Week 2 Flashcards
What is a alliance
is a voluntary, long-term, contractual relationship between two or more autonomous and independent organizations (i.e. Firms), designed to achieve mutual and individual objectives by sharing or creating resources.
What are 4 unique challenges of an alliance
- Misunderstanding tension between cooperation and competition,
- Lack of coordination/hierarchies (at the beginning)
- Misunderstanding unique challenges,
- Lack of institutionalization of alliance know-how and know-what
Name al the stages of the alliance framework
- Alliance strategy
- Partner Selection
- Alliance negotiation
- Alliance design
- Alliance launch
- Alliance management
- Alliance evaluation
8.Alliance termination
In the second stage (Partner selection) you choose partners based on:
- complementarity (combining distinct sets of resources from each partner that create more value than the sum of their individual contributions)
- Compatibility: in which the selected partner’s strategic (goals), organizational (structure and routines), operational (operational system), cultural (values ideologies, practices) and human fit (personalities, experiences and backgrounds) fits.
In the alliance strategy stage, there are different perspectives/theories you can use (Transaction cost economics, RBV, RDP, SMT, SNT, OLP and IT). Explain these theories
Transaction cost economics: minimizing transaction costs (efficiency). Alliances reduce market uncertainty and costs associated with hierarchy
RBV: focus on leverage of valuable rare, imitable and non-suitably resources. Seek to maximize value creation. Aliances help to acquire complementary resources
RDP: RDP: manage dependencies on external parties for critical resources. Alliances helps reducing uncertainty securing critical resources and minimise dependency on external parties
SMT: focus on achieving strategic objectives (create synergies). Alliances help create competitive advantage by leveraging each firms strengths
SNT: emphasizes importance of social relationships and networks in alliance strategy. Inter-firm networks act as conduits of information influencing alliance decisions. Firms use their social relationship (trust/reputation) to form and sustain alliances.
OLP: for acquiring new skills/or knowledge, improve (core) competences
Alliances enable knowledge exchange and development of intangible assets (e.g. innovation, expertise)
IT: firms are strongly influenced by environment (institutional norms and pressures) and they want to conform. imitate competitor alliances to gain social acceptance and competitive positioning
How do we check the compatibility? We look for
Strategic fit: compatibility in partners strategic view (long-term goals) and orientation.
Misfit can cause strategic conflicts
Organizational fit: compatibility in structure and routines reduces uncertainty.
Misfit undermines collective sensemaking and increases decision making risks.
Operational fit: align day to day operations for smoother execution
Poor fit hinders integration and slows down activities
Cultural fit: shared values improve joint decision making.
Misfit damages collaboration quality at different levels
Human fit: ensures employees communicate and trust each other
Poor fit creates interpersonal conflicts and impeded knowledge sharing
In the alliance negotiations, there are two types of behaviour? Which types, and what should firms do with this knowledge?
- Integrative (The trust game): accommodate the underlying interest of both, problem solving and joint gains, soft.
- It builds trust and long-term interdependence
- Firms limit partnerships and signal commitment through joint investments
- Informal agreements, shared values and mediation over legal conflicts - Distributive (The power game): seeks to create individual gain by concessions other party, hard
- Creates fear and dependence
- Firms play multiple partners against each other to avoid dependence (to gain better terms, prices, or conditions)
- Heavily reliance on formal contracts, legal enforcement and competitive bidding
Effective alliance design encompasses two main components, which?
- Choose the right governance form: equity vs non equity
- Provide strong safeguards to protect the alliance for:
-Opportunistic behavior: self-interested, unreasonable demands, etc
-Misappropriation of benefits: use acquired resources for purposes outside the alliance
Introduce control mechanisms: output, behavioral and social control
What are the 5 steps in the alliance launch
- Assemble launch teams representing all partners, ensure team members with business knowledge, with strong interpersonal skills and are collaborative
- Articulate a launch strategy; set up an execution plan with short term milestones to create trust and commitment.
- Create speed in the execution to maintain momentum and seize opportunities.
- Communication: maintain strong coordination between partners
- Measurement: Set up way to track progress, like performance metrics with focus on short-term milestones and processes that reflects towards long term milestones
What does alliance management include?
Includes the organizational and inter organizational routines, systems, operational procedures that make the alliance work, or not
- conflict management, response strategies, inter partner learning
What is the main issue in alliance management?
Not adapting to difficulties, which can lead to an alliance failure
In the alliance evaluation. How can we value the alliance?
- Economic: insights into the economic value and effectiveness of relationship
- Strategic: insight into the strategic value
- Operational: functioning of the alliance, output and process-like quality
- Learning
- Relational: focus on the behavior of the participants in an alliance
What influences this valuation?
- The strategy; is the alliance intentional (planned) or emergent (adapt over time)
- Based on the process or the outcome?
- Private or common goals
When do alliances come into the termination step?
When it is intended, the alliance did fulfill its initial purpose or is no longer needed. When it is unintended the termination of the alliance happens before achieving the objectives or continuous without adding value.
What are the steps of termination?
1., Assessment and initiating of dissolution: evaluation of partnerships (metrics) and start termination process
2. Promote dyadic communication: communicate termination intentions: offering opportunities for reconciliation if possible
3. Disengagement: finalize termination terms, handle resources and investments and manage communication with stakeholders
4. Manage aftermath: learn from experience, evaluate termination process, communicate with network for protecting reputation
