Engaging in cross border collaboration Flashcards
What is a strategic Alliance
- formal + mutually agreed on collab between companies
- Partners pool, exchange / integrate business resources
- remain a separate business
Key motivators for alliance
- Technology exchange
- competing tech beyond scope - Global Competition
- Industry convergence
- cross industry skills - Economies of scale + risk reduction
- Alliances as an alternative to mergers
List Joint Venture methods as a response to recession and growth strategy during recovery
- Partial divestment
- Business consolidations
- Partnerships
What is partial divestment?
- JVs as managed exits ( sell the non-core business)
- JVs to raise capital (sell a partial interest in a business)
What is business consolidations in JV
- consolidate similar operations of industry peer/competitor to capture the additional scale or cost synergies
- joint purchasing cooperatives
What are Partnerships for capital-light growth in JV
growth with low investment risk
- partnership with cash-rich players
- team up to create new products
- Invest/partner with innovative suppliers/tech companies
What are the benefits of JV in a crisis
- Raising capital
- low interest-free loans - Reduce cost through synergies
- Regearing financial ratios
- increase external borrowing
What are the risks of collaboration
- One partner develops a competitive edge
- strengthens a competitor
- takeover by one of the firms
- Benefits may be asymmetrical
What are the management costs caused by strategic and org complexity
- Unclear understanding of the risks + rewards of a partnership
- Difference in administrative heritage
- Coordinate and manage different alliance-related tasks
- constant monitoring and adaptation of goals tasks processes
How to build collaborative venture, list pre-alliance tasks
pre - alliance tasks
- Partner Selection
- Escalating commitment
- Alliance Scope
What is Partner Selection + mitigation strategy
- Assets + capabilities of a potential partner
- Barriers of culture / physical distance
- Est future development of partner
Mitigation
- Assess partners willingness to invest resources
- Ensure a clear understanding of the goals of the project
- Monitor partnerships continuously
What is escalating commitment + mitigation
- unrealistic expectations and wrong choices
Mitigations
- Operational managers involved in implementation should be part of pre-decision negotiation process
What is Alliance Scope + mitigation strategy
- Define a simple + focused scope
- Keep complexity low
Mitigations
- Expand scope gradually as trust and understanding increases
How to build collaborative ventures, List Post alliance tasks
- Managing boundary
- through joining committees
- the separate legal entity - Managing knowledge flows
- ensure full exploitation of learning potential
- Prevent outflow/breaches
- gatekeepers transfer relevant info to different parts of the org - Providing strategic direction
- equal dist of decision-making power can hinder effective mgmt
- Clear leadership in each task/responsibility of each task
How to manage individual and alliances better
- Cost + benefits analysis of individual level and alliance level
- integrated decision process involving all managers
- Clearly defined rols+responsibilities for all involved in decision making
