Which of the following is not a characteristic of global strategic partnership

Q: What are the advantages of contract manufacturing include all of the following except?

The advantages of contract manufacturing include all of the following except: considerable commitment of management resources.

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Inhaltsverzeichnis Show

What are Strategic Alliances?
Types of Strategic Alliances
Reasons for Strategic Alliances
Value Creation in Strategic Alliances
Related Reading
What is global strategic partnership?
What are the three types of strategic partnerships?
What are the disadvantages of strategic partnership?
What are the advantages of contract manufacturing include all of the following except?

Abstract

Managing the different kinds of risk in strategic alliances is a complex task. We propose a comprehensive framework of risk management with two components. First, we discuss the roles of relational risk and performance risk in alliance resource management. The overall goal is to gain access to partner firms' valuable resources while keeping one's own resources intact. To that end, alliance managers may choose from four orientations--control, flexibility, security, and productivity. The second part of the framework focuses on various risks in the alliance management process, including the stages of partner selection, structuring, operation, and performance evaluation. Within each stage, we identify the key risk that may affect alliance success. These risks are related to fit, flexibility, collaboration, and planning for the future. Together, the two components of the framework provide insights and guidelines for managers to effectively deal with the major risks in the management of alliances.

Journal Information

Effective with the February, 2006 issue the Academy of Management Executive has changed its name to the Academy of Management Perspectives. The overall goal of the Academy of Management journals is to serve the interests of the Academy's members, and the specific goal of the new Academy of Management Perspectives (AMP) is to publish accessible articles about important issues concerning management and business. AMP articles are aimed at the non-specialist academic reader, and should also be useful for teaching. Serving both these goals more effectively requires a change in strategy and direction for the journal. Going forward, Perspectives will concentrate on two types of articles aimed at this thought leader audience. The first are accessible surveys and reviews of contemporary knowledge about management and business issues. The goal would be to make information about empirical research in management accessible to the non-expert, including students, and the focus of the reviews would have to be on the phenomena of business and management, not the development of the academic literature.

Publisher Information

The Academy of Management (the Academy; AOM) is a leading professional association for scholars dedicated to creating and disseminating knowledge about management and organizations. The Academy's central mission is to enhance the profession of management by advancing the scholarship of management and enriching the professional development of its members. The Academy is also committed to shaping the future of management research and education. Founded in 1936, the Academy of Management is the oldest and largest scholarly management association in the world. Today, the Academy is the professional home for more than 18290 members from 103 nations. Membership in the Academy is open to all individuals who find value in belonging.

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Cooperation between competitors for strategic purposes

What are Strategic Alliances?

Strategic alliances are agreements between two or more independent companies to cooperate in the manufacturing, development, or sale of products and services, or other business objectives.

For example, in a strategic alliance, Company A and Company B combine their respective resources, capabilities, and core competencies to generate mutual interests in designing, manufacturing, or distributing goods or services.

Types of Strategic Alliances

There are three types of strategic alliances: Joint Venture, Equity Strategic Alliance, and Non-equity Strategic Alliance.

#1 Joint Venture

A joint venture is established when the parent companies establish a new child company. For example, Company A and Company B (parent companies) can form a joint venture by creating Company C (child company).

In addition, if Company A and Company B each own 50% of the child company, it is defined as a 50-50 Joint Venture. If Company A owns 70% and Company B owns 30%, the joint venture is classified as a Majority-owned Venture.

#2 Equity Strategic Alliance

An equity strategic alliance is created when one company purchases a certain equity percentage of the other company. If Company A purchases 40% of the equity in Company B, an equity strategic alliance would be formed.

#3 Non-equity Strategic Alliance

A non-equity strategic alliance is created when two or more companies sign a contractual relationship to pool their resources and capabilities together.

Learn more in CFI’s Corporate and Business Strategy Course.

Reasons for Strategic Alliances

To understand the reasons for strategic alliances, let us consider three different product life cycles: Slow cycle, Standard cycle, and Fast cycle. The product life cycle is determined by the need to innovate and continually create new products in an industry. For example, the pharmaceutical industry operates a slow product lifecycle, while the software industry operates in a fast product lifecycle. For companies whose product falls in a different product lifecycle, the reasons for strategic alliances are different:

#1 Slow Cycle

In a slow cycle, a company’s competitive advantages are shielded for relatively long periods of time. The pharmaceutical industry operates in a slow product life cycle as the products are not developed yearly and patents last a long time.

Strategic alliances are formed to gain access to a restricted market, maintain market stability (setting product standards), and establish a franchise in a new market.

#2 Standard Cycle

In a standard cycle, the company launches a new product every few years and may or may not be able to maintain its leading position in an industry.

Strategic alliances are formed to gain market share, try to push out other companies, pool resources for large capital projects, establish economies of scale, or gain access to complementary resources.

#3 Fast Cycle

In a fast cycle, the company’s competitive advantages are not protected and companies operating in a fast product lifecycle need to constantly develop new products/services to survive.

Strategic alliances are formed to speed up the development of new goods or services, share R&D expenses, streamline market penetration, and overcome uncertainty.

Value Creation in Strategic Alliances

Strategic alliances create value by:

Improving current operations
Changing the competitive environment
Ease of entry and exit

Current operations are improved due to:

Economies of scale from successful strategic alliances
The ability to learn from the other partner(s)
Risk and cost being shared between partner(s)

Changing the competitive environment through:

Creating technology standards (for example, Sony and Panasonic announce to work together to produce a new-generation TV). This would help set a new standard in a competitive environment.

Easing entry and exit of companies through:

A low-cost entry into new industries (a company can form a strategic partnership to easily enter into a new industry).
A low-cost exit from industries (A new entrant can form a strategic alliance with a company already in the industry and slowly take over that company, allowing the company that is already in the industry to exit).

Learn more in CFI’s Corporate and Business Strategy Course.

Challenges

Although strategic alliances create value, there are many challenges to consider:

Partners may misrepresent what they bring to the table (lie about competencies that they do not have).
Partners may fail to commit resources and capabilities to the other partners.
One partner may commit heavily to the alliance while the other partner does not.
Partners may fail to use their complementary resources effectively.

Thank you for reading CFI’s guide to Strategic Alliances. To keep learning and advancing your career in corporate finance we recommend these additional free CFI resources to help you along your path:

M&A Synergies
M&A Considerations and Implications
Amalgamation
Asset Acquisition
See all management & strategy resources

What is global strategic partnership?

Global Strategic Partnerships (GSP) is an enterprise group at Northwell Health that is focused on developing and maintaining strategic relationships with pharmaceutical and biotech companies, international trade agencies, enterprise partners and our own internal stakeholders.