Preparing ForPreparing ForThe AllianceThe Alliance

(Intelligent business alliances, chapter 5)(Intelligent business alliances, chapter 5)

Pirodom Lhaitragool ID: 4980557

Theerathorn Tharaparitkul ID:

4980639

Yada Trairattanaphakdee ID: 4980588

Krissanadej Chutitadakul ID: 4980239

Group 2 members:

Corporate Courtesy: A Matter of Corporate Courtesy: A Matter of StrategyStrategy

Business courtesy is a good alliance management strategy

The major elements of corporate courtesy are the following:Return calls promptlyWrite letters confirming appointmentsSay thank-you when appropriateRecognize extra effortKeep team members informedEnsure that support staff are pleasant,

welcoming, and helpful both on the telephone and in person

Corporate Courtesy: A Matter of Corporate Courtesy: A Matter of StrategyStrategy

Treating your potential partner well from the start will develop goodwill that may be crucial later on

By establishing a norm of pleasant behavior, when a problem occurs, it is likely that your displeasure will be noticed since it will be in great contrast to your agreeable demeanor

Courteous business practices are sending a thank-you letter after obtaining financial and corporate information from a candidate or after a meeting, keep logs of who called whom and whose responsibility it is to call back, etc.

It is important to practice business courtesies to the candidate because the person who made the reference will want to be kept informed on the progress of the relationship

Distinguish you from your competitors in a small but memorable way

Critical steps necessary for Critical steps necessary for good alliance creation and good alliance creation and

managementmanagementThere are fifteen steps in all

Step 1: Developing Qualitative and Step 1: Developing Qualitative and Quantitative Partner criteriaQuantitative Partner criteria

If you have followed the Corporate Self-Analysis process (from group 9’s first presentation), you should have by now created a mission statement for your potential alliance with goals stated

Questions to ask yourself could include the following:- What are the ideal characteristics of your alliance

partner, in terms of size, market share, corporate personality, and position in the industry?

- Could an existing partner be a candidate for an expanded relationship?

Step 1: Developing Qualitative and Step 1: Developing Qualitative and Quantitative Partner criteria (cont’d)Quantitative Partner criteria (cont’d)

As a result of the options, goals, and objectives analyses, your company now knows why it is entering into alliance and what you hope to achieve

By the end of this partner-criteria exercise, you should have a list of criteria that are ideal that you would be looking for in a partner

Step 2: Developing a Prospect ListStep 2: Developing a Prospect List

It is critical that partner analysis be proactive not reactive

A partner that approaches your company, even if the opportunity looks interesting, may not be the optimum partner for the particular industry, product, service, or technology or may have an incompatible corporate personality

A commonly overlooked source of new partnering opportunity is your existing partners

Some companies do large scans of the industry They may use the help of organizations such as trade

groups, local influencers, such as bankers, lawyers, consultants, etc., for ideas and advice

Step 2: Developing a Prospect List Step 2: Developing a Prospect List (cont’d)(cont’d)

Another source of information about emerging companies is in the venture-capital community. The venture directories available can point you toward areas of new technology and research

Visit to trade shows and conferences will also yield many opportunities that may then be more carefully researched

Step 3: Strategic Fit AnalysisStep 3: Strategic Fit Analysis

There are many questions to be asked at this stage

Some of them are:- Does the potential partner fit the quantitative

and qualitative criteria you have developed?- Will the relationship meet the mission statement

goals you have created?- What are the details of the partner’s business,

such as their management capabilities and the intention of key managers or project champions to remain in the partner company?

Step 3: Strategic Fit Analysis Step 3: Strategic Fit Analysis (cont’d)(cont’d)

- Have you diligently collected information on the company – its business history, financial background, and general position in the industry?

- What is the strategic potential for your company of a partnership with this candidate?

- Is there another partner in the same industry that would be a better candidate?

- In this relationship, what would the risk exposure for your company be in terms of both embedded and migratory knowledge transfer?

Step 3: Strategic Fit Analysis Step 3: Strategic Fit Analysis (cont’d)(cont’d)

Migratory knowledge is what a company communicates

Embedded knowledge is how a company communicates

Transfer of migratory knowledge like technology, capital investment, number of products sold, license fees are generally all in the contract

What about the way you talk to customers, how you reward your employees, the process you use to analyze your competitors? This is the embedded knowledge that is not in the contract

Step 3: Strategic Fit Analysis Step 3: Strategic Fit Analysis (cont’d)(cont’d)

Example:- One large computer company realized that they

were transferring embedded knowledge to their partner

- Their partner was learning their core competency: the way they service their customers

- The company should conduct a quick and efficient relationship audit and then undertake a reconfiguration

Step 4: Ranking the Strategic FitStep 4: Ranking the Strategic Fit

Develop as much information as possible on the candidates prior to establishing contact in order to put yourself in a strong position for negotiation later on.

Many companies rank their candidates according to how they meet the strategic criteria, which each criterion is given a value, and then the values are combined to get the ranking.

Summarize all information and data, and evaluate the strategic fit of each candidate with your company, the appropriateness of each candidate as a partner for your organization, in keeping with the goals and objectives that you have analyzed and developed during this process.

Step 4: Ranking the Strategic Step 4: Ranking the Strategic FitFit

The companies with a good strategic fit will go on your primary candidate list ranked in order of priority as their characteristics fit your goal.

Begin relationship development with companies on the priority list.

Step 5: Meeting & EvaluatingStep 5: Meeting & Evaluating

Gather as much information as possible prior to, during, and immediately after the first meeting regarding the current status of the business, financial overview, marketing overview, product-development overview, and any joint ventures, licensing agreement, or strategic partnerships presently in place.

The purpose of this proactive is to verify the information that has already received and adapt and improve understanding of the appropriateness of the partner for your stated goals.

Do not send out the same package of information to every candidate because as positioning your company in the other’s eyes is important

Step 5: Meeting & EvaluatingStep 5: Meeting & Evaluating

The goal is to convince the prospective candidate that there is mutual benefit to be derived from the strategic relationship, so focus on the mutuality element, namely, what’s in it for them and how the two companies together could leverage an opportunity better than if attempting to do so alone.

For example, if the partnership is a marketing or distribution opportunity, gather details on their marketing programs and sales volume. Tailor your questions to the criteria you have established to be vital and mandatory for your strategic partner.

After the first meeting, write a thank-you letter. This enables new and existing members of the alliance team to keep track of activity easily, so that follow-up can be carried out more efficiently.

Step 6: Getting to know the Step 6: Getting to know the Corporate ChampionCorporate Champion

It is important to get to know the individual or team who will become the champion of this opportunity within the candidate’s company.

Work on developing mutual trust and commitment to the opportunity.

During this time, the meeting will continue and the discussion will be narrowed. The lead representatives will exchange viewpoints related to the specifics of the alliance such as each partner’s definition of success, the proposed duration of the alliance, its goals and limitation.

Step 7: Looking out for Land MinesStep 7: Looking out for Land Mines

Apart from information gathering, should be concern about researching the implication of your alliance.

Be careful that a majority of your member do not have an issue with the company that you may be developing an alliance because you don’t want to be in the middle of their battle.

For example, most of your member are currently support the green or environmentally friendly, but the company in which you may develop an alliance has some environment issue to face.

Step 8: Obtaining Internal ApprovalStep 8: Obtaining Internal Approval

Obtaining clear approval from the CEO and top advisory staff is a critical element in managing this place of the alliance-development process.

If reliable internal approvals are not obtained, a decision maker may emerge later on in the process and pull the rug out from under the relationship. Besides the potential loss of a good business opportunity, and a rather embarrassing career moment, this may also be seen by the potential partner as an inability by your company to be trusted.

Step 9: Creating an Implementation Step 9: Creating an Implementation PlanPlan

Whatever your choice, this is the moment when the alliance-planning team must translate their excitement, knowledge, desire for benefit, and awareness of the cost of the alliance to those whose careers may depend on the alliance’s outcome so that everyone who involved will be prepared to start working on the alliance implementation plan.

Step 10: If Partner Development Step 10: If Partner Development lags, lags,

Try a Quick FixTry a Quick FixSometimes the partnership-development process

begins to slow down or lag. Industry changes may cause one partner’s attention to be distracted and the level of project importance may start moving from Market Extending to Experimental or worse.

This is the time for a “quick fix” solution.

Step 11: Applying the Mindshift Step 11: Applying the Mindshift Method Method

to the Partner Selectedto the Partner SelectedThe purpose of applying the Mindshift method is to

understand how rapidly your company will respond to changes in the environment, a downturn, or competitive forces as well as how the culture and relationship fit will work with your company, your managers, and the project in contrast to theirs.

Step 12: Final Predeal Evaluation of Step 12: Final Predeal Evaluation of

All Relevant InformationAll Relevant InformationAll the information you’ve gathered should be assembled

prior to the final step of having your attorneys draft an agreement.

The question must be asked one more time: Does the opportunity meet your objectives? Some time

will have passed since the initial contact with the candidate, and the fortunes of their operations may have changed. Managers may have come and gone, the industry could have changed – that may increase risks and decrease the chances for success. You may decide to modify your original ranking of the company to a lower one.

Step 13: Managing Any Predeal Step 13: Managing Any Predeal GlitchesGlitches

Include all the stakeholders in the final stakeholders in the final stage of relationship development.

This is the time to look out for unexpected issues to arise. If someone appears at this moment who doesn’t favor the deal, he or she may ultimately destroy it.

Step 14: Negotiating the DealStep 14: Negotiating the Deal

Choose a style that feels comfortable and will work best with your partner. However, styles that work well in one country may be ineffective in other countries.

2 approaches to reach general agreementProblem solving approach:

In joint-venture and R&D partnerships where collaborative problem solving is acceptable.

Debate and persuasion approach:U.S. executives will always prepare for any dispute.

However, it may not be accept in other cultures because it requires people to be comfort with confrontation.

Negotiation styles in different Negotiation styles in different culturescultures

Adapt business and negotiation styles to be compatible with the culture

In U.S. their cultural trait tends to oversell. U.S. executive became irritated by Chinese people who negotiate before meal times.

In U.K. understatement works better. Slow down the sales approach will be less irritated to them.

The choice of alliance team members and their personalities is sending a nonverbal message by the status of participants

Too high status may threaten and embarrass in non-U.S. culture because your partner may fear that they may insult you by not having same status.

Too low status or out-group could cause insult.

Someone who is well respected, trusted, and from the right in-group may be able to create trust in the most difficult circumstances.

Leader personalityLeader personality

Ego can be a huge incentive in culture where power is in the hand of people at the top of a hierarchy. But, ego can be a major deal breaker in individualistic cultures.

Beware in the cultural differences because confrontation behavior can be insulting in other countries and is not considered amusing as is in the U.S.

Coming to an agreement

Western cultures: written word and signature are the main evidence in the agreement.

Other cultures: huge transfers of goods and money may take place without any formal agreement.

Step 15: Managing the Legal Step 15: Managing the Legal ProcessProcess

Lawyer can either destroy good relationship or improve understanding of the issues.

Some managers insist on having legal counsel in the alliance-planning session so that the lawyers are aware of the issues discussed.

However, many managers do not want their in-house counsel present at the preliminary alliance discussions.

Managers that recognize value of educating in-house counsel will want them to be involved in the early stages in order to understand the way the organization makes decisions.

Legal counselLegal counsel

Meeting is held to start building mutual trust Having a legal counsel in the room may give wrong

impression that the meeting is a negotiation rather than a trust-building.

Life cycle stage of company leads to differences in behaviorSmall companies refuse to bring their lawyers to the

meeting because of high cost of legal fees Recommendation parties involve in alliance should

create a simple memo of terms that have been agreed such as information about liabilitystate regulationsother reasons

Structuring corporate strategic Structuring corporate strategic partner arrangementspartner arrangements

1. Nondisclosure agreements: agreements to keep confidential information that is designated as confidential by either party.

2. Evaluation agreements: agreements giving one party the ability to examine the other party’s information or products for the purpose of evaluating strategic fit for a defined period of time, with the added requirement of confidentiality.

3. Letter of intent: specific expressions of intent to do business together in a defined arena.

Short-term and long-term Short-term and long-term agreementagreement

Long-term: a plan for how conflict will be resolved through positive methods to maintain good relationship rather than lawsuit. Refer problem to higher

levels of managementTermination not best

solution when embedded info has been transferred.

Short-term: exit strategies should be clearly set in the agreement.

•Alliance can structured as short term and leaving open the opportunity for relationship to migrate up into longer-term

Thank YouThank YouForFor

Your AttentionYour Attention

Group 2