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Strategic Alliances Central, South East and Eastern Europe

F. Juergen Moy

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Alliances Management

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MOYCOM.DE Alliances Management Services
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MOYCOM.DE Strategic Alliances Central, South East & Eastern Europe

offers:

 

Alliances Management

 

International Corporate Alliances Management, Business Relationship Management and Public Communications Management

  • for Development of Communication Strategies and Relationship Management 
  • with Microsoft & SAP and Opinion-Lead Networking (Top-Experts, Partners & Customers)

   

MOYCOM.DE Strategic Alliances Central, South East & Eastern Europe
Service Description

 

International Alliances Management with a focus on distribution partners in key positions and alliance/cooperation relations to pro-actively and aggressively drive sales of products and services of the client in the fields of Cloud, Mobile & OnPrem Solutions with network policy to generate, enable and implement new sales and distribution channels.

 

 

MOYCOM.DE Strategic Alliances Central, South East & Eastern Europe
Service Base

 

  • Proven track record with leading players in the target channel, proven sales-ability, vision ability and patience to successfully support the company on the road to exponential growth in the coming years

  • Energy, motivation and strong focus on results

  • Use of the entire strategic and tactical marketing tools

  • Strong entrepreneurial spirit: self-motivation and enthusiasm

  • Team spirit: easy integration in sales teams

  • Development and implementation of partner business plans

  • Willingness to travel to distributors for personal contact meetings and presence at events for representation and presentation

 

MOYCOM.DE Strategic Alliances Central, South East & Eastern Europe
Responsibilities and Tasks

 

  • Support of sales teams with search, identification, recruitment, negotiation and supervision of new channel partners; base case: comprehensive understanding of the partner channel in order to enable a proper inclusion, integration and previously predictable success in sales level
  • Recruiting of new channel partners: selection profiling process (target selection process), initiation and implementation of on-boarding processes (inclusion integration processes) including partner contracting (contract negotiation and settlement) and subsequent professional administration (CRM system data administration)
  • On-boarding of channel partners: Fastest possible action plan generation for preparing partners for the productive use of technology and sales after conclusion
  • Activation of channel partners: creation and initiation of activation processes based on automation and repeatability
  • Assume responsibility for all development and activation activities of channel partners (distribution, procurement, supply, ordering, renewal and service)
  • Management of channel partners: initiation and formation of sales teams of customers and regular partners to a "highly profitable" business with alliance management as an integral part of an overall business strategy
  • Assumption of responsibility for ensuring a strong partner relationship with the conduct of successful action programs with channel partners in close cooperation with the marketing and sales teams with professional partner alliance management
  • Achievement of development and sales targets: management of partnership agreements, target sales negotiations, ensuring minimum standards and performance levels
  • Preparation, implementation and processing of business plans with the channel partners to build and maintain a high awareness of the channel partner organization, including the operational (executive) business as a value-added solution
  • Ensuring the accuracy of partner information in CRM systems
  • Practical implementation of partner management and team-work
  • Quick and efficient solution of 'partner-customer' and 'partner-partner' conflicts
  • Voice of partners with regard to all customer concerns
  • Development and implementation of an effective quarterly spatial channel area plan (channel territory plan)
  • Training of partners in selling products and services of the customer
  • Agreement and participation in conference calls (telephone / online) and personal meetings for the purpose of get-to-know meetings, company and product presentations, follow-ups, sales, pre project, interim project and final project talks
  • Planning, Organization and implementation of webcasts, trade fairs and events with moderation and presentation
  • Press and PR Management
  • Language Localization Organization

 

 

MOYCOM.DE Strategic Alliances Central, South East & Eastern Europe
Experiences and Capabilities

 

  • Extensive professional experiences in distribution channels with customers, partners, software vendors and service providers: channel structure development, activation, use, care and control
  • Comprehensive interdisciplinary technology solution provider experiences (including relationship networking, software solutions, infrastructures, security, cloud and industries) for sales in the channel space
  • Proven success stories for establishment and implementation of strategies to 'Best-in-Class' channel partner results based on quantitative and qualitative assessments of market opportunities
  • Capability to build co-operation relations and interdisciplinary functional impact tools; coordination and implementation of executive sales meetings and preparation of quarterly business plans
  • Pronounced natural relationship skills, perseverance, resilience with 'good soft skills' (social skills) and sovereign presentation, negotiation and moderation skills
  • Strong organizational skills in the fields of multi-tasking, task priority and time management

   

About strategic Alliances

   

What is Alliance?

Duration: 3:04

   

What is Relationship Marketing?

Duration: 2:21

    

What is a Strategic Alliance?

A strategic alliance is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. This form of cooperation lies between mergers and acquisitions and organic growth. Strategic alliances occurs when two or more organizations join together to pursue mutual benefits.

 

Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. The alliance is a cooperation or a collaboration which aims for a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts. The alliance often involves technology transfer (access to knowledge and expertise), economic specialization, shared expenses and shared risk.

   

Importance, History & Goals of Strategic Alliances

 

Importance of strategic alliances


Strategic alliances have developed from an option to a necessity in many markets and industries. Variation in markets and requirements leads to an increasing use of strategic alliances. It is of essential importance to integrate strategic alliance management into the overall corporate strategy to advance products and services, enter new markets and leverage technology, research and development.

 

Nowadays, global companies have many alliances on inland markets as well as global partnerships, sometimes even with competitors, which leads to challenges such as keeping up competition or protecting own interests while managing the alliance. So nowadays managing an alliance focuses on leveraging the differences to create value for the customer, dealing with internal challenges, managing daily competition of the alliance with competitors and risk management which has become a company-wide concern.

 

Statistics show that the percentage of revenues for the top 1.000 U.S. public corporations generated by strategic alliances increased from 3-6% in the 1990´s up to 40% in the year 2010, which shows the fast changing necessity to align in partnerships. The number of equity-based alliances has dramatically increased in the last couple of years, whereas the number of acquisitions has decreased by 65% since the year 2000. For a statistically examination over 3.000 announced alliances in the USA have been reviewed in the years 1997 to 1999 and results showed that only 25% of these alliances were equity based. In the years 2000 until 2002 this percentage increased up to 62% equity-based alliances among 2.500 newly formed alliances.

 

 

Historical development of strategic alliances


Some analysts may say that strategic alliances are a recent phenomenon in our time; in fact collaborations between enterprises are as old as the existence of such enterprises. Examples would be early credit institutions or trade associations like the early Dutch Guilds. There have always been strategic alliances, but in the last couple of decades the focus and reasons for strategic alliances has evolved very quickly:

 

  • In the 1970s, the focus of strategic alliances was the performance of the product. The partners wanted to attain raw material at the best quality at the lowest price possible, the best technology and improved market penetration, while the focus was always on the product.
  • In the 1980s, strategic alliances aimed at building economies of scale and scope. The involved enterprises tried to consolidate their positions in their respective sectors. During this time the number of strategic alliances increased dramatically. Some of these partnerships lead to great product successes like photocopiers by Canon sold under the brand of Kodak, or the partnership of Toshiba and Motorola whose joining of resources and technology lead to great success with microprocessors.
  • In the 1990s, geographical borders between markets collapsed and new markets were enterable. Higher requirements for the companies lead to the need for constant innovation for competitive advantage. The focus of strategic alliances relocated on the development of capabilities and competencies.

 

 

Goals of strategic alliances

 

  • All-in-one solution
  • Flexibility
  • Acquisition of new customers
  • Add strengths and reduce weaknesses
  • Access to new markets and technologies
  • Common sources
  • Shared risk

    

Definitions, Terminology & Typology
 

There are several ways of defining a strategic alliance. Some of the definitions emphasize the fact that the partners do not create a new legal entity, i.e. a new company. This excludes legal formations like Joint ventures from the field of Strategic Alliances. Others see Joint Ventures as possible manifestations of Strategic Alliances.

 

Some definitions are given here.

 

Definition including joint ventures

 

  • A strategic alliance is an agreement between two or more players to share resources or knowledge, to be beneficial to all parties involved. It is a way to supplement internal assets, capabilities and activities, with access to needed resources or processes from outside players such as suppliers, customers, competitors, companies in different industries, brand owners, universities, institutes or divisions of government.
  • A strategic alliance is an organizational and legal construct wherein “partners” are willing-in fact, motivated-to act in concert and share core competencies. To a greater or lesser degree, most alliances result in the virtual integration of the parties through partial equity ownership, through contracts that define rights, roles and responsibilities over a span of time or through the purchase of non-controlling equity interests. Many result eventually in integration through acquisition.

 


Definitions excluding joint ventures

 

  • An arrangement between two companies that have decided to share resources to undertake a specific, mutually beneficial project. A strategic alliance is less involved and less permanent than a joint venture, in which two companies typically pool resources to create a separate business entity. In a strategic alliance, each company maintains its autonomy while gaining a new opportunity. A strategic alliance could help a company develop a more effective process, expand into a new market or develop an advantage over a competitor, among other possibilities.
  • Agreement for cooperation among two or more independent firms to work together toward common objectives. Unlike in a joint venture, firms in a strategic alliance do not form a new entity to further their aims but collaborate while remaining apart and distinct.

 

Terminology

Various terms have been used to describe forms of strategic partnering. These include ‘international coalitions’ (Porter and Fuller, 1986), ‘strategic networks’ (Jarillo, 1988) and, most commonly, ‘strategic alliances’. Definitions are equally varied. An alliance may be seen as the ‘joining of forces and resources, for a specified or indefinite period, to achieve a common objective’.

 

Typology


Some types of 'Strategic Alliances' include:

  • 'Horizontal Strategic Alliances', which are formed by firms that are active in the same business area. That means that the partners in the alliance used to be competitors and work together In order to improve their position in the market and improve market power compared to other competitors. Research &Development collaborations of enterprises in high-tech markets are typical Horizontal Alliances. Raue & Wieland (2015) describe the example of horizontal alliances between logistics service providers. They argue that such companies can benefit twofold from such an alliance. One the one hand, they can "access tangible resources which are directly exploitable". This includes extending common transportation networks, their warehouse infrastructure and the ability to provide more complex service packages by combining resources. On the other hand, they can "access intangible resources, which are not directly exploitable". This includes know-how and information and, in turn, innovativeness.
  • 'Vertical Strategic Alliances', which describe the collaboration between a company and its upstream and downstream partners in the Supply Chain, that means a partnership between a company it´s suppliers and distributors. Vertical Alliances aim at intensifying and improving these relationships and to enlarge the company´s network to be able to offer lower prices. Especially suppliers get involved in product design and distribution decisions. An example would be the close relation between car manufacturers and their suppliers.
  • 'Intersectional Alliances' are partnerships where the involved firms are neither connected by a vertical chain, nor work in the same business area, which means that they normally would not get in touch with each other and have totally different markets and know-how.
  • 'Joint Ventures', in which two or more companies decide to form a new company. This new company is then a separate legal entity. The forming companies invest equity and resources in general, like know-how. These new firms can be formed for a finite time, like for a certain project or for a lasting long-term business relationship, while control, revenues and risks are shared according to their capital contribution.
  • 'Equity Alliances', which are formed when one company acquires equity stake of another company and vice versa. These shareholdings make the company stakeholders and shareholders of each other. The acquired share of a company is a minor equity share, so that decision power remains at the respective companies. This is also called cross-shareholding and leads to complex network structures, especially when several companies are involved. Companies which are connected this way share profits and common goals, which lead to the fact that the will to competition between these firms is reduced. In addition this makes take-overs by other companies more difficult.
  • 'Non-Equity Alliances', which cover a wide field of possible cooperation between companies. This can range from close relations between customer and supplier, to outsourcing of certain corporate tasks or licensing, to vast networks in R&D. This cooperation can either be an informal alliance which is not contractually designated, which appears mostly among smaller enterprises, or the alliance can be set by a contract.

 

Michael Porter and Mark Fuller, founding members of the Monitor Group, draw a distinction among types of 'Strategic Alliances' according to their Purposes:

  • 'Technology Development Alliances', which are alliances with the purpose of improvement in technology and know-how, for example consolidated 'Research & Development' departments, agreements about simultaneous engineering, technology commercialization agreements as well as licensing or joint development agreements.
  • 'Operations and Logistics Alliances', where partners either share the costs of implementing new manufacturing or production facilities, or utilize already existing infrastructure in foreign countries owned by a local company.
  • 'Marketing, Sales and Service Alliances', in which companies take advantage of the existing marketing and distribution infrastructure of another enterprise in a foreign market to distribute its own products to provide easier access to these markets.
  • 'Multiple Activity Alliances', which connect several of the described types of alliances. Marketing Alliances most often operate as single country alliances, international enterprises use several alliances in each country and Technology and Development Alliances are usually multi-country alliances. These different types and characters can be combined in a Multiple Activity Alliance

 

Further kinds of 'Strategic Alliances' include:

  • 'Cartels': Big companies can cooperate unofficially, to control production and /or prices within a certain market segment or business area and constrain their competition
  • 'Franchising': a franchiser gives the right to use a brand-name and corporate concept to a franchisee who has to pay a fixed amount of money. The franchiser keeps the control over pricing, marketing and corporate decisions in general.
  • 'Licensing': A company pays for the right to use another companies´ technology or production processes.
  • 'Industry Standard Groups': These are groups of normally large enterprises, that try to enforce technical standards according to their own production processes.
  • 'Outsourcing': Production steps that do not belong to the core competencies of a firm are likely to be outsourced, which means that another company is paid to accomplish these tasks.
  • 'Affiliate Marketing': Affiliate marketing is a web-based distribution method where one partner provides the possibility of selling products via its sales channels in exchange of a beforehand defined provision.

   

Success Factors, Advantages & Disadvantages, Risks & Mistakes
 

Success factors of strategic alliances

The success of any alliance very much depends on how effective the capabilities of the involved enterprises are matched and whether the full commitment of each partner to the alliance is achieved.

 

There is no partnership without trade-offs, but the benefits of it must preponderate to the disadvantages, because alliances are made to fill gaps in each other's capabilities and capacities. Poor alignment of objectives, performance metrics, and a clash of corporate cultures can weaken and constrain the effectiveness of the alliance effectiveness.

 

Some key factors that have to be considered to be able to manage a successful alliance include:

  • 'Understanding': The cooperating companies need a clear understanding of the potential partner´s resources and interests and this understanding should be the base of set the alliance goals.
  • 'No Time Pressure': During negotiations time pressure must not have an influence on the outcome of the process. Managers need time to establish a working relationship with each other, develop a time plan, set milestones, and design communication channels.
  • 'Limited Alliances': Some incompatibilities between enterprises might not be avoidable, so the number of alliances should be limited to a necessary amount, which enables the companies to achieve their goals.
  • 'Good Connection': Negotiations need experienced managers. The managers from large firms need to be connected very well so they have the possibility to integrate different departments and business areas over internal borders, and they need legitimations and support from the top management.
  • 'Creation of Trust and Goodwill': The best basis for a profit-yielding cooperation between enterprises is the creation of trust and goodwill, because it increases tolerance, intensity and openness of communication and makes the common work easier. Further it leads to equal and satisfied partners.
  • 'Intense Relationship': Intensifying the partnership leads to the fact that partners get to know each other better, each other's interests and operating styles and increases trust.

 

Further important factors

  • Ability to meet performance expectations
  • Clear goals
  • Partner compatibility
  • Commitment to long term relationship
  • Alignment

 

Advantages of strategic alliances

For companies there are many reasons to enter a 'Strategic Alliance':

  • 'Shared Risk': The partnerships allow the involved companies to offset their market exposure. Strategic alliances probably work best if the companies´ portfolio complement each other, but do not directly compete.
  • 'Shared Knowledge': Sharing skills (distribution, marketing, management), brands, market knowledge, technical know-how and assets leads to synergistic effects, which result in pool of resources which is more valuable than the separated single resources in the particular company.
  • 'Opportunities for Growth': Using the partner´s distribution networks in combination with taking advantage of a good brand image can help a company to grow faster than it would on its own. The organic growth of a company might often not be sufficient enough to satisfy the strategic requirements of a company that means that a firm often cannot grow and extend itself fast enough without expertise and support from partners
  • 'Speed to Market': Speed to market is an essential success factor in nowadays competitive markets and the right partner can help to distinctly improve this.
  • 'Complexity': As complexity increases, it is more and more difficult to manage all requirements and challenges a company has to face, so pooling of expertise and knowledge can help to best serve customers.
  • 'Costs': Partnerships can help to lower costs, especially in non-profit areas like 'Research & Development'.
  • 'Access to Resources': Partners in a strategic alliance can help each other by giving access to resources, (personnel, finances, technology) which enable the partner to produce its products in a higher quality or more cost efficient way.
  • 'Access to Target Markets': Sometimes, collaboration with a local partner is the only way to enter a specific market. Especially developing countries want to avoid that their resources are exploited, which makes it hard for foreign companies to enter these markets alone.
  • 'Economies of Scale': When companies pool their resources and enable each other to access manufacturing capabilities, economies of scale can be achieved. Cooperating with appropriate strategies also allows smaller enterprises to work together and to compete against large competitors.

 

Further advantages:

  • Access to new technology, intellectual property rights,
  • Create critical mass, common standards, new businesses,
  • Diversification,
  • Improve agility, R&D, material flow, speed to market,
  • Reduce administrative costs, R&D costs, cycle time
  • Allowing each partner to concentrate on their competitive advantage.
  • Learning from partners and developing competencies that may be more widely exploited elsewhere.
  • To reduce political risk while entering into a new market

 

Disadvantages of strategic alliances

  • 'Sharing': In a strategic alliance the partners must share resources and profits and often skills and know-how. This can be critical if business secrets are included in this knowledge. Agreements can protect these secrets but the partner might not be willing to stick to such an agreement.
  • 'Creating a Competitor': The partner in a strategic alliance might become a competitor one day, if it profited enough from the alliance and grew enough to end the partnership and then is able to operate on its own in the same market segment.
  • 'Opportunity Costs': Focusing and committing is necessary to run a strategic alliance successfully but might discourage from taking other opportunities, which might be beneficial as well.
  • 'Uneven Alliances': When the decision powers are distributed very uneven, the weaker partner might be forced to act according to the will of the more powerful partners even if it is actually not willing to do so.
  • 'Foreign Confiscation': If a company is engaged in a foreign country, there is the risk that the government of this country might try to seize this local business so that the domestic company can have all the market on its own.
  • 'Risk of Losing Control': Over proprietary information, especially regarding complex transactions requiring extensive coordination and intensive information sharing.
  • 'Coordination Difficulties': Due to informal cooperation settings and highly costly dispute resolution.

 

Risks of strategic alliances


Using and operating Strategic Alliances does not only bring chances and benefits. There are also risks and limitations that have to be taken in consideration. Failures are often attributed to unrealistic expectations, lack of commitment, cultural differences, strategic goal divergence and insufficient trust.

 

Some of the risks are listed below.

  • Partner experiences financial difficulties
  • Hidden costs
  • Inefficient management
  • Activities outside scope of original agreement
  • Information leakage
  • Loss of competencies
  • Loss of operational control
  • Partner lock-in
  • Partner product or service failure
  • Partner unable or unwilling to supply key resources
  • Partner's quality performance
  • Partner takes advantage of its position

 

Common mistakes of strategic alliances

Many Companies struggle to operate their alliances in the way they imagined it and many of these partnerships fail to reach their defined goals. There are some very "popular" mistakes which can be seen again and again.

 

Some are mentioned here.

  • Low commitment
  • Poor operating/planning integration
  • Strategic weakness
  • Rigidity/ poor adaptability
  • Too strong focus on internal alliance issues instead on customer value
  • Not enough preparation time
  • Hidden agenda leading to distrust
  • Lack of understanding of what is involved
  • Unrealistic expectations
  • Wrong expectation of public perception leading to damage of reputation
  • Underestimated complexity
  • Reactive behaviour instead of prepared, proactive actions
  • Overdependence
  • Legal problems

  

Life Cycle of a Strategic Alliance
 

 

Formation of an alliance

 

Forming a strategic alliance is a process which usually implies some major steps that are mentioned below:

  • 'Strategy Development': In this stage the possibility of a strategic alliance is examined with respect to objectives, major issues, resource strategies for production, technology and people. It is necessary that objectives of the company and of the alliance are compatible.
  • 'Partner Assessment': In this phase potential partners for the strategic alliance are analysed, in order to find an appropriate company to cooperate with. A company must know the weaknesses and strengths and the motivation for joining an alliance of another company. Besides that appropriate criteria for the partner selection are defined and strategies are developed how to accommodate the partner´s management style.
  • 'Contract Negotiations': After having selected the right partner for a strategic alliance the contract negotiations start. At first all parties involved discuss if their goals and objectives are realistic and feasible. Dedicated negotiation teams are formed which determine each partner´s role in the alliance like contribution and reward, penalties and retaining companies´ interests.

 


Operation of an alliance


In this phase in the life of a strategic alliance, an internal structure occurs under which it´s functions develop. While operating it, the alliance becomes an own new organization itself with members from the origin companies with the aim of meeting all previously set objectives and improving the overall performance of the alliance which requires effective structures and processes and a good, strong and reliable leadership. Budges have to be linked, as well as resources which are strategically most important and the performance of the alliance has to be measured and assessed.

 

 

End of an alliance


There are several ways how a strategic alliance can come to an end:

  • 'Natural End': When the objectives, the strategic alliance was founded for have been achieved, and no further cooperation is necessary or beneficial for the involved enterprises the alliance can come to a natural end. An example for such a natural end is the alliance between 'Dassault' and 'British Aerospace' which was founded to manufacture the 'Jaguar' fighter aircraft. After the end of the program no further jets were ordered so the involved companies ended their cooperation.
  • 'Extension': After the end of the actual reason for the strategic alliance, the cooperating enterprises decide to extend the cooperation for following generations of a respective product or expand the alliance to new products or projects. 'Renault' for example worked together with 'Matra' on three successive generations of their 'Espace' minivan, whereas 'Airbus' expanded its cooperation to include a complete family of airplanes.
  • 'Premature Termination': In this case the strategic alliance is ended before the actual objectives of its existence have been achieved. In 1987 'Matra-Harris' and Intel broke up their 'Cimatel' partnership before one of the planned 'VLSI' chips was manufactured.
  • 'Exclusive Continuation': If one partner decides to get out of the strategic alliance before the common goals have been achieved, the other partner can decide to continue the project on its own. This happened when 'Saab' decided to continue with the designing of a commuter aircraft ('SF-340'), after the partner 'Fairchild' had to cancel the alliance because of internal problems. After 'Fairchild' left the project it was named 'Saab 340'.
  • 'Takeover of Partner': Strong companies sometimes have the opportunity to take over smaller partners. If one firm acquires another the strategic alliance comes to an end. After almost ten years of cooperation in the field of mainframe computers with 'Nokia' the last independent British computer manufacturer 'ICL' was taken over by 'Fujitsu' in 2002.
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