MGT 5391

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MGT 5391 Spring 2005 Cooperative Strategies for
Alliances and Formal Partnerships
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A Firms Internal and External Growth Strategies
External Market and Other Forces
Market/Customer Insights
Commercial
Organizational
Corporate And Business Strategies
Value Chain Core Competencies Identification
Increased Capabilities (Internal Growth)
Increased Performance
Outsourcing (Non- Core Competencies)
Team/Individuals
Technological
MA/JVs (External Growth)
_____ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA. (forthcoming)
3
Strategic Alliance Model The Five Most Frequent
Types of Alliances
Competitors
Key Suppliers
Retail Store Or Large Organizational
Consumers Customer Accounts
Firm
Supply Chain
Demand Chain
_____ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA. (forthcoming)
4
Types of Organizational Relationships

• Customer-supplier relationships
• Distribution channel relationships (VMSs)
• End-user customer relationships
• Strategic alliances
• Joint ventures
• Internal partnering

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Strategic Alliances

• Definition an agreement between two
  organizations to cooperate to achieve one or more
  common strategic objectives.
• A HORIZONTAL AGREEMENT (between two firms at the
  same level in the value chain).
• Not a merger! Instead, a commitment to
  participate on a common strategic project or
  program.

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Reasons for Strategic Alliance Formation

• Market entry and market position motives
• Product motives
• Product/market motives
• Market structure motives
• Market entry timing motives
• Resource use efficiency motives
• Resource risk reduction motives
• Skill enhancement motives

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Strategic Alliance Model The Five Most Frequent
Types of Alliances
Competitors
Key Suppliers
Retail Store Or Large Organizational
Consumers Customer Accounts
Firm
Supply Chain
Demand Chain
_____ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA. (forthcoming)
8
Types of Strategic Alliances
Example Dow Corning from Dow Chemical and
Corning Inc.
Example Chrysler and Mitsubishi Automotive
Example Chryslers supplier network
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Reasons for Alliances by Market Type
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Reasons for Alliances by Market Type
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Types of Strategic Alliances
Business-Level
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Types of Strategic Alliances
Corporate-Level
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Types of Business-Level Strategic Alliances
Complementary Strategic Alliances
Partnerships that build on the complementarities
among firms that make each more competitive
Include distribution, supplier or outsourcing
alliances where firms rely on upstream or
downstream partners to build competitive advantage
Example Japanese manufacturers rely on close
relationships among suppliers to implement
Just-In-Time inventory systems
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Types of Business-Level Strategic Alliances
Complementary Strategic Alliances
Used to increase the strategic competitiveness of
the partners
Example Product development agreements between
Microsoft and Dreamworks SKG
or Joint ventures between BMG Entertainment and
Universal Music
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International Cooperative Strategies
However....
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Why Strategic Alliances Fail?

• LOGIC FAILURES
• Environment changed
• Insufficient information about partner
• Wrong partner
• Overestimated market
• Not near core competencies
• Never developed product

• PROCESS FAILURES
• Poor leadership
• Different cultures
• Poor integration
• Leadership unclear
• Merged too few activities
• Merged too many activities
• Lack of Trust
• Their Core Values are incompatible

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Joint Ventures

• Definition An agreement between two or more
  firms to establish a separate entity.
• Could be to develop a new market opportunity,
  access an international market, share
  costs/risks, gain local manufacturing profits,
  acquire knowledge or technology for core business.

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The Relational Form (Enterprise Teams)

• Used when
• Competitive market conditions
• High environmental uncertainty
• Nonroutine tasks, little specialized investment
• Characteristics
• Effective and adaptive
• Not efficient
• Examples
• Long-term retainer with ad agency
• Long-term relationship with consulting firm

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21st Century Organization Strategies for Growth
and Profitability
Streamline obtain a Seamless Supply
Chain/Demand Side (Value Chain) Integration
Global Scope
Consumer Promotion
Focus on Product Quality
Driving Growth (8)
Funding Growth (5)
Use of Technologies to Create Cost Savings
3600 Marketing
Creating the Best Place To work (11)
Superior Knowledge of Customer/Consumers
IS/SAP/ Consolidated Partnership
Coverage of Trade
HPWS
Move to Global and Local Regional Businesses
Formal Partner- ship/Alliances with Customers
Vision Direction
Stimulating Careers
Acquisitions
Community Involvement
Lean Flat Structures
Empowered People
Shared Leadership, Coaching and Feedback
Innovative New Products
Regionalization with Local Control
Horizontal Structures, Systems, and
Processes Integration/Communication/ Coordination
Recognition Financial Rewards
Guiding Core Values,Philosophies and Principles
_____ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA. (forthcoming)
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Value Chain
Back of the Shop Org.
Front Org.
Core Technologies
Market (Customer)
Develop
Design
Conceive
Support
Sales
Market
Procedure
Distribute
_____ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA. (forthcoming)
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The Typical Five Different Types Organization
Structures in Exemplar Organizations (N102
North America Organizations)
Corporate Office
1.
Macro Business Level
S.B.U.s/GBUs
2.
Value-Chain Design
Business Teams
3.
1, 2, 3, 4, 5
Product Teams
4.
Supply Side
Demand Side
Multi-functional Account Teams (Enterprise Teams)
5.
e. Products
a. Key Customers
b. Key Suppliers
d. Channels
c. Key Value Chain Processes
Source B.A.Macy, Successful Strategic Change
Berrett-Koehler Publishers, San Francisco, CA
(forthcoming)
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Horizontal Organization Critical Design Elements
Competitors
Suppliers
Consumers
The Firms Value Chain
Preferred Customers
Supply Chain
Demand Chain
Strategic Alliances and Partnerships
_____ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA. (forthcoming)
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THE THREE TYPES OF BUSINESS STRATEGIES TO MEET
MARKET DEMANDS

• PRODUCT LEADERSHIP
• BEST PRODUCT
• OPTIMISED FOR INNOVATION SPEED
• PRODUCT FEATURES THAT DELIVER RESULTS

CHOICE

• KEY CUSTOMER/ KEY SUPPLIER INTIMACY
• BEST TOTAL SOLUTION
• OPTIMIZED FOR SPEED AND RESPONSIVENESS
• VALUED ADVICE
• CUSTOM - TAILORED SERVICE

• OPERATIONAL EXCELLENCE
• BEST TOTAL COST
• OPTIMIZED EFFICIENCE
• LOW LOWEST PRICE
• HASSLE-FREE, RELIABLE

Source Adopted from M. Porter, Competitive
Advantage, The Free Press, 1985
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National Account Team, Selling Team, Category
Team, and Business Team Continuum 1960s to the
21st Century
Customer Business/ Enterprise Team
Category Management Team
National Account Manager
National Account Team
Selling Center Team
Vertical Ventures
?
1950s 1960s 1970s
1980s 1990s- Future

2001
Transaction Long-term
Formal Partnership/ Vertical
Relationships Mirror
Teams Integration/ Formal
Alliance
Source B.A.Macy, Successful Strategic Change
Berrett-Koehler Publishers, San Francisco, CA
(forthcoming)
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The Value Chain
Key Suppliers
Key Customers
DEMAND Fulfillment Organization (each with
own resources experts)
DEMAND CREATION Organization (each with
own resources experts)
The Mirror Concept
The Mirror Concept
Suppliers Mirror Teams
Firms Enterprise Teams
Firms Enterprise Teams
Customer Mirror Teams
Source B.A.Macy, Successful Strategic Change
Berrett-Koehler Publishers, San Francisco, CA
(forthcoming)
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Enterprise Team Design After Redesign
/Key Customer Contacts
Enterprise Team Leader
The Mirror
Corporate Support
Corporate Support
Finance Systems Product Supply Category
Management Eng./Technology
Finance Systems Product Supply Category
Management Eng./Technology
Key Customer (Mirror Team)
Firms Enterprise Team
_____ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA. (forthcoming)
27
Illustrative Enterprise Teams Full-time
Multi-Functional Members (with Modified P/L
Responsibility)
Engineering Technology
Team Leader
4-6 Sales Reps.
Finance
Multi-Functional Enterprise Team
Product Supply
Future Business Development
Logistics
MKT. Research
Operations

IS/IT
Marketing
HR
___________________ Might be shared across
Multiple Enterprise Teams
________________ Source B.A.Macy, Successful
Strategic Change Berrett-Koehler Publishers, San
Francisco, CA (forthcoming)
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Enterprise Teams What Is It?

• IS NOT
• Manufacturing Teams
• Hourly / Wage Teams
• Project Teams (limited life)
• Matrix Teams
• National Accounts
• Management Teams
• Sales and Engineering Teams
• Selling Teams
• IS
• Professional - White Collar - Office Teams
  Dedicated to Key Customers, Products, Processes,
  Channels
• Multi-functional Skills into an Enterprise Team
• Aligned to Key Customer(s) - Products, Channels,
  Processes or Key Suppliers 100 of Time
• A Competitive Advantage

_____ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA. (forthcoming)
29
Enterprise Teams The Mirror Design Concept
The Mirror One Contact Point
Key Customers/ Retail Stores
The Various Global SBUs
Enterprise Units/ Team(s)
Corporate Office
Consumers
1 2 3 4 5 6 7 etc.
(feedback)
________________ Source B.A.Macy, Successful
Strategic Change Berrett-Koehler Publishers, San
Francisco, CA (forthcoming)
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ABC Key Findings Relationships

• Customer satisfaction builds share
• Team effectiveness, demographics and
• structure drive volume, share, employee
• commitment and trust
• The design of Leadership roles has a
• varied impact on results
• Customer Business team capability drives
• customer satisfaction, share and volume

_____ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA. (forthcoming)
31
Figure 2 Results of PLS Analysis
Numbers in parentheses are standard errors.
All path coefficients are standardized. Source
D. Arnett, B. Macy and J. Wilcox, The Roles of
Core Selling Teams in Supplier-Buyer
Relationships Increasing Relationship
Commitment and Sales Performance,
submitted to the Journal of Marketing, Jan., 2003.