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STRATEGIC ALLIANCES AND NETWORKS, ROLE OF TRUST - Coggle Diagram
STRATEGIC ALLIANCES AND NETWORKS
Forms of Strategic alliances
Licensing
Well-established
Often leading to extended collaborations.
Acquiring technology
Relatively common
Supplier Relations
Based on close supplier collaboration
Cost reduction
Improved material flow
Reduced R&D expenses
Outsourcing
Delegating non-core operations to external entities.
Reduce costs
Focus on key competencies
EXAMPLE
WhatsApp outsourced much of its
app development
to Redmadrobot
Joint Ventures
Established for specific projects.
Separate legal entity created with shared equity between partners
EXAMPLE
Sony-Ericsson joint venture for mobile phones
Collaboration
Less formal than joint ventures
Extendable over time
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Lacking a legal entity
Flexible
R&D Consortia
**
Common in high-cost, high-risk projects.
A group of firms pooling resources for large-scale research activities.
Industry Clusters
Increased productivity and innovation.
Geographic concentrations of interconnected companies.
EXAMPLE
Silicon Valley as a hub of tech innovation
dense concentration
of companies
self-sustaining
environment
rapid
knowledge transfe
r and the development of
specialized infrastructure
Innovation Networks
Informal networks of firms collaborating to innovate
Often involve sharing knowledge and technology.
NEGOTIATING A LICENSING DEAL
Terms for the Agreement
Define the company (affiliates, subsidiaries, parent)
Specific products/processes involved
EXAMPLE
Microsoft defined licensed products and processes clearly
Managed future technology improvements in the agreement
Rights Granted
Specify intellectual property (IP) rights granted
EXAMPLE
Focused on maintaining confidentiality in open-source
Defined IP rights to balance corporate control and open-source use
Confidentiality
Maintain confidentiality throughout the agreement
License Restrictions
Limitations on industries, markets, territories, prior licensee rights, and licensor’s commercial rights
Patent
Know-how
Exclusive/non-exclusive
Termination
Conditions
Terminating the agreement
Resolving breaches
Handling IP post-expiration
EXAMPLE
Altered traditional termination by foregoing exclusive rights
Removed market/territory restrictions by opening patents
Consideration (Monetary Value)
Royalties
Milestone payments
Minimum annual payments
EXAMPLE
Apple and Qualcomm Licensing Battle
Handled third-party patent infringement issues
1 more item...
Infringement
Handling third-party infringement
Sharing recovery proceeds
Representations/Warranties
Parties need to ensure their capacity
The agreement
The validity of the IP
Improvements
Clarify who holds rights to future technological improvements
Arbitration
Saving legal costs
:
Disputes
THE USE OF GAME THEORY
Game theory in strategic alliances
High opportunity to cheat
High behavioural uncertainty
Poor stability, longevity and performance
Several strategic alliances with competitors
To make its Betamax technology the industry standard
The alliance existed in name only
The repeated game
EXAMPLE
Impact long-term gains
Maintaining balanced competition
To play, do not confess
More realistic interpretation
The prisoner’s dilemma
Cooperation is the mutually advantageous
Non-cooperation provides high-risk opportunities to both parties
EXAMPLE
Fear of losing technological or market advantage
Had numerous patent disputes
Damage both companies' reputations
STRATEGIC ALLIANCES
An agreement to share knowledge or resources, which could be beneficial to all parties involved
PROBLEMS
Competitors
Managing joint investments
Conflict
Bad partner
Moral hazard
Hold-up
EXAMPLE
Daimler-Benz focused on
quality
; Chrysler prioritized
cost-efficiency
Conflicting approaches to quality, innovation, and cost management
Low employee morale, unmet synergy expectations, continuous disagreements
End relationship
MAKING ALLIANCES WORK
Select "Good" partner
Help all parties
Complementary assests
Contribute value assests
Fair
EXAMPLE
effective collaboration through complementary strengths
integrate Microsoft productivity tools with Samsung mobile devices
Structure
Contractual terms
Credible commitments
Managing
Trust
Learn from partner
Adapt structure and management over time
ROLE OF TRUST
CONCEPT OF TRUST
Decision to trust
MADE ON
Prior professional and or social knowledge
Trust
:red_cross:
Confidence
Both are
based on expectations
about the future
Trust has the risk of opportunistic behaviors by others
Emotional + cognitive dimension
TYPE OF TRUST
Process
Past experiences
Expected exchange
Personal
Tied to a person
Family background
Religion
Ethnicity
EXAMPLE
Strong personal trust based on their shared experiences and mutual understanding
Institutional
Formal structures
based on
Specific attributes
Competence trust
Believe others will perform properly
EXAMPLE
Relied on Foxconn’s expertise in electronics manufacturing, trusting them to meet high production standards and deliver on time
Handle complex manufacturing processes with precision, efficiency, and quality control
Contractual trust
Respect the rules of exchange
Goodwill trust
Mutual expectations of open commitment
Extends beyond contractual obligations
EXAMPLE
Long-term partnership between a supplier and a manufacturer
Supplier fulfills extra requests beyond contract in a peak seasons
Trust that the manufacturer will continue the partnership in good faith
MAIN RISKS
Others
Depend on the supplier
Hidden costs
Loss of competencies
Lack of necessary capabilities
Social risk
Inefficient management
Information leakage
Outsourcing
Multiple partners over short
periods of time
Little protection of internal core competency
Information leakage
