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Chapter 11
Managing StrategicAlliances
2Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Purpose and Overview
• Purpose– To understand various interorganizational
relationships• Non-coercive • Strategic
3Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Purpose and Overview
• Overview– Alliances in Health Care – Types and Forms of Alliances – What Are Alliances Meant to Do? – The Alliance Process: A Multistage Analysis – Frameworks for Analyzing Alliance Problems
4Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Alliances in Health Care
• High failure rates
• Must balance rewards and returns with prospective risks
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Alliances in Health Care
• Pros– New way of doing
business– Allows for complexity
and interdependence while maintaining autonomy
– Transcends existing organizational inertia
– Successful in other sectors
• Cons– Distracts organizations
from basic goal– Exaggerated benefits – Can lead to collusion– Process problems and
cost-intensive– Ineffective committee
governance – Ineffective for markets
with limited research and development needs
6Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Types and Forms of Alliances
• Ownership versus Control– Alliances vary in regard to
• Ownership• Control• Size• Governance• Nature of participation
7Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Types and Forms of Alliances
• Number of Members– Larger alliances are harder to govern – Larger alliances tend to be more powerful
8Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Types and Forms of Alliances
• Governance Structure– Members are equal and autonomous– Organization commitment and diverse
representation
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Types and Forms of Alliances
• Mandated versus Voluntary Participation– Mandated forms of organization can be
superficial and short-lived
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Types and Forms of Alliances
• What are the intentions of alliances? – Strategic intentions may vary – Alliance is not a good predictor of what
alliance can achieve
11Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
What Are Alliances Meant to Do?
• Pooling vs.Trading Alliances– Pooling alliances – Trading alliances
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What Are Alliances Meant to Do?
• Cost Reduction vs. Revenue Enhancement– Differences in how success is gauged and how
alliance is organized
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What Are Alliances Meant to Do?
• Quality, Innovation, and Learning– Revenue enhancement or cost reduction
• Link with financial performance difficult to discern
– Many organizations underestimate involvement to realize benefits • Personnel flow between partners can
accelerate learning and innovation
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What Are Alliances Meant to Do?
• Power Enhancement– Alliances motivated by organization's desire to
gain influence
• Uncertainty Reduction – Highlights one organization's attempts to
reduce its own uncertainty
• Risk Sharing – Emphasizes uncertainty for all partners
15Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
What Are Alliances Meant to Do?
• Intentions are not mutually exclusive• Understanding strategic intent can be
critical success factor
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What Are Alliances Meant to Do?
• Keys to Success: – Understand your motivation– Express this to alliance partner– Elicit and listen carefully to partners’
expression of strategic intentions– Examine compatibility of all intentions
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What Are Alliances Meant to Do?
• Physician-Hospital Trading Alliances– Aimed at reduction of uncertainty– Serves many purposes:
• Revenue enhancement • Quality improvement• Cost containment
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The Alliance Process: A Multistage Analysis
• The Life Cycle Model
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Frameworks for Analyzing Alliance Problems
• Locating the Problem– Alliance problems:
• Environmental • Strategy • Structure • Behavioral
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Frameworks for Analyzing Alliance Problems
• Separating the root from the symptom– Categories of deeper problems:
• Parochial self-interest• Misunderstanding and lack of trust• Different assessments• Low tolerance for ambiguity
21Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Frameworks for Analyzing Alliance Problems
• Treating Alliance Problems – Categories of deeper problems– Participation– Facilitation– Negotiation– Cooptation– Coercion
22Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Frameworks for Analyzing Alliance Problems
• Know Thy Partner– Partner can be useful in addressing problems
• The Cooperative Partner• The Quasi-Cooperative Partner• The Indifferent Partner• The Competitive Partner• The Vengeful Partner
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