C.6 Engaging in Cross-Border Collaboration

Question 1

Key motivations for strategic alliances

Answer 1

• Tech/knowledge exchange
• Global comp
• Industry convergence
• Economies of scale
• Reduction of risk
• Alternative to merging

Question 2

Range of strategic alliances

Answer 2

1. Cooperation Agreement
2. Patent License
3. Franchising
4. Cross Licensing
5. R&D Consortia
6. Co-production/Buyback
7. Joint Venture

Question 3

Risk and cost of alliancing

Answer 3

• Risk of competitive collaboration
• Strategic and organizational complexity
• Benefits from collab might not be the same
• Successful partnerships will lead to the strengthening of the competitor

Question 4

Success factors in international JVs

Answer 4

• Trust
• Similarity in org cultures
• Product relatedness
• Goal congruency
• Prior collaboration experience

Question 5

Joint venture checklist

Answer 5

Test strategic logic:
Do you really need a partner and vise versa?
Is it the best option?
How likely is success?

Partnership and fit:
Does your partner share your venture objectives?
Do they have the necessary skills and resources? Do you have access to them?
Are you compatible?

Shape and design:
Define venture’s scope of activity and its strategic freedom re its parents
Establish managerial role of each partner
Lay out each parent’s duties and payoffs for a win-win

Question 6

Building and Managing Collaborative Ventures: Pre and Post-Alliance Tasks

Answer 6

Pre-Alliance

1. Partner Selection
2. Escalating Commitment
3. Alliance Scope

Post-Alliance

1. Managing the Boundary
2. Managing Knowledge Flows
3. Providing Strategic Direction

Question 7

How to manage an international joint venture

Answer 7

• Continuous top management attention
• Manage cultural differences
• Watch out for inequities
• Be flexible

Question 8

Framework for alliance formation decisions

Answer 8

1. Use an alliance business case framework that considers the costs/benefits on the stand-alone basis as well as the alliance portfolio level of analysis
2. Empower an individual/department to oversee alliance formation decisions
3. Implement an integrated and codified decision process

Question 9

Costs/benefits: Individual alliance

Answer 9

Benefits:

• Economies of scale
• Access to partner’s complementary assets, knowledge, and skills
• Access to new skills
• Reduce competition in the market and increase market power

Costs:

• Start-up costs
• Ongoing coordination costs
• Leakage: appropriates skills/knowledge from partner

Question 10

Costs/benefits: Alliance portfolio

Answer 10

Benefits:
- Synergies: sharing or recombining know-how, and reinforcing existing coalitions

Costs:

• Conflict resolution among existing alliances
• Dissolution costs if conflicts with existing alliances are not resolved
• Redundancy and value cannibalization as a result of a new alliance