Transcript Lecture 1: Perspective on entrepreneurship

Week 6
A presentation on Partnerships and
alliances and supply (chain) networks
M.Tariq Yousafzai
MS Innovation and Business
Creation/ILSCM
[email protected]
Lecture 1-1
Some Conceptualities
 Cost leadership is generally
described as a lean strategy
 It achieves this by remorselessly
eliminating waste from supply
chains
Lean and agile
The alternative strategy of
product differentiation is
normally described in logistics
as an agile strategy
Bottlenecks
Classification of stocks
Types of stocks
 Raw materials – the materials, parts and
components that have been delivered to an
organisation, but are not yet being used
 Work-in-process – materials that have started,
but not yet finished their journey through
the organisation’s operations
 Finished goods – goods that have finished
the process and are waiting to be shipped
out to customers
 Spare parts -for machinery, equipment, etc.
 Consumables - such as oil, fuel, paper, etc.
For individual firms an important
point is value density
 This is the ratio of a product’s value to
its weight or size
Why Alliances?
• For mutual benefit of
partners
o
Complementary
capability & IP
• Because nobody can
do it alone
• However, Watch
for…
o
o
Inadequate Returns!
Strategic Roadblocks!
Lecture 1-8
Pyramid of Alliances
Acquisition/
Merger
Joint Venture
R&D Collaboration/Tech Transfer
Licensing/OEM/Private Label
Joint Selling/Distribution
Joint Marketing
Vendor
Supplier
Partnership Matrix
Partner A
Contribution
Benefit
Partner B
Some changes
influencing the need of alliances
 Internationalization and globalisation
 International competition
 Outsourcing and reduction in suppliers
 R&D and shorter product life cycles
 Time to market
Lecture 1-11
Give me examples of alliances!
?
Lecture 1-12
Global logic of alliances
 To compete on the global arena you
have to incur fixed costs
 With enough time, money and luck,
you can do everything yourself. But
who has enough?
 Having control does not necessarily
mean better management
Lecture 1-13
Basic motives of alliances
 Transaction costs bargaining
 Enhance competitive
positioning and market
power
 Quest for
organisational
knowledge and
learning
Lecture 1-14
Classification of alliances
1. Degree of commitment and
integration
2. Function based-i.e. product
development, distribution,
production, purchasing
3. Formal- informal
4. Symmetry-assymmetry ( including
the power issue)
5. Type of actors involved
(competitors,buyer-seller,
distributors )
6. Geographical spread ( local,
national, regional, global)
Lecture 1-15
C1
C1
Customers
C1
C1 C2
C1
C1
D
D
A
D
P
P
C2= org. customer
C2
C2
D
C1= consumer
A
D
D
B
A
Distributor
or agent
D=distributor
A= agent
P
Partners
P= partner
S1
S1
S1
S1
S3
S2
S2
S2
S2
S1
S3
S3
S2
S3
S1
Supplier 1 tier
S1=supplier 1tier
Supplier 2 tier
S2= supplier 2 tier
Other suppliers
S3= Other supplier
What could this alliance mean to downstream and upstreamLecture
partners?
1-16
Supply Chain for Paper
Typical supply chain around
manufacturer
Alliances
simplication
• Firm - Firm
• Net - Firm
• Net -Net
Lecture 1-20
Alliances as dyads
 Alliance definition
”A long term relationship where participants
cooperate and willingly modify their
business practices to
improve joint performance”
Lecture 1-21
Part II
What is an
alliance/partnership?
Based how it is mostly used in literature
Strategic. Alliance
include. J/V and part-
alliance
ownership
Partnership
Transaction
Relationships
Degree of commitment
Lecture 1-22
Alliances from different
perspectives








Supply Chain Management
Industrial Marketing
Purchasing
Marketing
Service marketing
Relationship marketing
Social networks
Organisational and management literature
Lecture 1-23
Part II
Supply chain network
consisting of a a number of relationships
Single relationship
Focal firm
Upstream
Downstream
Lecture 1-24
Supply chain length
 – the number of tiers that materials
flow through from initial suppliers
through to final customers
 Supply chain breadth – the number of
parallel routes that materials flow
through, or the number of
organisations in each tier
 Other factors - such as:
Part II
Interacting dimensions of
relationship
Social
Legal
Communication
/IT
Knowledge
Physical
Economic
Technical
Lecture 1-28
Part II
How?
Relationship life cycle
dissolution
termination?
closer cooperation
expansion
Enlargement/
Commitment
stable stage
Institutionalization
Disintegration
dissatisfaction
Dissolution
Termination
Formation
Revival
Pre-relationship
or awareness stage
Formatio
Prerelationship
stage
Lecture 1-29
Individual alliances will not
easily break- Why?
 Investments
 Costs of breaking
 Trust
 Knowledge
 This creates inertia
Lecture 1-30
Global logic of alliances
(K. Omae)
 Nine times out of ten you will want to
stay in the alliance if you can
 The way to wreck an alliance is to
become a check casher, a coupon
clipper
Lecture 1-31
When and why to switch
 Marketing forces
 Internal conflicts
 Acquisitions and
mergers
 New
opportunities
Lecture 1-32
Different roads to dissolution
 Who is breaking
 Direct or indirect
 Dissolution quality
 ( intracomp. exit, aftermath)
 Task related, actor related
or network related
Lecture 1-33
Gradual way - the most common way
Three different ways
•
relationship of lower
importance - less
volumes
break but stay in the
supply chain
break but stay in the
firm network
•
leave the
network
Lecture 1-34
Alliances as networks
 A network is a set of connected
exchange relations between
actors.
 Exchange relations are defined as
connected if exchange in one of
relation is contingent upon
exchange in other relations
Lecture 1-35
Part III
Firm network
The firm
Lecture 1-36
Relationships and supply chain network
simplified
C1
C1
Customers
C1
C1 C2
C1
C1
D
D
A
D
P
P
C2= org. customer
C2
C2
D
C1= consumer
A
D
D
B
A
Distributor
or agent
D=distributor
A= agent
P
Partners
P= partner
S1
S1
S1
S1
S3
S2
S2
S2
S2
S1
S3
S3
S2
S3
S1
Supplier 1 tier
S1=supplier 1tier
Supplier 2 tier
S2= supplier 2 tier
Other suppliers
S3= Other supplier
What could this alliance mean to downstream and upstreamLecture
partners?
1-37
Supply chain network change
patterns
 Supply chain network formation/
joining
 Supply chain development include closer
cooperation and enlargement
 Supply chain closing up
 Supply chain splitting- leaving
 Supply chains drifting closer/away
Lecture 1-38
Joining of networks
Lecture 1-39
Closing up
Lecture 1-40
Horizontal and vertical alliance
networks
Horizontal network
Transport firms representing each other in different countries
Vertical networks
include customers and suppliers
Lecture 1-41
Spectrum of cooperation
Levels of Integration
What?
Overlap or complementarity?
in alliances of supply chain networks
Type of products/services
Different
Same
Fully complementary
Overlap
/ complementary
Different
Geographical
coverage
Complementary/
overlap
Full overlap
Same
Lecture 1-44
Network effects
Externalisation effects
(ex.telecom)
Forrester or bullwhip
effects amplication of demand changes
( dynamic performance -info and physical systems small disurbance large effects
Domino effects
Lecture 1-45
Overlapping supply chains
and firm networks
Firms are part of several supply chains
Movement between supply chains in firm
network
 Once you are in, you have a bigger
chance
Lecture 1-46
Effects of overlap
Overlapping supply chain networks
a) Decrease
b) increase
Supply chain
network 1
a) Decrease
b) increase
Supply chain
network 2
a) increase
b) decrease
Lecture 1-47
Domino effects
B1
C1
A
B2
C2
D2
E2
Lecture 1-48
A radical break
often a result of strategic change
at network level
Exemple of strategic change
strategic alliances, mergers and acquisitions
Lecture 1-49
Dynamics of alliances and market restructuring
Competitor alliance
processes
Customers
Network processes
Internal developm.
focal alliance
Relationship processes
Customer- focal firm
Hertz& Mattsson
SJM 2006
Processes
breaking/dissolving
relationships
Lecture 1-50
Management of alliances
as dyads and networks
Lecture 1-51
Management of alliances
Performance
Development
Positioning
Handling effects
Lecture 1-52
Problems to be handled
 Missions and domains
 Job division
 Expectations
 Cultural differences
 Power distribution
Lecture 1-53
Cultural fit?
 Main stream culture
 Organisational culture
 Managerial style
 ( autocratic,democratic
 Individualistic-collectivistic
 Trust)
Lecture 1-54
Part IV Performance
From management to leadership
Financing
Projects
Measurement
Science
Tools
Consulting
Communication
Commitment
Behaviors
Creativity
Overcoming resistance
Self leadership
etc
etc
Lecture 1-55
Dissatisfied? Intra-alliance fit?
Inhibitors
 Disparate
benefit of
alliances
 Lack of willingness to
accept unpopular
decisions
 Lack of propensity to
reach consensus
 Lack of willingness to
contribute to resources
and alliance missions
Stimulators
 Types of tasks
performed in concert
 Relational bonds and
functional codependency
 High level of mutual
control due to
standardisation
 Trust and
commitment to
Ludvigsen, 2001
alliance welfare Lecture 1-56
Inter- alliance fit?
Before forming alliance?
 Degree of overlap or
complementarity?
 Corporate cultural
differences and
management practices?
 Power balance?
 Differences in strategic
interests?
 Development - speed and
direction?
 Access to network partners?
 Effects and costs of a
change?
Lecture 1-57
Part IV performance
Different types of strategies
dyads and / networks
 Dyad - establish, develop, break or switch
 Supply chain network - changing your
position




Increasing/ decreasing integration
Conflict/ cooperation- group work
Changing direct and indirect relationship
Leave/ enter
 Industry network
 Overlapping/ complementary
 Moving in or out or supply chains
Making use of relationship lifecycle pattern
Lecture 1-58
Positioning ?
 Your firm´s position in the allianceRelated to actors-resources and activities
 Your position in the network horizontal or vertical (supply chain
network)
 Your network in comparison to others
Lecture 1-59
Handling the effects?
How to prepare for the domino
effects?
 Where can we expect large acquisitions or mergers
 How would such an alliances influence us? Directly
-indirectly?
 What can we do to prepare? Alternative solutions?
How to make use of the
externalisation effects?
 Extension of the number of actors in the network
 Interaction between actors
Lecture 1-60
Category of alliances?
Prerequisites?
Lecture 1-61
Part VI
Success factors expressed as
”8 i´s for successful alliances”
(Rosabeth Moss-Kanter” Collaborative advantage- The art of alliances HBR 2:4 July Aug 1994)
 Individual
excellence
 Importance
 Interdependence
 Investment
 Information
 Integration
 Institutionalisati
on
 Integretity
Lecture 1-62
What have you
learnt?
When and why do you need alliances?
Alliances of different types?
How do partnerships or alliances change?
Network of relationships
- a supply chain network
Strategies for alliances
The industry networks and alliances dynamics
Management and implications
New
Knowledge?
Lecture 1-63
The ASG- Danzas case
Questions
 What are the main objectives of the alliance
 What were the strengths and weaknesses
before when forming the alliance ?
 How have these strength and weaknesses
changed?
 How would you as a new CEO cope with the
situation? What different problems have you
solved with your suggested solutions?
Lecture 1-64
ASG and Danza
 1.Strategic alliances are inherently
unstable due to overlapping processes
in the network
 context (related to the processes listed
above) that change the structural fit
and the sign of connectedness between
the actors.
 2. The higher the interdependence
between actors, involved in collective
competition, the
 more influential will the domino effect be on
strategic actions.
ASG and Danza
 3.Actors, involved in the development of an existing
alliance need to concurrently plan for its
 potential dissolution by preparing for alternatives.
 4. Actors´ network theories are important
determinants of the timing and speed of strategic
 actions.
 5. Dyadic alliances should be regarded as multiple
firm alliances due to the strategic action
 potential of subsidiaries.
Integration is difficult, with
specific problems including
 Finding a sponsor
 Changing practices
 Organisation
 Cultural changes
 Rewards
 Information systems
 Hoarding of resources
Because of the difficulties,
integration is usually
approached in stages
Separate logistics activities are not given much
attention
Recognition that the separate activities of logistics
are important to the success of the organisation
Making improvements to the separate functions,
ensuring that each is as efficient as possible
Realising the benefits of internal integration that
combines the separate activities
Developing a logistics strategy for an integrated
function
Benchmarking to compare logistics’ performance
Continuous improvement of logistics
Lecture 1-68
Implementing a strategy almost
invariably involves change to the
organisation
 Denial - where people deny that there is a need
for change
 Defence – defending the current way of doing
things and criticising new proposals
 Discarding – beginning to move away from the
old ways and towards the new ones
 Adoption – using the new ways and accepting
that they bring benefits
 Integration – assuming the new ways are normal
and using them naturally
.
THANKS