Strategic alliances and joint ventures

Presented to Sir

Shahzaib Haider. 01-220102-045 Muzammil Ahmed.. 01-220102-038

Strategic Alliance

An arrangement between two companies that have decided to share resources to undertake a specific, mutually beneficial project. Bottom line, strategic alliances are partnerships that stress mutual problem solving. Each party in the alliance maintains autonomy.

Components of a Strategic Alliance

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Confidentiality agreement Mission, vision, values statements Long-term goals and objectives Plan for implementation of activities Plan for managing the process and measuringsuccess Exit strategy

Why consider a strategic alliance?

Sharing the risk Sharing knowledge Opportunity for growth

Focus on your core strength

Access resources

Access target market

Economic of scale

Characteristics of a Strategic Alliance

May or may not be a contractual arrangement, but this is always recommended. Long Term Relationship High Level of Trust Win/Win (Mutual Advantage) Top Management Interchange Continuous Exchange of Ideas Business Process Re-engineering Focus on Significant Value-Addition Mutual Dependency

High Level of Commitment

Increased Capabilities/Capacities Enhanced Business Opportunities Improving Shareholders Value

Examples of a Strategic Alliance

McDonalds and HAVI -sourcing, transportation, distribution Banking ATM Machines -service, maintenance, collecting

PSO UBL Auto Credit Card 5%* Free Fuel on transactions at PSO Stations 1%** Free Fuel on transactions at non PSO Outlets

Joint venture
.A

joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a new entity and new assets by contributing equity.

each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity or separate.

Why joint venture?

A joint venture may be formed to:

Run production facilities in another country. Set up a marketing and distribution presence. Use complementary technologies held by each participant. Access new markets and distribution networks. Increase capacity.

Share risks and costs with a partner.

Access greater resources, including specialized staff, technology and finance.

Factors affecting joint venture

International partnership: differences in language, culture and business practices. Also consider:

Intellectual property rights. Financial considerations. Potential for political instability. Impact of local law.

Legal requirements

A joint venture or strategic alliance will need to change with circumstances. Agreements should anticipate these changes and provide a method for change, termination and dispute resolution.

Partner is selected, generally a Memorandum of Understanding (MoU)