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module 2-strategic alliances
1) M&As can be seen as a way to create full integration at one extreme of the spectrum
2) divestitures can be seen as a way to separate out units into independent firms at the other end of the spectrum
3) the alternatives in the middle, should be seen as potential alternatives to full
integration and full arm's length separation
4) how to manage these
strategic alliances effectively
Strategic alliances
relational contracts
licensing
equity alliances
joint ventures
why firms do strategic alliances
to access capabilities or markets more quickly and surely
to reduce each of their asset commitments and maintain some flexibility to invest in other opportunities.
to learn from its partner and upgrade resources.
sharing cost, risk as well as rewards
building a common technology standard
problems with strategic alliances
partner become potential
competitor
learning race
having problem of coordination
joint investments, risks and responses
conflict
transaction costs ( adverse selection moral hazard, and hold-up problem)
the element that make alliances work effectively
alliance structure
ongoing management
partner selection
structure of alliance
contractual terms
structural arrangements
contractual safeguards
credible commitments
walling off key technology
manage the risk, opportunism, and conflict
relational governance
commitments
example
is an arrangement between two companies to undertake a mutually beneficial project while each retains its independence.