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

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  • Size and market power of both are modest compared with industry leaders. For a smaller firm, it gets hard to leave the comfort of a large firm's nest, even after you could begin to fly on your own.

  • Each partner believes it can learn from the other and at the same time limit access to proprietary skills. To be a leader in any endeavor, you must possess certain competitive advantages over competitors. I wouldn't go sharing!

In order for a strategic alliance and collaboration to be successful is for both parties to be able to transfer something distinctive to the other party: basic research, product development skills, manufacturing capacity, access to distribution.

To ensure that a strategic alliance does not work against your company:

  • Limit the scope of the formal agreement to specific technologies. Cover a single technology as opposed to an entire range of technologies or limit coverage to specific markets for a limited amount of time.

  • Establish specific performance requirements with incremental, incentive-based rewards for effective technology transfer. For example, an agreement between Motorola and Toshiba required Motorola to microprocessor technology incrementally as Toshiba achieved specific semiconductor market share targets in Japan for Motorola.

  • Realize that information exchange is determined by day-to-day interactions of engineers, marketers and product developers. Limit unintended transfers by using “gatekeepers" to control contacts and information flows with a partner.

  • Learn as much as possible about your partner's complex processes.

Winning Through Collaboration Successful collaborations typically have a few common aspects.

  • 1.

    The strategies of the alliance firms converge as their competitive objectives diverge.

  • 2.

    In most successful collaborative situations the alliance firms are relatively small compared to the industry leaders.

  • 3.

    Each alliance partner is generally confident in its ability to gain knowledge from the other, while at the same time defending against competitive compromise.

Remember that collaboration is competition in a different form; that harmony is not the most important measure of success; that cooperation must be limited to avoid against competitive compromise; and that learning from partners is paramount to success.

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