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When establishing an international strategic alliance between two or more companies, the literature suggests as a best practice the establishment of a trust-based relationship between the parties as an alternative to a contractual relationship.
The Role Of Strategic Alliances In Competitive Business Growth
The case of the high-tech sector allows us to explore all the advantages associated with the trust approach, how this approach guarantees various strategic opportunities.
Strategic Alliance: What Is It, Types, Benefits & Why You Need It.
One of the main goals for high-tech companies is to develop specialized knowledge that can guarantee continuous innovation. However, it is very difficult for companies to get the right combination of product, market, technology and internal competence to guarantee these results when approaching the foreign market, if we talk about SMEs.
For this reason, international partnerships in the high-tech sector are aimed at developing highly specialized knowledge to work in a competitive environment and develop new innovative opportunities.
The main goals of international alliances in the high-tech industry: development of knowledge, high reactivity in the competitive environment, sustainable innovation
Strategic Trust Based Alliances: Naive Or Strategic Approach?
However, at the same time, the sharing of business knowledge and confidential information between partners hides a great risk for the parties, because the competitive advantage of high-tech companies is based on their unique knowledge. Firms motivated to form alliances try to prevent the threat of partner opportunism through special deterrent instruments embedded in the contract and focus on spillover effects during the negotiation phase. At first glance, this approach seems to reflect the principle of unquestionable rationality, but empirical evidence shows that it is one of the most common causes of alliance failure.
In this context, the main advantage of prioritizing a trust-based approach is a change of perspective: the main purpose of the alliance is no longer just to protect against risks, but to identify opportunities to create added value. In fact, the best strategic approach is to leverage partner alignment by creating collaborative relationships across activities, goals, and outcomes. The ability of partners to build strong collaborative relationships helps create the foundation for the development of joint capabilities that would not be possible without the input of each partner. Therefore, the report focuses on the possibility of creating added value and understanding that the creation of margins necessarily depends on the joint action of the two partners.
Cooperation increases the cooperative activity of partners, as it encourages the development of trust-based relationships: free exchange of information is strengthened, knowledge transfer increases, equal relations between partners are established, and contract costs are reduced.
Strategic Partnerships: Driving Offensive Competitive Strategies
These activities allow the development of specialized knowledge, enhance the development of new capabilities and guarantee greater flexibility of the parties in adapting to unforeseen circumstances. Building trust-based relationships, therefore, enables the complex needs of the high-tech sector to be met: fostering the growth of knowledge, protecting the creation of new opportunities, and managing the environment of competitive uncertainty documented by a range of knowledge-intensive industries. reads
In addition, the literature of practical studies proves that the construction of the mechanism of trust between the parties has changed the role of the contract: the written form becomes a sign of commitment, where the goals, roles and rules.
Therefore, the written agreement should not be understood as a means of limitation, but it is intended to ensure continuous coordination between the parties. To this end, it can change from a static to a dynamic tool that includes possible changes to the elements of the alliance.
Strategic Alliance Manager Resume Samples
(1) See De Jong G. (2016), Successful Strategies and Alliances, University of Groningen, Center for Sustainable Entrepreneurship Monograph Series, no. 3. (2) Blomqvist K. et al. (2008), The Role of Trust and Contracts in the Internationalization of Technology-Intensive Born Globals, Journal of Engineering and Technology Management 25 1-2: 123-135; De Jong G. (2016), Successful Strategies and Alliances, University of Groningen, Sustainable Entrepreneurship Monograph Series, No. 3; Johanson J. e Vahlne J. (2009), The Uppsala model of the internationalization process revisited: from the responsibility of the foreigner to the responsibility of the outsider, Journal of International Business Studies 40: 1411; Saarenketo S. etc. (2004), Dynamic learning processes associated with international knowledge in high-tech SMEs, International Journal of Production Economics 89: 363–378. An alliance is a sharing of capabilities between two or more companies without losing their strategic autonomy in order to increase their competitive advantage and/or create new business. A global alliance is a global market presence (global reach alliance) or an increase in the firm’s global competitiveness (global leverage alliance). What makes an alliance “strategic”? Capability sharing (R&D, production or marketing) affects the long-term competitiveness of the companies involved and implies a relatively long-term commitment of partners’ resources.
Consolidation of Capabilities under Single Management Control (M&As) Market Agreement (Buyer-Supplier Agreement) Strategic Alliance When absolute control fails for legal or practical reasons. those involved are capable of developing the necessary internal competence
Global Reach Alliances (Geographically Complementary Partnerships) Global Leverage Alliances (Research and Development Partnerships, Joint Production) Country Market Access Alliances (Traditional Joint Ventures in Emerging Markets) Country Resource Access Alliances (Joint Ventures in Resource Rich Countries)
Collaborative Advantage Of Strategic Alliances: Value Creation In The Value Net
Basis of Local Alliances (Joint Ventures): Consists of exchanging market or resources for technology. Foreign investors are encouraged to bring their own products, processes and management technologies with their capital to access domestic markets or key natural resources. Value for the foreign partner: increased market access, combined income from various sources – dividends, transfer prices, management fees. The value for the local partner is knowledge growth, dividend flow and other indirect cash flows such as rents, local purchases, etc.
Coalitions Alliances of competitors, distributors, and suppliers in the same industry that combine their capabilities to cover global markets (“go global”) or to establish a common standard. Joint Specializations An alliance of companies that combine unique but complementary capabilities to create a business or develop new products or technologies. Each partner provides a unique asset, resource or opportunity. The capabilities of the partners are combined to create the capabilities needed to grow the business. Learning Alliance The primary purpose of such an alliance is to serve as a vehicle for the transfer of knowledge between partners.
Joint Ventures (JVs) Strategic Alliances (SAs) Strategic Objectives Rather Direct (substitution of market or resources for technology) More complex, market objectives are combined with technological research or strategic options. Strategic architecture A simple complementary approach is market access versus technology transfer. There is often a mix of complementary capabilities, integration of multiple activities, and technology transfer from both sides. Valuation is more difficult than the traditional methods used in M&A because SA often involves investments in intangible assets and knowledge, and in most cases they take place in a new and innovative new product or process. Value Creation Value is created by the enterprise and distributed to partners in the form of dividends or transfer prices. Value is created not only within the alliance but also outside the alliance through applied learning that partners can apply to their other products. Partners In most cases, non-competitors often compete with CAs
Must Know Business Competition Strategies [new Research]
Industry Future and Competitive Forces What are the benefits of the Alliance? What do partners get out of it? Strategic Context and Value Potential Scope Strategic Objectives Value Creation Potential Shape EXPECTATIONS Partner Fit Strategic Fit Capability Fit Cultural Fit Organizational Fit Partner Selection How well does the relationship work? PROBLEM DEFINITION Negotiation and Design Operational Environment Interface Management How do we organize and manage? CONTRACT Integration Collaboration Evolution How do we work? Get RESULTS
Coalitions Partners seek market access by coordinating geographic assets, combining capabilities to reduce costs or increase competitiveness, or combining product offerings to increase market acceptance. The strategic scope of the alliance is to create a larger and more competitive player in the global market. Co-specialization is often aimed at creating new products or increasing competition by combining relatively independent capabilities. Each party focuses on what it is good at and, as a result, delivers a product, service or component with the best concentration of resources and skills. Learning alliances are also designed for collaborative learning in the sense that partners develop new skills together.
Coalitions Co-specialization Learning Opportunities/Resources – Funding – Risk Sharing – Complementary Resources – Risk Sharing – Research and Marketing Personnel Assets – Distribution – Production – Assets Customer Service – Access to Key Tangible and Intangible Assets Competencies – Valuable Market Knowledge – How
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