15 - Strategic Alliances and Networks
1. Are inter-organizational relationships evolving into the new trend favoring
‘competition’?
The challenges of current business environment have dramatically changed inter-
organizational relationships. Organizations are pressued to partner with others due
to scarcer resources, pressure from distributors, and more turbulent, unpredictable
markets, to name a few.
In the past decade or so, new organizational forms, that of collaborating with
competition not for the sake of "favoring" them, but rather to achieve strategic
objectives of the company. Alliances and networks may help companies compete in
their respective industries sharing skills and resources, supply chain management,
etc.
2. Discuss and give examples of the different forms of strategic alliances and
networks.
Strategic alliances are more formal arrangements, sometimes under contract, for
companies to collaborate and act jointly. The are defining characteristics of
strategic alliances. First, organizations are independent despite having a set of
agreed goals. Second, they share benefits and control over the tasks. and finally,
they contribute on a continued basis in other strategic areas.
Horizontal strategic alliances are created by businesses that are involved in the
same business area. This means that the partners in the alliance used to be
competitors and come together In order to boost their position in the marketplace
and improve market power compared to other business rivals. Examples: The
partnership between Sina Corp and Yahoo in an effort to offer online auction
services in China.
A vertical strategic alliance is a partnership between a firm and its distributors.
Some companies make use of vertical alliances to produce their products and
services.
Examples: (1) Apple Pay and Master Card:
When Apple Inc. decided to get into digital payment business. It became a big
competitor to all existing companies in this field. Master Card become the first
company to provide Apple Pay’s services, and Apple Pay got the benefit of the
Master Card’s reputation.
(2) The HP and Microsoft global strategic alliance aimed to helping customers and
channel partners worldwide enhance productivity by using innovative technologies.
Networks Forms
(1) Vertical market networks, or marketing channel networks, reflect the
traditional view of vertical channel relationships, but go further to recognise the
focal firm that co-ordinates upstream supplier firms and downstream distributor
firms. Example: Ikea, a retailer of Swedish furniture has a global outsourcing
network of thousands of suppliers in 67 countries.
(2) Intermarket or concentric networks – this is largely the province of the
Japanese and Korean economies – the well-known keiretsu and chaebol ‘enterprise
groups’ representing alliances among firms operating in a variety of unrelated
industries. Example: Toshiba has around 200 companies in a direct exchange
relationship, and another 600 ‘grandchild companies’ below them.
(3) Opportunity networks – this is represented as a set of firms specialising in
various products, technologies or services that form temporary alignments around
specific projects or problems. Example:
1. Are inter-organizational relationships evolving into the new trend favoring
‘competition’?
The challenges of current business environment have dramatically changed inter-
organizational relationships. Organizations are pressued to partner with others due
to scarcer resources, pressure from distributors, and more turbulent, unpredictable
markets, to name a few.
In the past decade or so, new organizational forms, that of collaborating with
competition not for the sake of "favoring" them, but rather to achieve strategic
objectives of the company. Alliances and networks may help companies compete in
their respective industries sharing skills and resources, supply chain management,
etc.
2. Discuss and give examples of the different forms of strategic alliances and
networks.
Strategic alliances are more formal arrangements, sometimes under contract, for
companies to collaborate and act jointly. The are defining characteristics of
strategic alliances. First, organizations are independent despite having a set of
agreed goals. Second, they share benefits and control over the tasks. and finally,
they contribute on a continued basis in other strategic areas.
Horizontal strategic alliances are created by businesses that are involved in the
same business area. This means that the partners in the alliance used to be
competitors and come together In order to boost their position in the marketplace
and improve market power compared to other business rivals. Examples: The
partnership between Sina Corp and Yahoo in an effort to offer online auction
services in China.
A vertical strategic alliance is a partnership between a firm and its distributors.
Some companies make use of vertical alliances to produce their products and
services.
Examples: (1) Apple Pay and Master Card:
When Apple Inc. decided to get into digital payment business. It became a big
competitor to all existing companies in this field. Master Card become the first
company to provide Apple Pay’s services, and Apple Pay got the benefit of the
Master Card’s reputation.
(2) The HP and Microsoft global strategic alliance aimed to helping customers and
channel partners worldwide enhance productivity by using innovative technologies.
Networks Forms
(1) Vertical market networks, or marketing channel networks, reflect the
traditional view of vertical channel relationships, but go further to recognise the
focal firm that co-ordinates upstream supplier firms and downstream distributor
firms. Example: Ikea, a retailer of Swedish furniture has a global outsourcing
network of thousands of suppliers in 67 countries.
(2) Intermarket or concentric networks – this is largely the province of the
Japanese and Korean economies – the well-known keiretsu and chaebol ‘enterprise
groups’ representing alliances among firms operating in a variety of unrelated
industries. Example: Toshiba has around 200 companies in a direct exchange
relationship, and another 600 ‘grandchild companies’ below them.
(3) Opportunity networks – this is represented as a set of firms specialising in
various products, technologies or services that form temporary alignments around
specific projects or problems. Example:
