Part II: Cooperation and alliances Flashcards
What are the possible networks types, relative to its topology?
Isolation:
Network clusters without intermediaries cannot access
common resources.
Networking:
Network clusters with intermediaries establish
interconnections to gain additional resources.
What are the advantages of collaboration and good networks?
A good network adds value. An understanding of the structure and dynamics of networks is a competitive advantage.
Companies should cooperate in one level of the value chain (R&D) but compete in another (sells).
What are motivations for cooperation?
- Cost sharing
- Risk sharing
- Advantages of timing
- Market entry
- Reputation
- Resource access
- Access to Text knowledge and learning
What are the types of cooperation?
- Franchising
- Supply contract
- Subcontracting
- Consortia
- Management contract
- Joint venture
Describe Franchising and give examples
- Special (strict) form of Licensing
- Cooperation in sales and distribution
- Asymmetric power distribution
- Long lasting relationships
Ex:
- Mc Donalds
- Schülerhilffe
Describe supply contract and give examples
- Uni-directional, interorganizational contracts
- Long-term procurement agreements
- Mutual coordination of logistics (e.g. JIT)
- Conjoint development processes
- Risky for supplier
Ex:
- Toyota
- Bosh
Describe Subcontracting and give examples
- Outsourcing of activities
- For areas with low strategic relevance
- Concentration on core-activities
- Generally long-term contracts
Ex:
- IBM
- LSG Sky Chefs
Describe Consortia and give examples
- Development of major projects
- Limited duration, scale and content
- Risk reduction for the partners
- Regulated through contracts
Ex:
Airbus
Describe Management contract and give examples
- Consulting and management services
- Project oriented
- Limited in time and scope
- Principal-Agent problems
Ex:
- McKinsey
- Roland Berger
Describe Joint Venture and give examples
- Separate legal entity
- Controlled by one or more of the partners
- Individual strategic orientation
- Organizational linkage of the partners
Ex:
- Merial
- B/S/H/
What are the two types of designs modes in an Alliance. Describe them briefly.
- Equity Based:
Joint ventures result in the formation of a new legal entity. - Non-equity Based:
Contractual agreement for cooperation which does not require setting up a new legal entity.
What types of Equity modes exist?
- Minority Joint Ventures
- 50/50 Joint Ventures
Majority Joint Venture
What types of Non-equity modes exist?
- Informal cooperative alliances
- Formal cooperative alliances
What Alliance design mode has become one of the dominant cooperative?
Non-equity
On what different levels does Cooperation takes place in Industry? Whats the simplest form?
- Strategic alliance (The simplest)
- Alliance portfolio (More advanced)
- Strategic network
Specify Strategic alliance.
- Formalized, voluntary long-term relationships between two organizations
- Focused cooperation in key areas of the partners
- Contract based with defined scope
Focus of strategic alliance?
Dyad
Goals of strategic alliance?
- Compensate weaknesses through strengths of the partner
- Secure and improve competitive positioning
- Risk and cost reduction
Types of strategic alliance?
- Horizontal:
Between potential competitors - Horizontal:
Alliance with supplier
Define Alliance portfolio
The egocentric network of all active (and past) cooperative relationships of a single company
Focus of Alliance portfolio
Portfolio on firm level
Strategic issue of Alliance portfolio
Configuration of the portfolio, realization of synergies between the different partners
Formation of alliance portfolios:
Why do organizations build alliance portfolios?
- Manage risk and uncertainty
- Organizationallearning
- Access to knowledge and other resources from different partners
- Structural and relational embeddedness
- Coevolution with environment
Configuration of alliance portfolios:
How do firms configure their portfolio?
- Portfolio size
- Relational and structural factors
- Partner characteristics
Changes in configuration through formation of new ties and termination of existing ones is important
Management of alliance portfolios:
How do firms manage their portfolios?
- Build alliance portfolio capability (ability to identify partners, to initiate alliances and to manage them).
Research also focuses on the effectiveness of alliance portfolio management tools
Define strategic network
The network of strategic alliances from an industry perspective
Focus of strategic network?
(Industry-)network
Specifics of a strategic network?
- Actors (nodes) are connected through direct or indirect relations (ties)
- Number of nodes determines network size, Position of nodes and ties determines the network structure
Management of cooperation:
What are the phases of the alliance life cycle?
- Alliance formation and partner selection
- Alliance governance and design
- Alliance management (post-formation)
Challanges of Alliance formation and partner selection
- Partner complementarities
- Partner compatibility
- Partner commitment
Key factors of Alliance formation and partner selection
Screening and partner selection:
- Common objectives
- Compatible values and behaviors (culture)
Challenges of Alliance governance and design
- Equity sharing or ownership
- Contractual details
- Relational governance
Key factors of Alliance governance and design
Negotiation and alliance designing:
- Decentralized structure
- Process and interface optimization
Challenges of Alliance management (post-formation)
- Use of coordination mechanisms
- Development of trust and relational capital
- Conflict resolution and escalation
Key factors of Alliance management (post-formation)
Commitment and trust:
- Creating a common identity through collaboration
- Communication and information transfer
Management of networks:
Dimensions of a network strategy?
Objectives Strategic Analysis Configuration Implementation Stabilization
Objectives of a network strategy
Definitions of objectives and harmonization of individual objectives as premises for a cooperation’s success
- Transformation of individual to common objectives
- Defining network objectives for coordinating network activities
- Specification of key figures for a network controlling
Strategic analysis of a network strategy
1) Analysis of the overall network structure:
- Size
- Density
- Stability
- Groups
- Centrality
2) Identification of structural and interactional dimensions:
- Intencity
- Reciprocity
- Multiplexity
3) Identification of key roles:
- Bridge
- Gatekeeper
Configuration of a network strategy
1) Typology of networks:
- Ties among legally autonomous companies
- Regional networks
- (Global) strategic networks
2) Consequences of embeddedness:
- Identification of structure and dynamics
- Differences in the degree of connectedness lead to different consequences of success
3) Planning of positions
- Prominence of actors
- Focal actors
Implementation of a network strategy
- Determination of the network strategy
- Business model integration
Stabilization of a network strategy
- Securing the network structure
- Institutionalizing network management
Management practices of a network stabilization
Its a cycle of:
1) Selection
- Selection of network partners
- Definition of partners’ input
- Selection of "Boundary Spanner“ (network managers)
2) Allocation
- Distribution of tasks, resources and responsibilities according to the capabilities of network members
- Distribution follows the negotiation processes
3) Evaluation
- Evaluation at the dyadic level and at the network level
- In addition to economic criteria, procedural and distributive justice also play a decisive role
4) Regulation
- Development and enforcement of formal and informal rules
- Development of incentive systems
- Search for win-win situations
5) Go to "1) Selection"
