Part 1
Learning alliances are the most common form of competitive/competency strategic alliances. Using specific examples, explain the main factors or conditions that can improve its effectiveness. Explain in detail.
One of the most over-used words in business today is strategic. This is espec...
Part 1
Learning alliances are the most common form of competitive/competency strategic
alliances. Using specific examples, explain the main factors or conditions that can
improve its effectiveness. Explain in detail.
One of the most over-used words in business today is strategic. This is especially true in the
area of alliances, where managers must discern between ordinary and truly strategic ties.
Companies' assets often inflate with partnerships as they develop experience in forming
agreements. While these collaborations may add value to the company, not all of them are
strategic in nature. This is a crucial point because, as this article will illustrate, really
strategic alliances must be discovered and managed differently than less strategic alliances.
When forming a strategic alliance, it's vital to consider which of these factors the other party
considers strategic. It is likely to fall apart if either party misunderstands the other's
expectations of the alliance For instance, if one partner believes the other is seeking income
to achieve a fundamental business goal but the goal is actually to keep a strategic
alternative open, the alliance is unlikely to endure.
Risk mitigation
The type of the risk and its possible influence on the actual market objective are the major
factors of whether or not an agreement is truly strategic when it is driven by the intent to
mitigate considerable risk to an underlying business purpose. Multiple sourcing solutions for
important production elements or processes are great examples of how supply-side
strategic partnerships can be used to mitigate risk.
Vendors frequently engage with process manufacturing businesses to guarantee that their
new goods fit within the manufacturer's new operations as the yield of their operations
improves. Cost savings for the manufacturer and faster product design for the supplier are
two advantages of such an association.
Important to achieving a corporate goal
While the most prevalent sort of revenue-generating alliance is one that uses a shared go-
to-market strategy, not every revenue-generating alliance is strategic. Consider the impact
on revenue goals if the partnership is discontinued, for example. Obviously, a truly strategic
connection would have a significant impact on the likelihood of meeting sales growth
targets.
A corporate purpose may require linked groupings of alliances, networks, or clusters in
addition to a single strategic relationship.
Sun Microsystems has formed a network of integrator partnerships that serve as an
effective marketing channel for the company and generate significant money each quarter.
Consider the influence of emerging industry standards that allow items from various
manufacturers to communicate with one another.
This can increase the income potential of new technological advancements goods by
unlocking consumer satisfaction. Technical standards are democratically defined in
consortiums of interested industry partners on everything from readable DVD formats to
, next-generation wireless technologies. With so many products being developed at the same
time, the first mover advantage can be significant, therefore alliance creation and advocacy
within a sector become critical to financial success.
Defending against a competitive threat
Even if it fails to generate a competitive advantage, an alliance can be strategic. Consider
the instance of a strategic alliance that thwarts a competitor. When the absence of
competitive parity produces a competitive disadvantage in the relevant principal segments
of a market in which the firm competes, it is advantageous to bring competitive parity to that
auxiliary segment.
For instance, competing in a market with a luxury product in the high and medium price
ranges may leave the company vulnerable to a low-cost entrance. If the company's
manufacturing procedures prevent the development of a low-cost product, a strategic
alliance with a volume partner in a nearby market can successfully counteract the danger.
Airlines alliances that allow carriers to share routes are another type of strategic alliances
that limit competitive threats. Routing and pricing are the two most important factors in
consumer flight choosing. As a result, airlines' adoption of route-sharing alliances mitigates
the competitive threat of preferential routing in the markets where they choose to compete.
Future strategic options
An association that isn't crucial to accomplishing a corporate goal now could become
prominent. In 1984, in contrast, a consumer goods company in the United States needed to
expand its distribution beyond the Midwest.
Confronted with the reality of future European competition, the company chose to form an
alliance with a delivery and support services company with iterative distribution capacity in
the United States and a similar presence in Europe rather than engage in widening its own
distribution centers capabilities.
With the opportunity to expand into European distribution at any time, the company may
focus on closing the deal in the United States before growing too quickly elsewhere.
Competitive advantage and core competency
Another way an alliance might be strategic is if it aids in the development or protection of a
company's competitive advantage or core competency. The most prevalent type of
competitive/competency strategic partnership is a learning alliance.
The requirement for a company to develop incremental abilities in a critical area is
frequently accelerated with the assistance of an experienced partner. The training goal of
the partnership is sometimes openly agreed upon by the participants, however, this is not
always the case. Learning collaborations are most effective when,
The companies' mindsets are similar enough that procedure and methods can be
shared.
The goals are publicly discussed.
When the participants are in emerging markets, there is little likelihood of future
competition.
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