Exam 3 Flashcards
4 reasons a company would go with external innovation
1) firm’s product line is falling quickly behind its competitors
2) A new competitor enters the market or about to enter and will change the dynamics of the given industry
3) The firm discovers its processes are not a efficient and/or effective as those of its competitors
4) The firm believes its current products or processes are not going to be successful in the future
Joint Venture
Is when two or more firms combine equity to form a new third entity.
Franchise agreement
Is a contract established between the company and the individual who buys the business unit to sell a given product or conduct business under the company’s trademark.
Licensing agreement
Is when one firm agrees to pay another firm for the right to either manufacture or sell a product.
Mergers
when two firms combine as relative equals (example, brighthouse turned into specturm).
Acquisitions
the outright purchase of a firm or some parts of the firm.
Subcontracting
It exists as long as the contract is in force.
example, Saint Leo partners with a company in Tampa for customer service and financial aid.
Different classifications of alliances
1) Degree of formality - the less formal they are the shorter they are.
2) How long they are expect to last.
3) By the location of its partners.
Concerns with alliances
1) finding the proper partner,
2) dealing with ambiguities,
3) discovering partnering firms lack a shared vision,
4) getting the timing right,
5) communicating effectively,
6) protecting effective and efficiently,
7) protecting intellectual property,
8) measuring real costs and profits from the alliance.
Strategic reasons for mergers or acquisitions
1) entering a market quickly or increase speed to the market.
2) avoid costs and risks of new product development.
3) gain market power.
4) acquire knowledge.
Three initial questions a company should ask in the implementation phase
1) How will the external effort to obtain innovation capability or technology affect customers? How does the organization keep short-term commitments to customers while the internal chaos of blending takes place?
2) How do organizational priorities change following the externally focused activity?
3) Where should the primary focus of the organization be during the external effort to obtain innovation or technology?
4 key elements a company needs to address in the implementation phase
1) integration
2) leadership
3) execution
4) alignment.
What is involved in the 4 key elements a company needs to address in the implementation phase
1) Integration it is the most critical item that must occur for the successful acquisition of technology.
2) Leadership is the second major element in the implementation of an externally focused means of obtaining innovation capability or technology.
3) Execution refers to the people-related issues that are addressed during the implementation process. People need to work together.
4) The fit between people, systems, operations, and strategic goals aka alignment.
Recommendations for management when integrating companies
1) establishing a clear purpose for the alignment.
2) find a partner that had the potential to fit within their firm.
3) recognize the need for each partner to do what it does it best.
4) create incentives for cooperation among various groups that will interact.
5) management would then need to share information and treat the alliance partner as they would like to be treated.
6) they would need to exceed expectations of the partnership and be flexible.
Evaluation and control
Evaluation and control are ongoing activities in an organization.
