View
216
Download
0
Embed Size (px)
Citation preview
Strategic Strategic AlliancesAlliances
9-9-11Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Chapter 9Chapter 9
Strategic Management & Competitive Advantage – Barney & Hesterly 2
Strategic AlliancesStrategic Alliances
9-9-22Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Mission Objectives
ExternalAnalysis
InternalAnalysis
StrategicChoice
StrategyImplementation
CompetitiveAdvantage
The Strategic Management Process
Corporate LevelStrategy
Which Businessesto Enter?
• Vertical Integration
• Diversification
• Strategic Alliances
• mode of entry
Strategic Management & Competitive Advantage – Barney & Hesterly 3
Strategic AlliancesStrategic Alliances
9-9-33Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Strategic Alliances Defined
Strategic Alliance:
Any cooperative effort between two or moreindependent organizations to develop, manufacture, or sell products or services
Strategic Management & Competitive Advantage – Barney & Hesterly 4
Strategic AlliancesStrategic Alliances
9-9-44Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Motivation for Alliances
Create economic value by:
• accessing complementary resources and capabilities
• leveraging existing resources and capabilities
An alliance is an organizational form of exchangethat:
• should produce a gain from trade due tosome comparative or absolute advantage
Implication: Choose partners that are better atsomething than you are (complementary resources)
Strategic Management & Competitive Advantage – Barney & Hesterly 5
Strategic AlliancesStrategic Alliances
9-9-55Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Canada MexicoWheat
bushels/hr.
Bananaslbs./hr.
6
4
1
5
ExchangeRate:
1 bu. = 1 lb.
Canada: 2 hrs. = 6 bu. Wheat and 4 lbs. Banana, or2 hrs. = 12 bu. Wheat
By trading, Canada can get: 6 bu. Wheat and 6 lbs. Bananas
Gains from Trade
Motivation for Alliances
A ½ hour gainfrom trade!
Strategic Management & Competitive Advantage – Barney & Hesterly 6
Strategic AlliancesStrategic Alliances
9-9-66Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Canada MexicoWheat
bushels/hr.
Bananaslbs./hr.
6
4
1
5
ExchangeRate:
1 bu. = 1 lb.
Mexico: 2 hrs. = 1 bu. Wheat and 5 lbs. Bananas, or2 hrs. = 10 lbs. Bananas
By trading, Mexico can get: 5 bu. Wheat and 5 lbs. Bananas
Gains from Trade
Motivation for Alliances
A 4 hour gainfrom trade!
Strategic Management & Competitive Advantage – Barney & Hesterly 7
Strategic AlliancesStrategic Alliances
9-9-77Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Three TypesOf
Alliances
NonequityAlliance
Contracts
• licensing• supply &
distributionagreements
JointVenture
EquityAlliance
Cross EquityHoldings• partners own
stakes ineachother
Joint EquityHoldings• independent
firm iscreated
Strategic Management & Competitive Advantage – Barney & Hesterly 8
Strategic AlliancesStrategic Alliances
9-9-88Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
How Strategic Alliances Create Value
Improve Current Operations
Shaping the Competitive Environment
Facilitating Entry and Exit
ValueCreation
Strategic Management & Competitive Advantage – Barney & Hesterly 9
Strategic AlliancesStrategic Alliances
9-9-99Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
How Strategic Alliances Create Value
Improving Current Operations
Exploiting economies of scale
• a partner brings increased market shareand/or manufacturing capacity
Learning from partners
• a partner brings technology and/ormarket knowledge
Risk and cost sharing
• a partner bears a portion of the risk and/orcost of the alliance
Strategic Management & Competitive Advantage – Barney & Hesterly 10
Strategic AlliancesStrategic Alliances
9-9-1010Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
How Strategic Alliances Create Value
Shaping the Competitive Environment
Facilitating technology standards
Facilitating tacit collusion
• partners may agree on a standard and avoida market battle for the standard
• partners may communicate within an alliancein subtle, legal ways whereas the samecommunication between competitors outsidean alliance would be illegal
Strategic Management & Competitive Advantage – Barney & Hesterly 11
Strategic AlliancesStrategic Alliances
9-9-1111Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
How Strategic Alliances Create Value
Facilitating Entry and Exit
Low-cost entry into new industries
Low-cost exit from industries
Managing uncertainty
Low-cost entry into new geographic markets
• a partner provides instant access and legitimacy
• a partner is an informed buyer
• alliances may serve as ‘real options’
• partners provide local market knowledge, access,and legitimacy with governments and customers
Strategic Management & Competitive Advantage – Barney & Hesterly 12
Strategic AlliancesStrategic Alliances
9-9-1212Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Challenges to Value Creation and Allocation
Incentives to Misappropriate Value (Cheat)
An alliance is an exchange context in which:
• partner inputs may be difficult to monitor
• actual value creation may be difficult to monitor
• value appropriation (allocating the value) may be:
• difficult to monitor
• subject to power dynamics
Strategic Management & Competitive Advantage – Barney & Hesterly 13
Strategic AlliancesStrategic Alliances
9-9-1313Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Challenges to Value Creation and Allocation
Three Forms of
MisappropriatingValue
AdverseSelection
MoralHazard
Holdup
misrepresentingthe value of inputs
providing inputsof lesser valuethan promised
exploiting the transaction-specific investment of partners
Strategic Management & Competitive Advantage – Barney & Hesterly 14
Strategic AlliancesStrategic Alliances
9-9-1414Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Sustained Competitive Advantage
Are strategic alliances rare?
As a form of organizing economic exchange, NO!
The sources of value creation within alliancesmay be rare.
However,
• firms may form a combination of complementaryresources within an alliance that is rare
• the stock of such complementary resources maybe limited so that first movers have a rare combination
Strategic Management & Competitive Advantage – Barney & Hesterly 15
Strategic AlliancesStrategic Alliances
9-9-1515Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Sustained Competitive Advantage
Are strategic alliances costly to imitate?
As a form of organizing economic exchange, NO!
However,
The resource combinations that create value inalliances may be very costly, if not impossible,to imitate if:
• the organizational form per se is easily duplicated
• the value creating combination depends onsocial complexity (trust), causal ambiguity,and/or historical uniqueness
Strategic Management & Competitive Advantage – Barney & Hesterly 16
Strategic AlliancesStrategic Alliances
9-9-1616Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Sustained Competitive Advantage
Are strategic alliances substitutable?
Substitutes for Strategic Alliances
InternalDevelopment
Mergers &Acquisitions
If:
• no partneris available
• transaction-specificinvestment is high
• low uncertainty aboutthe investment
If:
• there are noanti-trust issues
• low uncertainty aboutthe investment
• firms can beintegrated easily
• value of combined firms isnot tied to independence
Strategic Management & Competitive Advantage – Barney & Hesterly 17
Strategic AlliancesStrategic Alliances
9-9-1717Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Organizing Strategic Alliances
Governance Responses to the Challenges ofValue Creation and Allocation
Explicit Contracts& Legal Sanctions
Equity InvestmentsJoint Ventures
Formal/Codified
• imposes costsfor cheating
• creates mutualunderstanding
• conflict resolution
• aligns interests ofpartners throughownership of independent firm
• aligns interests ofpartners throughownership in each other
• direct effect • indirect effect
Strategic Management & Competitive Advantage – Barney & Hesterly 18
Strategic AlliancesStrategic Alliances
9-9-1818Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Trust Firm Reputations
Informal
Organizing Strategic Alliances
Governance Responses to the Challenges of Value Creation and Allocation
• the shadow of thefuture constrainscheating
• may allow partnersto exploit opportunitiesthat would be infeasiblewith other mechanisms
Strategic Management & Competitive Advantage – Barney & Hesterly 19
Strategic AlliancesStrategic Alliances
9-9-1919Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Organizing Strategic Alliances
Governance Responses to the Challenges of Value Creation and Allocation
These responses are not mutually exclusive:
• contracts may be used with equity investmentsand joint ventures along with firm reputation and trust
• reputation and trust come into play in every typeof alliance
Reputation and trust may be sources of competitiveadvantage because they are costly to imitate
Strategic Management & Competitive Advantage – Barney & Hesterly 20
Strategic AlliancesStrategic Alliances
9-9-2020Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
International Expansion
Alliances may be attractive because:
• local market knowledge is usually critical
• governments may require a local partner
• international expansion may be:
• fraught with uncertainty
• high risk
• expensive
• alliance investment may be more easily reversedthan internal development or acquisition
Strategic Management & Competitive Advantage – Barney & Hesterly 21
Strategic AlliancesStrategic Alliances
9-9-2121Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Summary
• create alliances that will produce gainsfrom trade—complementary resources
• identify the sources of value creation
• assess the likelihood of challenges to valuecreation and allocation
• adopt appropriate governance responses to the challenges to value creation and allocation
Successful alliance managers will:
Strategic Management & Competitive Advantage – Barney & Hesterly 22
Strategic AlliancesStrategic Alliances
9-9-2222Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Summary
Alliances may generate competitive advantage if:
• combinations of complementary resourcesmeet the VRIO criteria
• governance responses meet the VRIO criteria
The Big Challenge of Strategic Alliances:Maximizing gains from trade whileminimizing the threat of cheating
Strategic Management & Competitive Advantage – Barney & Hesterly 23
Strategic AlliancesStrategic Alliances
9-9-2323Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Prisoner’s Dilemma GameOn each round of play each team can choose either Strategy Aor Strategy B.
The objective is to maximize your payoff.
Payoff MatrixTeam I
Tea
m I
I
I. $3,000II. $3,000
I. $-0-II. $5,000
I. $5,000II. $-0-
I. $1,000II. $1,000
Strategy A Strategy B
Str
ateg
y B
Str
ateg
y A
Strategic Management & Competitive Advantage – Barney & Hesterly 24
Strategic AlliancesStrategic Alliances
9-9-2424Copyright © 2008 Pearson Prentice Hall. All rights reserved. Copyright © 2008 Pearson Prentice Hall. All rights reserved.
Payoff Schedule
Team I Team II
Round 1 _____________ _____________
Round 2 _____________ _____________
Round 3 _____________ _____________
Round 4 _____________ _____________
Round 5 _____________ _____________
Total _____________ _____________
Round 6 _____________ _____________