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STRATEGIC ALLIANCES AND NETWORKS, th, 1 (1), que-es-outsourcing, th (2),…
STRATEGIC ALLIANCES AND NETWORKS
1. DEFINING STRATEGIC ALLIANCES
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Reduce risks
Increase ability
Expanding the market
Cooperation between companies to achieve common goals.
Share knowledge and resources
Enhance competitiveness
2. FORMS OF STRATEGIC ALLIANCE
Licensing
Common and well-established
The licensor will perform the role of ‘teacher’
Potential problems
Supplier relations
Informal alliance
Lower production costs
Reduced R&D expenses
Improved material flow
Reduced administration costs
Outsourcing
The delegation of non-core operations
The decision to outsource
Transferring or sharing management control and/or decision
A joint venture
A separate legal entity
Joint ventures share costs and benefits from R&D projects.
‘Stand alone’.
Collaboration (non-joint ventures)
Provides the opportunity to extend the cooperation
Many university departments work closely with local firms
A consortium
A large-scale activity
The rationale for joining an R&D consortium
The 'virtual company'
Business operations are outsourced to unknown vendors.
Aspects of control that may be lost
Intellectual property, skills and know-how may also be lost
Industry clusters
Geographic concentrations
Increase the productivity
Geographic, cultural and institutional proximity
The global economy is becoming more complex.
Innovation networks
‘Virtual organisation’
Some networks have been described as federated
Temporary web
Strategic partnerships
3. NEGOTIATING A LICENSING DEAL
Terms
Clear definitions
Scope of license
Intellectual property rights
Restrictions
Industry, market, territory
Prior licensee rights
Commercial rights
Improvements
Ownership of improvements
Obligations under the deal
Financial Terms
Payments: Royalties, milestones, equity
Currency and exchange rates
Minimum payments (especially important for exclusive licenses)
Representations and Warranties
Ability to enter into the agreement
Validity of the intellectual property
Standard warranty disclaimer
Infringement
Handling of intellectual property infringement
Distribution of proceeds from litigation
Confidentiality
Confidentiality agreement
Term of confidentiality agreement
Granted Rights
Licensed intellectual property rights (patents, know-how)
License type (exclusive, co-exclusive, non-exclusive)
Arbitration
Disagreement resolution
Specification of rules
Independent organization
Cost-effective
Termination
Right to end agreement
Breach of contract
Notice period
Consequences of breach
Expiration of license
Know-how and confidentiality
4. RISKS AND LIMITATIONS WITH STRATEGIC ALLIANCES
Management and Cultural Issues
Failure to understand and adapt to new management style
Failure to understand cultural differences
Commitment and Trust
Lack of commitment to succeed
Insufficient trust
Strategic Misalignment
Operational Issues
Unrealistic Expectations
5. THE ROLE OF TRUST IN STRATEIC ALLIANCES
Concept of trust
Personal judgement
Carries an emotional
Cognitive dimension
Types of trust
Process
Tied to past or expected exchange
Personal
Tied to a person
Institutional
Tied to formal structures
Competence trust
Confidence ability to perform properly
Contractual trust
Honouring rules of exchange
Goodwill trust
Expectations of open commitment
Main risks
Dependence on the supplier
Hidden costs
Loss of competencies
Service provider's lack of necessary capabilities
Social risk
Inefficient management
Information leakage
6. THE USE OF GAME THEORY TO ANALYSE STRATEGIC ALLIANCES
Summary Defining the Game
Strategic environment
Players
Strategies
Payoffs
Rules
Time-frame for decisions
Nature of the conflict
Nature of interaction
Information
Game Theory
Study of rational behavior
Interactive
Interdependent
Research using game theory
high opportunity cheat
High behavioural uncertainty
Poor stability
Longevity & performance
The repeated game
