Transcript STRATEGIC ALLIANCES Şinasi

Strategic Alliance is an agreement
between companies(partners) to reach
objectives of a common interest.

Joint Venture: These are the results of the
agreements based on which the partner
companies remain independent and decide to
create a new organization that is legally distinct.
The share of participation can be various such as
50/50 , 49/51 , 30/70 and so on. Most joint
ventures limit collaboration to specific functions.
For example, only R&D, not product
development and distribution. Joint ventures
that cover all possible functions are rare.
There are two types of joint ventures:


Project-based Joint Venture: This type of
alliance may commonly be used on a project by
project basis. In other words, the creation of a
separate entity through the alliance of two or
more organizations for the purpose of carrying
out a specific project.
Full-blown Joint Venture: This type of alliance
requires significant resource input. It is
expected to remain a viable entity for a
significant length of time, certainly spanning
multiple projects.


In a joint venture with Tepe Construction of
Turkey, Turner construction provided
construction management services for Türkiye
IsBankası Headquaters tower.
Turner International renovated six luxury
hotels throughout Turkey in a joint venture
with Pro^ge.

An energy company of USA, EMS, a leading
provider of pipeline management services has
joined forces on a Joint Venture Agreement with
Turkish based, VASTAŞ Company.
EMS’s chief executive says that; “Turkey is
geographically a prime location for providing our
joint venture services throughout the Middle East,
Western Asia and Eastern Europe.”
Vastaş CEO says that; ”Our partnership with EMS
will enable the utilization of high technology in the
petroleum and natural gas infrastructure
throughout the Country.”

Consortia: This type of alliance involves two or
more organizations. Their objective is a
particular initiative or a particular project. The
most significant examples are in construction
such as aerospace construction. (European
Airbus Consortium)
Contract of Partnership in Specific Functions:
One or more companies decide to collaborate
in one or more functions such as marketing,
R&D, production or other functions, without
starting a new, legally distinct entity.
Ownership of Capital: The alliance can be
based on stock participation of one or more of
the partners by others.

Networks: These are agreements in which two
or more organizations collaborate without
formal relationships, but through mechanisms
that provide reciprocal advantages.
“Code sharing” agreements among airlines can
be considered networks. These agreements
through which passengers can fly with one
ticket, using several airline partners.

Franchising: This is an agreement in which a
company (franchiser) allows another
(franchisee) to sell its products or services. A
franchising contract is set for a specific period
of time. The franchisee pays a royalty to the
franchiser for the buying rights.
Franchising offers advantages to both parties.
The most notable examples for franchising is
Coca Cola and McDonald’s.

Licensing: This is an agreement in which a
company allows another (exclusive licensing) or
multiple others (non-exclusive licensing) the right
to use its technology, distribution network or to
manufacture its products. The licensee pays a fixed
amount and/or royalty or fee for the rights that are
ceded to it.
For an innovative company licensing offers the
possibility of presence in multiple markets.
The risk is that the company, ceding its own knowhow to potential competitors, therefore loses
control over its core technology.
The two companies made a cross-licensing
alliance. Motorola ceded part of its
microprocessor technology, in exchange
Toshiba allowed Motorola part of its memory
chip technology. Therefore, the risk of ceding
technology was shared.


Vertical Alliance: These are the alliances
formed between entities that provide
complementary services in industry.
The alliance between structural steel erector
and structural steel fabricator can be
considered as a vertical alliance.
Horizontal Alliance: These are the alliances
formed between entities that compete. This type
alliances are more common in the construction
industry.


Short-term Alliances: These alliances are
characterized as primarily for operational, or
project purposes.
Long-term Alliances: These alliances are used
for marketing purposes or offer a specific
technology.
Strategic alliances are based on the partnering
concept.
While seeking for a partner, construction firms
should consider the common features of the
potential partners.
Each company should have complementary
products based on compatible technology,
should share a cooperative business
philosophy and so on.



Compatibility: It is easier to establish whether
compatibility exists by looking at previous
alliances.
Capability: Generally one partner seeks in
another the capabilities that contribute to
strengthening an alliance.
Commitment: The partner can be compatible,
with complementary capabilities, but it must
also believe in the alliance.



In the 70’s, the main factor was the performance of
the product. Alliances aimed to acquire the best raw
materials.
In the 80’s, the main objective became consolidation
of the company’s position in the sector, using
alliances. There was a true explosion of alliances.
In the 90’s, collapsing barriers between many
geographical markets and the blurring of borders
between sectors brought the development of
capabilities and competencies to the center of
attention.
Competitiveness within the construction
industry is increasing as market borders are
being expanded through use of widely
available telecommunications and increasingly
efficient transportation systems. In this
competitive environment, firms must look to a
variety of strategies.
Alliance formation is one way to survive in
such an environment.
Access Technology
20%
Share Risks
15%
Secure Financing
15%
Enter New Markets
15%
Serve Core Customers
10%
Improve Competitive Position
10%
Meet Foreign Government Requirements
8%
Learn Local Markets
7%
Benefits of Strategic Alliances
Enhance Competitive Position
20%
Increase Market Share
17%
Obtain New Work
15%
Broaden Client Base
13%
Increase Cultural Responsiveness
10%
Reduce Risk
9%
Increase Profits
9%
Increase Labor Productivity
7%


Tangible Assets: Tangible assets include
resources that are easily and regularly valued
and traded in the market place. Labor,
equipment, financial strength and raw material
are examples of such assets.
Intangible Assets: Intangible assets are
becoming increasingly recognized. Technology,
necessity and legitimacy are the intangible
assets valued by clients.



Technology: Construction skill and design skill
are technological assets of a construction firm.
Necessity: Necessity is considered as to focus
on a specific group such as socially
disadvantaged groups (minority owned
businesses) or other similar groups.
Legitimacy: Legitimacy is considered as client’s
trust, and often expressed as an organization’s
reputation, image or prestige.
Asset asymmetry means a firm’s assets are
significantly more or less than the other
venture partners.
Lesser-resourced partners experiences greater
return than its stronger counterparts.
Positive legitimacy asymmetry within a joint
venture was shown to be beneficial in gaining
organizational return.


Differences in National Culture: Firms have habits
and values according to the place where they are
located. A firms values are largely a reflection of
its national culture. Differences in national culture
of the firms does not have a significant effect on
international joint ventures.
Differences Between Host Country and Joint
Venture: Differences between the national culture
of the joint venture and the culture of host country
does not effect performance of the joint venture
significantly.



Differences in Organizational Culture:
Organizational culture relates primarily to shared
beliefs in organizational practices and processes.
Differences in organizational cultures of the firms
has a positive affect on the joint venture. The
possible reasons of this situation are:
The culture differences may help partners learn
how to operate with a foreign partner and enhance
the firm’s learning capabilities.
Efforts of partner companies to prevent potential
miscommunications and conflicts due to cultural
differences.
THANKS FOR ATTENTION