How to Manage Alliances Strategically

How to Manage Alliances Strategically Description

This is an MIT Sloan Management Review Article. Two key strategic alliances were crucial to the early success of Tesla Motors Inc. A partnership with Daimler AG provided a much-needed cash injection; a partnership with Toyota Motor Corp. gave Tesla access to a world-class automobile manufacturing facility located near its headquarters in Palo Alto, California. In 2014, Tesla Motors signed yet another strategic alliance -- this one with Panasonic Corp., a world leader in battery technology.The alliances highlight the fact that companies may not need to own all of the resources, skills, and knowledge necessary to undertake key strategic growth initiatives. When conditions are uncertain and the stakes are high, partnerships can be an attractive alternative to going it alone or to mergers and acquisitions. Accordingly, many companies now maintain alliance portfolios. As a result, executives must manage multiple alliances with diverse partners across the globe simultaneously. However, the skills required to develop and manage alliances are still not well understood. In this article, the authors attempt to address these shortcomings by offering an integrative and holistic framework of alliance management along with practical guidance. Although strategic alliances are often viewed as a critical tool for pursuing growth opportunities, recent survey data suggest that roughly half of alliance portfolios underperform. Although the assessments of performance are subjective, it is fair to say that many alliances fail to live up to expectations. Why? As the authors found in their research, companies move at different rates down the learning curve related to managing alliances. Smaller companies may have advantages in this relative to larger partners because they are usually less complex internally and have stronger incentives to learn. Moreover, the benefits of alliance experience depend on the extent to which the organization can actively capture and leverage its experience (for instance, one partner may be able to draw additional benefits from an alliance, while the other may continue to make the same old mistakes). Hence, the authors argue, companies need to take a holistic and strategic approach. Tesla, for instance, doesn't view its alliances as individual deals but as part of an overall strategy to establish a new standard in automotive technology and, along the way, to gain a competitive advantage. Much prior research on alliance management has tended to focus on one aspect of the process -- for example, how to manage a stand-alone alliance. The authors note that executives often need to manage multiple alliances at once with partners in different geographies and at different stages of the alliance life cycle. Using the experience of Lego A/S as an illustration, the authors present a process framework with five distinct steps (partner selection, deal negotiation, execution, exit, and portfolio management).

Case Description How to Manage Alliances Strategically

Strategic Managment Tools Used in Case Study Analysis of How to Manage Alliances Strategically

STEP 1. Problem Identification in How to Manage Alliances Strategically case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of How to Manage Alliances Strategically case study

STEP 3. Industry Specific / Porter Five Forces Analysis of How to Manage Alliances Strategically case study

STEP 4. Evaluating Alternatives / SWOT Analysis of How to Manage Alliances Strategically case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis How to Manage Alliances Strategically case study

STEP 6. Recommendations How to Manage Alliances Strategically case study

STEP 7. Basis of Recommendations for How to Manage Alliances Strategically case study

Case Analysis of How to Manage Alliances Strategically

How to Manage Alliances Strategically is a Harvard Business (HBR) Case Study on Strategy & Execution , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. How to Manage Alliances Strategically is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. How to Manage Alliances Strategically case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. How to Manage Alliances Strategically will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

How to Manage Alliances Strategically case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Strategy & Execution, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of How to Manage Alliances Strategically, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The How to Manage Alliances Strategically case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Strategy & Execution Solutions

In the Texas Business School, How to Manage Alliances Strategically case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – How to Manage Alliances Strategically

Step 1 – Problem Identification of How to Manage Alliances Strategically - Harvard Business School Case Study

The first step to solve HBR How to Manage Alliances Strategically case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Alliances Alliance is facing right now. Even though the problem statement is essentially – “Strategy & Execution” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Alliances Alliance, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the How to Manage Alliances Strategically.

The external environment analysis of How to Manage Alliances Strategically will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in How to Manage Alliances Strategically case study. PESTEL analysis of " How to Manage Alliances Strategically" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with How to Manage Alliances Strategically macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for How to Manage Alliances Strategically

To do comprehensive PESTEL analysis of case study – How to Manage Alliances Strategically , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact How to Manage Alliances Strategically

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on How to Manage Alliances Strategically

Government policies have significant impact on the business environment of any country. The firm in “ How to Manage Alliances Strategically ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Alliances Alliance is operating, firms are required to store customer data within the premises of the country. Alliances Alliance needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. How to Manage Alliances Strategically has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Alliances Alliance in case study How to Manage Alliances Strategically" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Alliances Alliance in case study “ How to Manage Alliances Strategically ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Alliances Alliance in case study “ How to Manage Alliances Strategically ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on How to Manage Alliances Strategically

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ How to Manage Alliances Strategically ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Alliances Alliance can compete against other competitors.

Government Scheme & Subsidies Impact on How to Manage Alliances Strategically

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at How to Manage Alliances Strategically case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on How to Manage Alliances Strategically

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Alliances Alliance needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact How to Manage Alliances Strategically

Social Factors that Impact How to Manage Alliances Strategically

Technological Factors that Impact How to Manage Alliances Strategically

Environmental Factors that Impact How to Manage Alliances Strategically

Legal Factors that Impact How to Manage Alliances Strategically

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in How to Manage Alliances Strategically case study. PESTEL analysis of " How to Manage Alliances Strategically" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: How to Manage Alliances Strategically case study solution