The document provides an overview of strategic alliances, including their definition, types, factors promoting them, risks and costs, balancing cooperation and competition, and ethics. Strategic alliances are cooperative relationships between independent organizations designed to achieve mutually beneficial goals economically. They can take various forms, from licensing agreements to joint ventures to consortia and networks. Factors driving alliances include new market entry, learning new technologies, and industry shaping. Risks include incompatibility, knowledge leakage, and dependence. Success requires balancing collaboration and competition within the alliance.

1. Strategic Alliances Overview

2. What you will learn… Strategic Alliance defined Information requirements Examples of Strategic Alliances Factors promoting Strategic Alliances Types of Strategic alliances Risks and cost of Strategic Alliances Balancing co-operation and competition Alliances and Ethics Summary

3. Strategic Alliance defined Strategic alliances are co-operative relationships between two or more independent organisations, designed to achieve mutually beneficial goals for as long as is economically viable. They carry uncertainties that are not manageable in a contractual arrangement.

4. Figure 1: In formation Phases for the alliance process

5. IBM’s Global Alliances Early Alliances: Responding to Japan IBM’s Initiatives During the 1990s: Rebuilding Competitiveness

6. The Global Airline Industry Airline industry consolidation of 1990s From code sharing, joint marketing activities to combining operations. Examples of Alliances Star Alliance ONE world Alliance

7. Global Airline Alliances Airlines Type of Alliance United Airlines Lufthansa Scandinavian Thai International Varig Brazilian Air Canada Air New Zealand Mexicana Star Alliance: Code sharing, joint marketing; includes up to 15 partners in 2002

8. New market entry Shaping of industry evolution Learning and applying new technologies Rounding out a product line Factors promoting alliances

9. Licensing Arrangements The least sophisticated and easiest-to-manage type of alliance Joint Ventures The creation of a third entity representing the interests and capital of the partners Consortia and Networks Highly complex linkages among groups of companies Types of Strategic Alliances

10. Licensing Arrangements Primary reasons for entry A need for help in commercializing a new technology Global expansion of a brand franchise or marketing image

11. Joint Ventures Primary reasons for entry Vertical integration Learning a partner’s skills Upgrading and improving skills Shaping industry evolution

12. Consortia and Networks Multi partner Consortia Multi partner alliances designed to share an underlying technology Cross-Holding Consortia Formal groups of companies that own large cross-holdings and equity stakes in each other Industry-Spanning Alliance Networks Firms sharing knowledge, costs, and risks

13. Risks and Costs of Alliances Rising incompatibility Risk of knowledge or skill leakage Risk of dependence Strategic control costs

14. Balancing Cooperation and Competition Understand the firm’s knowledge and skill base Choose complementary partners Keep alliance personnel long-term

15. Alliances and Ethics Balancing collaboration and competition within the alliance The issue of loyalty among personnel assigned to the alliance

16. Summary Strategic alliances are no longer a strategic option but a necessity in many markets and industries. Dynamic markets for products and technologies coupled with increasing costs has increased the use of alliances. It is hard to capture value in strategic alliances. Knowledge resource exchange is important.

17. You are welcome to contact Nigel Bairstow at B2B Whiteboard your source of B2B Asia / Pacific marketing advice http://www.linkedin.com/pub/nigel-bairstow/6/41b/726 http://twitter.com/#!/b2bwhiteboard