What is the primary purpose of a strategic alliance
a) create mutual advantage
b) develop shared advantage
c) develop competitive advantage
d) create existing advantage
Answer: C
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Business Strategy Chapter 6
- Careful and dedicated management can help build the trust necessary to ensure that each firm cooperates in an effort to maintain a successful alliance
- In the evaluation of an alliance' value, the partners who are, in turn, allied with the firm's strategic alliance partner should also be considered.
- The means for analyzing the alliance's performance and for distributing performance outcomes to the partners should be clearly established.
- A clear plan for implementing the alliance should be discussed, created, and activated once the partners have agreed to the alliance.
- The organization should analyze each alliance's priority within its resource allocations and ensure the commitment needed for each alliance to succeed
- The manager or sponsor from each firm should be appointed to keep each other informed of major alliance activities, resource allocations, and outcomes.
- Managing Strategic Alliance: if an incompatible partner is selected, the alliance is likely to fail. The firm should understand its partner's situation, resources, capabilities, etc
- Usually more difficult to manage and sustain because often the partners are also competitors
- Involves cooperative partnerships at the same stage of the value chain
- Involves cooperative partnerships across different stages of the value chain. Key to success = trust between partners
- A relationship between firms in which the partners agree to cooperate in ways that provide benefits to each firm
- Which strategy works the best:
- What are the three steps of bi-cultural audit:
- When the vertical acquisition is going upstream it is getting:
- A transaction in which businesses are sold to other firms or spun off as independent enterprises
- Regardless of effort, acquisitions often fail between ___ and ___ percent of all mergers fail to return a positive investment.
- Acquired company embraces acquiring firm's culture. (Acquired firm has a weak culture.)
- Acquiring firm imposes its culture on unwilling acquired firm. (Rarely works- may be necessary only when acquired firm's culture doesn't work but employees don't realize it.)
- Combining two or more cultures into a new composite culture. (Existing cultures can be improved.)
- Merging companies remain distinct entities with minimal exchange of culture or organizational practices. (Firms operate successfully in different businesses requiring different cultures.)
- The practice of diagnosing cultural relations between companies and determine the extent to which cultural clashes will likely occur
- Moving upstream by acquiring businesses that supply inputs to a firm's core business or downstream by acquiring businesses that use the outputs of the firm's core business
- Purchasing a supplier or distributor of one or more of firms good/services
- Purchasing a competitor competing in the same market(s) as the acquiring firm
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