Sei sulla pagina 1di 4
Innovation Management Kevin O’Brien Strategic Alliances
Innovation Management
Innovation Management

Kevin O’Brien

Innovation Management Kevin O’Brien Strategic Alliances

Strategic Alliances

Definition of strategic alliance A strategic alliance is an agreement between two or more partners
Definition of strategic alliance
A strategic alliance is an agreement between two or
more partners to share knowledge or resources,
which could be beneficial to all parties involved
(Vyas et al., 1995).
Fall of the ‘go-it-alone’ strategy  Increased levels of competition  Increased complexity of products
Fall of the ‘go-it-alone’ strategy
 Increased levels of competition
 Increased complexity of products and
production
 Widening technology base
 Dramatically shortened product life-
cycles
 Pressure to reduce npd time
 Need to manage market and
technological uncertainty
Learning Objectives  Understand the reasons for increasing use of strategic alliances  Recognise different
Learning Objectives
 Understand the reasons for increasing
use of strategic alliances
 Recognise different forms of strategic
alliance
 Identify factors critical to the success of
strategic alliances
 Appreciate the risks and limitations of
strategic alliances
Reasons for Entering a Strategic Alliance 1. Improved access to capital and new business 2.
Reasons for Entering a Strategic
Alliance
1. Improved access to capital and new business
2. Greater technical critical mass
3. Shared risk and liability
4. Better relationships with strategic partners
5. Technology transfer benefits
6. Reduce R&D costs
7. Use of distribution skills
8. Access to marketing strengths
9. Access to technology
10. Standardisation
11. By-product utilisation
12. Management training
Rise of the ‘octopus’ strategy  Competitive advantage often resides in sets of firms acting
Rise of the ‘octopus’ strategy
 Competitive advantage often resides in sets
of firms acting together:
 European Airbus strategic alliance
 VHS alliance between JVC, Sharp, Toshiba, RCA
 Even IBM has forsaken go-it-alone strategy.
 Alliances with Toshiba, Microsoft, Siemens, HP,
Cisco, Real Networks, & many more ……
 Octopus strategy (Vyas et al., 1995)
 From 1976 to 1987, the annual number of
new joint ventures rose six-fold; three-
quarters are in high-technology industries
(Lewis, 1990).
JVC’s Alliance for VHS Marketing Product Development Matsushita Matsushita Production
JVC’s Alliance for VHS
Marketing
Product Development
Matsushita
Matsushita
Production
European Airbus Aerospatiale CASA British Aerospace Deutsche Airbus
European Airbus
Aerospatiale
CASA
British Aerospace
Deutsche Airbus
Potential Alliance Partners Suppliers Government Complementary Facilitators Firm Competitors Firms Academia
Potential Alliance Partners
Suppliers
Government
Complementary
Facilitators
Firm
Competitors
Firms
Academia
Customers
Strategic Business Environment
(Chan & Heide, 1993)
JVC’s VHS  JVC with VHS (video recording format):  competing with Sony’s Betamax to
JVC’s VHS
 JVC with VHS (video recording format):
 competing with Sony’s Betamax to set
industry standard
 VHS licensed to other Japanese video
recorder manufacturers
 joint ventures for marketing in Europe (Thorn-
EMI, Thomson, Telefunken)
 supplied RCA-branded video recorders for the
US market
Benefits of strategic alliances  Opportunities to learn & acquire new technologies  Access to
Benefits of strategic alliances
 Opportunities to learn & acquire new
technologies
 Access to complementary technological
resources and capabilities that reside in other
firms
 Access to new markets
 Access to resources that can enhance the
competitive position of the firm (e.g. through
minimising costs)
 Opportunities to influence or control
technological standards
(Dyer & Singh, 2000)
Technology alliances  Strategic alliances can occur intra-industry or inter-industry.  Faulkner (1995); Conway
Technology alliances
 Strategic alliances can occur intra-industry or
inter-industry.
 Faulkner (1995); Conway & Stewart (1998)
identify seven generic types of strategic
alliance:
Licensing
Supplier relations
Joint venture
Collaboration (non-joint ventures)
R&D Consortia
Industry Clusters
Innovation networks
Evolution of alliance strategy High Technological and demand uncertainty Low Window Time options Positioning
Evolution of alliance strategy
High
Technological
and demand
uncertainty
Low
Window
Time options
Positioning
strategy
strategy
strategy
(Dyer & Singh, 2000)
Disney & Pixar Alliance
Disney & Pixar Alliance
Disney Acquires Pixar Disney buys Pixar in $7.4bn deal Walt Disney has agreed a $7.4bn
Disney Acquires Pixar
Disney buys Pixar in $7.4bn
deal
Walt Disney has agreed a $7.4bn (£4.1bn) deal to
buy Pixar, the animation firm behind films including
Toy Story and The Incredibles.
Disney's distribution deal with Pixar was due to end
this year, and it seemed the two would split after
failing to agree on how to divide future profits.
The loss of Pixar would have been a blow for
Disney, as demand for the company's films, as well
as DVDs, videos and merchandise, has proved to
be very strong.
"Disney and Pixar can now
collaborate without the
barriers that come from two
different companies with
two different sets of
shareholders," Mr Jobs said.
Disney's earnings from Pixar's six films are
estimated to be about $3.2bn.
(Source: bbc.co.uk, 24 th January 2006)
"With this transaction, we
welcome and embrace Pixar's
unique culture, which for two
decades has fostered some of
the most innovative and
successful films in history," Mr
Iger said.
Elements of an alliance Window Options Positioning strategy strategy strategy Strategic Learning Building
Elements of an alliance
Window
Options
Positioning
strategy
strategy
strategy
Strategic
Learning
Building platforms
Scale-based
objectives
advantages
Monitoring
Key success
Effective tracking
Scalability
Scale, operational
factors
effectiveness
Knowledge
absorption
Ability to evaluate
technologies
Ability to identify
complementary
resources
Key difficulties
Leakage of
Value of option
Speed and
knowledge
responsiveness
(partner
dependence)
(Dyer & Singh, 2000)
Movie-Making Value Chain Complementary Innovators VCR/DVD CD Projection Computing Distribution Manufacturers
Movie-Making Value Chain
Complementary
Innovators
VCR/DVD
CD
Projection
Computing
Distribution
Manufacturers
Channel
Suppliers
Time Warner
Cinemas
Actresses
Customers
MCA/Universal
TV networks
Actors
Movie viewers
Disney
Cable TV
Cameras
Paramount
Satellite TV
Video stores
(Adapted from Affuah, 2003, p188)
Critical success factors  Creating knowledge sharing routines  Codifiable knowledge, ‘know-what’  Tacit
Critical success factors
 Creating knowledge sharing routines
 Codifiable knowledge, ‘know-what’
 Tacit knowledge, ‘know-how’
 Choosing complementary partners
 Strategic complementarity
 Assets, distinctive resources
 Organisational complementarity
 Decision processes, information/control systems, culture
 Building and managing co-specialised assets
 New assets created as a result of the alliance
 Establishing effective governance processes
 Formal (legal, financial), informal (trust)
(Dyer & Singh, 1998)
Risks of strategic alliances Can lead to:  Competition rather than co-operation  Loss of
Risks of strategic alliances
Can lead to:
 Competition rather than co-operation
 Loss of competitive knowledge
 Conflicts resulting from incompatible cultures
and objectives
 Reduced management control
 Increased complexity
 Loss of autonomy
 Information asymmetry
May harm a firm’s ability to innovate
References Chan, P.S. and Heide, D. (1993) Strategic alliances in technology: key competitive weapon, Advanced
References
Chan, P.S. and Heide, D. (1993) Strategic alliances in technology: key
competitive weapon, Advanced Management Journal, 58(4), 9-17.
Conway, S. and Stewart, F. (1998) Mapping innovation networks,
International Journal of Innovation Management, 2(2), 223-254.
Dyer, J.H. and Singh, H. (1998) The relational view: cooperative strategy
and sources of interorganizational competitive advantage, Academy of
Management Review, 23(4), 660-679.
Dyer, J.H. and Singh, H. (2000) Using alliances to build competitive
advantage in emerging technologies, in Day, G.S. and Schoemaker,
P.J.H., Wharton on Managing Emerging Technologies, New York:
Wiley.
Faulkner, D. (1995) International Strategic Alliances, Maidenhead;
McGraw-Hill.
Langrish, J., Evans, W.G. and Jerans, F.R. (1982) Wealth from
Knowledge, London: Macmillan.
Lewis, J.D. (1990) Partnerships for Profit, New York: Free Press.
Vyas, N.M., Shelburn, W.L. and Rogers, D.C. (1995) An analysis of
strategic alliances: forms, functions and framework, Journal of
Business and Industrial Marketing, 10(3), 47-60.