Strategic Alliances

Question 1

Strategic alliance def

Answer 1

Agreements among firms designed to collectively achieve individual organizational objectives. Pooling of resources and capabilities to create sustainable competitive advantages for alliance participants

Question 2

DOWNSTREAM strategic alliance (vertical)

Answer 2

Firms align with partners that are closer to the end consumer. Ex. Biotech company partnered with large pharmaceutical company to bring product to market

Question 3

UPSTREAM alliance (vertical)

Answer 3

Firms partners with firms that are further from the end consumer. Ex biotech company as an example, it partnered with a university in order to collaborate on a new discovery

Question 4

HORIZONTAL alliance

Answer 4

Integration of firms at the same level of the value chain. Ex. Biotech firm were to align with a similar firm in the market

Question 5

SWOT TOWS

Question 6

Alliance Management Steps

Answer 6

1. Define objectives - based on results of internal analyses. Identify where partnering opportunity may be beneficial. External analysis of the market and environment to identify partnering opportunities
2. Sourcing partners - based on internal and external analysis, potential partners are short listed. While it important to find tech and financial synergies, cultural likeness should not be overlooked. Crucial to partnership success.
   Due diligence performed on potential partners. (Comprehensive investigation of the partner, including but not limited to a financial, legal, technological, marketing, product, and management audit)
3. Contract negotiation - partners clearly articulate goals, objectives, and responsibilities included in the strategic alliance.
4. Monitoring - finalization of shared mission and vision, teams and leaders, performance measurements, financial compensation.

Question 7

Advantages of strategic alliance

Answer 7

Shared risk, shared knowledge, oops for growth, speed to market, innovation, costs, access to resources, to target markets, economies of scale

Question 8

Disadvantages of strategic alliance

Answer 8

Sharing, creating a competitor, opportunitycosts, uneven alliances, foreign confiscation, loss of control, coordination

Question 9

Risks of strategic alliance

Answer 9

Partner experiences financial difficulties, hidden costs, inefficient management, activities out of scope, partner lock-in, info leak, loss of operational control, partner takes advantage, partner unwilling to supply key resources