Transcript Alliances & Technology Transfer

Innovation Management
Kevin O’Brien
Strategic Alliances
Learning Objectives
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Understand the reasons for increasing
use of strategic alliances
Recognise different forms of strategic
alliance
Identify factors critical to the success of
strategic alliances
Appreciate the risks and limitations of
strategic alliances
Definition of strategic alliance
A strategic alliance is an agreement between two or
more partners to share knowledge or resources,
which could be beneficial to all parties involved
(Vyas et al., 1995).
Reasons for Entering a Strategic
Alliance
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Improved access to capital and new business
Greater technical critical mass
Shared risk and liability
Better relationships with strategic partners
Technology transfer benefits
Reduce R&D costs
Use of distribution skills
Access to marketing strengths
Access to technology
Standardisation
By-product utilisation
Management training
Fall of the ‘go-it-alone’ strategy
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Increased levels of competition
Increased complexity of products and
production
Widening technology base
Dramatically shortened product lifecycles
Pressure to reduce npd time
Need to manage market and
technological uncertainty
Rise of the ‘octopus’ strategy
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Competitive advantage often resides in sets
of firms acting together:
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Even IBM has forsaken go-it-alone strategy.
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European Airbus strategic alliance
VHS alliance between JVC, Sharp, Toshiba, RCA
Alliances with Toshiba, Microsoft, Siemens, HP,
Cisco, Real Networks, & many more ……
Octopus strategy (Vyas et al., 1995)
From 1976 to 1987, the annual number of
new joint ventures rose six-fold; threequarters are in high-technology industries
(Lewis, 1990).
JVC’s Alliance for VHS
Marketing
Product Development
Matsushita
Matsushita
Production
JVC’s VHS
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JVC with VHS (video recording format):
 competing with Sony’s Betamax to set
industry standard
 VHS licensed to other Japanese video
recorder manufacturers
 joint ventures for marketing in Europe (ThornEMI, Thomson, Telefunken)
 supplied RCA-branded video recorders for the
US market
European Airbus
Aerospatiale
British Aerospace
CASA
Deutsche Airbus
Rise of the ‘octopus’ strategy
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Competitive advantage often resides in sets
of firms acting together:
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

Even IBM has forsaken go-it-alone strategy.
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European Airbus strategic alliance
VHS alliance between JVC, Sharp, Toshiba, RCA
Alliances with Toshiba, Microsoft, Siemens, HP,
Cisco, Real Networks, & many more ……
Octopus strategy (Vyas et al., 1995)
From 1976 to 1987, the annual number of
new joint ventures rose six-fold; threequarters are in high-technology industries
(Lewis, 1990).
Benefits of strategic alliances
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Opportunities to learn & acquire new
technologies
Access to complementary technological
resources and capabilities that reside in other
firms
Access to new markets
Access to resources that can enhance the
competitive position of the firm (e.g. through
minimising costs)
Opportunities to influence or control
technological standards
(Dyer & Singh, 2000)
Potential Alliance Partners
Suppliers
Complementary
Firms
Firm
Government
Competitors
Customers
Facilitators
Academia
Strategic Business Environment
(Chan & Heide, 1993)
Technology alliances
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Strategic alliances can occur intra-industry or
inter-industry.
Faulkner (1995); Conway & Stewart (1998)
identify seven generic types of strategic
alliance:
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Licensing
Supplier relations
Joint venture
Collaboration (non-joint ventures)
R&D Consortia
Industry Clusters
Innovation networks
Evolution of alliance strategy
High
Technological
and demand
uncertainty
Low
Window
strategy
Time options
strategy
Positioning
strategy
(Dyer & Singh, 2000)
Elements of an alliance
Window
strategy
Options
strategy
Positioning
strategy
Strategic
objectives
Learning
Monitoring
Building platforms
Scale-based
advantages
Key success
factors
Effective tracking
Scalability
Scale, operational
effectiveness
Knowledge
absorption
Ability to evaluate
technologies
Leakage of
knowledge
Value of option
Key difficulties
Ability to identify
complementary
resources
Speed and
responsiveness
(partner
dependence)
(Dyer & Singh, 2000)
Disney & Pixar Alliance
Movie-Making Value Chain
Complementary
Innovators
VCR/DVD
CD
Projection
Computing
Suppliers
Actresses
Actors
Cameras
Manufacturers
Time Warner
MCA/Universal
Disney
Paramount
Distribution
Channel
Cinemas
TV networks
Cable TV
Satellite TV
Video stores
Customers
Movie viewers
(Adapted from Affuah, 2003, p188)
Disney Acquires Pixar
Disney buys Pixar in $7.4bn
deal
Walt Disney has agreed a $7.4bn (£4.1bn) deal to
buy Pixar, the animation firm behind films including
Toy Story and The Incredibles.
Disney's distribution deal with Pixar was due to end
this year, and it seemed the two would split after
failing to agree on how to divide future profits.
The loss of Pixar would have been a blow for
Disney, as demand for the company's films, as well
as DVDs, videos and merchandise, has proved to
be very strong.
Disney's earnings from Pixar's six films are
estimated to be about $3.2bn.
(Source: bbc.co.uk, 24th January 2006)
"Disney and Pixar can now
collaborate without the
barriers that come from two
different companies with
two different sets of
shareholders," Mr Jobs said.
"With this transaction, we
welcome and embrace Pixar's
unique culture, which for two
decades has fostered some of
the most innovative and
successful films in history," Mr
Iger said.
Critical success factors
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Creating knowledge sharing routines
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Codifiable knowledge, ‘know-what’
Tacit knowledge, ‘know-how’
Choosing complementary partners
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Strategic complementarity
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Organisational complementarity
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Decision processes, information/control systems, culture
Building and managing co-specialised assets
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Assets, distinctive resources
New assets created as a result of the alliance
Establishing effective governance processes
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Formal (legal, financial), informal (trust)
(Dyer & Singh, 1998)
Risks of strategic alliances
Can lead to:
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Competition rather than co-operation
Loss of competitive knowledge
Conflicts resulting from incompatible cultures
and objectives
Reduced management control
Increased complexity
Loss of autonomy
Information asymmetry
May harm a firm’s ability to innovate
References
Chan, P.S. and Heide, D. (1993) Strategic alliances in technology: key
competitive weapon, Advanced Management Journal, 58(4), 9-17.
Conway, S. and Stewart, F. (1998) Mapping innovation networks,
International Journal of Innovation Management, 2(2), 223-254.
Dyer, J.H. and Singh, H. (1998) The relational view: cooperative strategy
and sources of interorganizational competitive advantage, Academy of
Management Review, 23(4), 660-679.
Dyer, J.H. and Singh, H. (2000) Using alliances to build competitive
advantage in emerging technologies, in Day, G.S. and Schoemaker,
P.J.H., Wharton on Managing Emerging Technologies, New York:
Wiley.
Faulkner, D. (1995) International Strategic Alliances, Maidenhead;
McGraw-Hill.
Langrish, J., Evans, W.G. and Jerans, F.R. (1982) Wealth from
Knowledge, London: Macmillan.
Lewis, J.D. (1990) Partnerships for Profit, New York: Free Press.
Vyas, N.M., Shelburn, W.L. and Rogers, D.C. (1995) An analysis of
strategic alliances: forms, functions and framework, Journal of
Business and Industrial Marketing, 10(3), 47-60.