with change and turbulent environments particularly in the globalization of markets. It encourages and does not adverse change. References Bamford, J. D., Gomes-Casseres, B., & Robinson, M. S. (2003). Mastering alliance strategy: a comprehensive guide to design, management, and organization.. San Francisco: John Wiley & Sons. Bartol. K., Martin, D., Tein, M., & Matthews, G. (2001). Management: a Pacific Rim focus. Sydney: The McGraw-Hill. De Man, A. P., & de Zee, H. V. (2002). Strategies for e-partnering: moving brick-and-mortar online. Groningen: Gopher Publishers. De Man, A. P., Stienstra, M. & Volberda, H. W. (2002). E-partnering: moving bricks and mortar online, European Management Journal, 20(4), 329-339.
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  21. 21. Segil, L. (2004). The eight golden rules of alliances. Financial Executive Magazine & Business Week Online, February 2004. Sun Microsystems (2000). Palm, Inc., Sun Microsystems and iPlanet plan to develop end-to-end enterprise wireless solution. Retrieved May 26, 2004, from http://www.sun.com/smi/Press/sunflash/2000-2/sunflash.20000229.2html. Woolworths (2004). What is Woolworths Ezy Banking? Retrieved May 28, 2004, from http://www.ezybanking.com.au/whatis/tbc-whatis.asp.

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