Strategic Alliance is an agreement between companies(partners)
to reach objectives of a common interest.
Slide 3
Joint Venture: independent distinct Joint Venture: These are
the results of the agreements based on which the partner companies
remain independent and decide to create a new organization that is
legally distinct. The share of participation can be various such as
50/50, 49/51, 30/70 and so on. Most joint ventures limit
collaboration to specific functions. For example, only R&D, not
product development and distribution. Joint ventures that cover all
possible functions are rare.
Slide 4
There are two types of joint ventures: Project-based Joint
Venture: project by project basis specific project Project-based
Joint Venture: This type of alliance may commonly be used on a
project by project basis. In other words, the creation of a
separate entity through the alliance of two or more organizations
for the purpose of carrying out a specific project. Full-blown
Joint Venture: multiple projects Full-blown Joint Venture: This
type of alliance requires significant resource input. It is
expected to remain a viable entity for a significant length of
time, certainly spanning multiple projects.
Slide 5
In a joint venture with Tepe Construction of Turkey, Turner
construction provided construction management services for Trkiye
IsBankas Headquaters tower. Turner International renovated six
luxury hotels throughout Turkey in a joint venture with
Pro^ge.
Slide 6
An energy company of USA, EMS, a leading provider of pipeline
management services has joined forces on a Joint Venture Agreement
with Turkish based, VASTA Company. geographically a prime location
EMSs chief executive says that; Turkey is geographically a prime
location for providing our joint venture services throughout the
Middle East, Western Asia and Eastern Europe. high technology Vasta
CEO says that; Our partnership with EMS will enable the utilization
of high technology in the petroleum and natural gas infrastructure
throughout the Country.
Slide 7
Consortia: Consortia: This type of alliance involves two or
more organizations. Their objective is a particular initiative
particular project particular initiative or a particular project.
The most significant examples are in construction such as aerospace
construction. (European Airbus Consortium)
Slide 8
Contract of Partnership in Specific Functions: One or more
companies decide to collaborate in one or more functions such as
marketing, without R&D, production or other functions, without
starting a new, legally distinct entity. Ownership of Capital:
Ownership of Capital: The alliance can be stock participation based
on stock participation of one or more of the partners by
others.
Slide 9
Networks: Networks: These are agreements in which two without
or more organizations collaborate without formal relationships
formal relationships, but through mechanisms that provide
reciprocal advantages. Code sharing agreements among airlines can
be considered networks. These agreements through which passengers
can fly with one ticket, using several airline partners.
Slide 10
Franchising: Franchising: This is an agreement in which a
company (franchiser) allows another products or services
(franchisee) to sell its products or services. A franchising
contract is set for a specific period of time. The franchisee pays
a royalty to the franchiser for the buying rights. Franchising
offers advantages to both parties.
Slide 11
The most notable examples for franchising is Coca Cola and
McDonalds.
Slide 12
Licensing: technologydistribution network manufacture its
products Licensing: This is an agreement in which a company allows
another (exclusive licensing) or multiple others (non-exclusive
licensing) the right to use its technology, distribution network or
to manufacture its products. The licensee pays a fixed amount
and/or royalty or fee for the rights that are ceded to it. For an
innovative company licensing offers the possibility of presence in
multiple markets. The risk is that the company, ceding its own
know- how to potential competitors, therefore loses control over
its core technology.
Slide 13
The two companies made a cross-licensing alliance. Motorola
ceded part of its microprocessor technology, in exchange Toshiba
allowed Motorola part of its memory chip technology. Therefore, the
risk of ceding technology was shared.
Slide 14
Vertical Alliance: complementary services Vertical Alliance:
These are the alliances formed between entities that provide
complementary services in industry. The alliance between structural
steel erector and structural steel fabricator can be considered as
a vertical alliance. Horizontal Alliance: compete Horizontal
Alliance: These are the alliances formed between entities that
compete. This type alliances are more common in the construction
industry.
Slide 15
Short-term Alliances: operational project purposes Short-term
Alliances: These alliances are characterized as primarily for
operational, or project purposes. Long-term Alliances: marketing
purposesspecific technology Long-term Alliances: These alliances
are used for marketing purposes or offer a specific
technology.
Slide 16
Strategic alliances are based on the partnering concept. While
seeking for a partner, construction firms should consider the
common features of the potential partners. Each company should have
complementary products based on compatible technology, should share
a cooperative business philosophy and so on.
Slide 17
Compatibility: Compatibility: It is easier to establish whether
compatibility exists by looking at previous alliances. Capability:
Capability: Generally one partner seeks in another the capabilities
that contribute to strengthening an alliance. Commitment: The
partner can be compatible, with complementary capabilities, but it
must also believe in the alliance.
Slide 18
product In the 70s, the main factor was the performance of the
product. Alliances aimed to acquire the best raw materials.
consolidation In the 80s, the main objective became consolidation
of the companys position in the sector, using alliances. There was
a true explosion of alliances. capabilitiescompetencies In the 90s,
collapsing barriers between many geographical markets and the
blurring of borders between sectors brought the development of
capabilities and competencies to the center of attention.
Slide 19
Competitiveness within the construction industry is increasing
as market borders are being expanded through use of widely
available telecommunications and increasingly efficient
transportation systems. In this competitive environment, firms must
look to a variety of strategies. Alliance formation is one way to
survive in such an environment.
Slide 20
Access Technology 20% Share Risks 15% Secure Financing 15%
Enter New Markets 15% Serve Core Customers 10% Improve Competitive
Position 10% Meet Foreign Government Requirements 8% Learn Local
Markets 7%
Slide 21
Slide 22
Enhance Competitive Position20% Increase Market Share17% Obtain
New Work15% Broaden Client Base13% Increase Cultural
Responsiveness10% Reduce Risk9% Increase Profits9% Increase Labor
Productivity7% Benefits of Strategic Alliances
Slide 23
Slide 24
Tangible Assets: Tangible Assets: Tangible assets include
resources that are easily and regularly valued and traded in the
market place. Labor, equipment, financial strength and raw material
are examples of such assets. Intangible Assets: Intangible Assets:
Intangible assets are becoming increasingly recognized. Technology,
necessity and legitimacy are the intangible assets valued by
clients.
Slide 25
Technology: Technology: Construction skill and design skill are
technological assets of a construction firm. Necessity: Necessity:
Necessity is considered as to focus on a specific group such as
socially disadvantaged groups (minority owned businesses) or other
similar groups. Legitimacy: Legitimacy: Legitimacy is considered as
clients trust, and often expressed as an organizations reputation,
image or prestige.
Slide 26
Asset asymmetry means a firms assets are significantly more or
less than the other venture partners. Lesser-resourced partners
experiences greater return than its stronger counterparts. Positive
legitimacy asymmetry within a joint venture was shown to be
beneficial in gaining organizational return.
Slide 27
Differences in National Culture:. Differences in National
Culture: Firms have habits and values according to the place where
they are located. A firms values are largely a reflection of its
national culture. Differences in national culture of the firms does
not have a significant effect on international joint ventures.
Differences Between Host Country and Joint Venture: Differences
Between Host Country and Joint Venture: Differences between the
national culture of the joint venture and the culture of host
country does not effect performance of the joint venture
significantly.
Slide 28
Differences in Organizational Culture: Differences in
Organizational Culture: Organizational culture relates primarily to
shared beliefs in organizational practices and processes.
Differences in organizational cultures of the firms has a positive
affect on the joint venture. The possible reasons of this situation
are: The culture differences may help partners learn how to operate
with a foreign partner and enhance the firms learning capabilities.
Efforts of partner companies to prevent potential miscommunications
and conflicts due to cultural differences.
