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Strategic Alliances: Collaboration with Your Competitors--and Win1 - page 2 / 4

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  • 2.

    Gain market access at a low cost.

  • 3.

    Gain insights into the partner’s business practices and strategies.

  • 4.

    Strengthen competitive advantages or core competencies.

  • 5.

    Develop benchmarks through examination of the practices of the alliance firm.

Three situations can result in mutual collaboration is most successful:

  • 1.

    The partners’ strategic goals converge while their competitive goals diverge.

  • 2.

    The size and market power of both partners are modest compared with industry leaders.

  • 3.

    Each partner believes it can learn from the other and at the same time limit access to

proprietary skills.

Companies may think it devious to partner with a competitor to “steal” their secrets and use them to their advantage. However, forming a strategic alliance is usually beneficial to both parties, each contributing what they know and learning what they need to know from the other company to accomplish a goal that is not possible otherwise.

Risks of collaboration Competitive Collaboration can strengthen both companies against outsiders, however it has triggered unease about the long-term consequences. Western firms commonly exhibit a lack of strategic intent in collaborative efforts. Western firm’s primary goal is often cost reductions when entering into a collaborative agreements. The strategic intent problem is amplified by the fact that Western firms generally place little or no emphasis on learning from the alliance partner. It is believed that Western firms often seek “quick and easy” fixes to organizational problems when they enter into a collaborative situation. Western firms often take on the teacher role in a collaborative situation and are quick to demonstrate and explain aspects of their business strategies and competitive advantage. The contribution of a Western firm in a collaboration effort is often in the form of technology and is relatively easy for the alliance firm to transfer. In many instances, Western firms are less skilled at limiting unintended competency transfer than their Japanese counterparts. As a result: 1. A firm’s competitive position may weaken relative to the alliance firm through operations or

strategic revelations.

  • 2.

    Unintended competencies are transferred or compromised.

  • 3.

    Dependence on the alliance firm often increases.

  • 4.

    Employees “go native” while working on the alliance partner’s turf.

One partner does not always have to give up more than it gains to ensure the survival of an alliance. There

are certain conditions which mutual gain is possible

1.

The partners’ strategic goals converge while their competitive goals diverge.

This means that each

2.

partner allows continued prosperity on both sides of the shared business. The size and market power of both partners are modest compared with industry leaders.

This usually

3.

forces the partners to accept that they are mutually dependent upon each other. Long-term collaboration may be so critical to both that neither will risk antagonizing the other. Each partner believes it can learn from the other and at the same time limit access to proprietary skills. Both partners need to believe that there is an equal chance for gain.

How to Build Secure Defenses Companies that benefit most from these alliances usually adhere to a set of principles.

  • 1.

    Collaboration is competition in a different form. Successful companies do not forget that there is a possibility for their partner to be out to harm them. They enter strategic alliances with clear strategic objectives, and in turn they understand how their partner’s objectives will affect them.

  • 2.

    Harmony is not the most important measure of success. Occasional conflict may be the best evidence of mutual benefit.

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