Question

• Analyze HR strategies for promoting a successful alliance.
  • Cite specific steps from the Required Resources and your own research that are essential to take before an alliance agreement can be reached.
  • Describe the importance of relationship management to the success of an alliance.
• Evaluate challenges to implementing a successful alliance.
  • Identify potential obstacles that could prevent alliance partners from maintaining productivity, retaining key talent, and promoting long-term implementation of the buy decision.
    • Describe the obstacles and suggest actions that could be taken to prevent or mitigate their effects.
    • Support your analysis with specific examples

Answer 1

What is the Strategic Alliance?

Strategic alliances are possible between two organizations and can be between organizations belonging to the same industry, different but allied industries or totally different industries.

According to Thompson and Strickland, “In recent years, strategic partnerships/alliances have replaced joint ventures as the favored mechanism for joining forces to pursue strategically important diversification opportunities because hey can more readily accommodate multiple partners … then a formal joint venture”.

According to Yoshino and Rangan (1995), the characteristic features of an alliance are:

• Two or more organizations unite to pursue a set of agreed-upon goals but remain independent subsequent to the alliance.
• The partnering firms share the benefit of the alliance and control over the performance of the assigned tasks.
• The partners contribute on an on-going basis in some of the other key areas such as technology product development.

A strategic alliance is formed to help each other in organizational or business functions for mutual benefits. It does not entail forming a new organizational entity.

The partners in strategic alliances have no formal ownership ties like a joint venture. The partners rather work cooperatively under an agreement. The collaborative arrangement must result in win-win outcomes for all partners to ensure ultimate success.

They cooperate on technological development, in sharing R & D information, in developing new products that ‘Complement each other in the marketplace and in building networks of dealers and distributors to handle their respective products.

Examples of strategic alliances include HP and Intel, Microsoft, AT&T, and UPS; Merck and J&J; IBM and Dell; Pfizer and Warner-Lambert.

Steps:

1) Identify Potential Partners: We need to choose counterparts with whom we can easily collaborate with, develop good connections, and those who will actively introduce us to new clients rather than waiting for an opportunity. We also need to focus on those alliance who gets mutually benefited.

2) Research Potential Partners: We need to gather data and research our potential alliances. Our goal in this step is to support our position that a strategic alliance with this firm will be mutually beneficial.

3) Contact Selected Alliance: Now we need to talk about the potential alliance , the benefits of working together, and the opportunity for revenue sharing, how to market to them, and the most effective way to earn their business. This will support our case for forming an alliance and position us as an industry expert and influencer.

4) Identify Opportunity: We need to discuss objectives, obstacles, and expectations for our future relationship. Determine what our alliance should accomplish over the next 12 months.

5) Establish Revenue/Profit Goals: Anything will not be successful unless a profit is been made. We need to determine ideal and minimum revenue and/or profit goals for our alliance.

6) Development of the Plan: Identify the goal for each item, the strategy we will use to obtain results, when the event will take place, and who will be responsible for implementation.

7) Plan Presentation: Now once the plan have been made and checked for errors and once confirmed that the plan is mutually benefited for everyone then we need to present the plan to potential alliance. Discussing profit goal as well as be ready/flexible for taking suggestion for any change.

8) Commitment + Implementation + Followup: Now after finalization we need to implement our alliance and also we need to regularly followup for any changes required.

Importance of relationship management to the success of an alliance

It is very important to understand that Alliance is not a joint venture or partnership, where every party is bound by law. Both parties are separate entities and work on individual level to achieve their individual target. Thus relationship management plays a very key role here. A successful alliance will break in case we don't understand each other and take care of each other's requirements. It takes large amount of time as well as resources to get a successful alliance and if broken will impact cost of the company. Thus we need to understand each other requirement and work regularly on getting betterment of getting our alliance on new heights.

Challenges to implementing a successful alliance.

1) Choosing the Right Partner: The challenges to a strategic alliance begin during the very first stage of choosing a partner. Choosing the wrong partner can be damaging if it is not able to contribute to the growth of our business and offer a degree of dedication, honesty and integrity to the partnership.

2) Building a Mutually Beneficial Alliance: One of the biggest challenges of entering a strategic alliance is ensuring that the partnership is going to benefit both businesses involved. With human nature being motivated by self-interest, it is often difficult to enter into a business relationship with the goal to benefit the other party just as much as it will benefit our brand.

3) Upholding Trust and Honesty: Without a certain degree of trust and honesty, a partnership has no foundation to build on. It is important for both parties approaching an alliance to set their expectations clearly and concisely before the partnership is solidified.    

4) Knowing When to Reassess the Alliance: Every business will experience constant flux and change and initiatives that have once been prosperous may not be right two to three years down the road. To ensure that a business alliance continues to mutually benefit both parties, it is important to know when to reassess the alliance and change the foundation.

Potential obstacles that could prevent alliance partners from maintaining productivity, retaining key talent, and promoting long-term implementation of the buy decision.

1) Cost: This is very major factor which could impact a company's decision to go further.

2) Management Styles: It is very important to know that no two person think a like. Where for one profit is important whereas to another it could be long term relationship.

3) Mind Set: It is possible that one party may think for a shorter goal where another have longer goal in his mind.

4) Flexibility: It's been seen that some party may not feel comfortable to changes. They follow the same procedure as they were following earlier.

5) Cooperation: There were times when one need support of other in their low times. Mutual understanding is very important. It's require cooperation on certain aspects.

The obstacles and suggest actions that could be taken to prevent or mitigate their effects.

The success of strategic alliances mostly depends on effective cooperation among the partners and successful adaptation to change. The collaborative arrangement must result in win-win outcomes for all partners to ensure ultimate success.

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. It is suggested that there should be a regular meeting between alliances to understand each other issues and then to electrify the issue faced by each other.

No time pressure: During negotiations time pressure put an influence on the outcome of the process. It is suggested that managers take 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 it is suggested that 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. Thus it is suggested that 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 legitimation 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.

Examples:

1) Ford and Eddie Bauer

2) Spotify and Uber

3) Google and Luxottica

4) Hewlett-Packard and Disney

5) Starbucks and Barnes & Noble

Source: https://www.allbound.com/resource-center/successful-strategic-alliances-5-examples-of-companies-doing-it-right/