Alliance: two or more parties coming together to set an agreement or goal Types of Alliance Sales alliance Solution-specific alliance Geographic-specific alliance Investment alliance Joint venture alliance
Sales Alliance - The focus is to create sales. - Benefits Create competitive advantage Reduce cost of sales Grow revenue through sales - Exclusivity is not required. Solution Specific Alliance - The focus is joint selling of a jointly developed solution. - Exclusivity may or may not be required. - Specific parameters and incentives for both parties to maximize return.
Geographic-Specific Alliance - Focus is to expand their products and services in a specific geographic region. - Benefits Reduce transportation costs Avoid trade barriers Faster expansion Grow revenue through sales Investment Alliance - Happens when one company makes an investment in another. - Example: Hearst and Boston Consulting Group and Whirlpool and Brandwise.com
Joint Venture Alliance - Occurs when two companies form a separate company to market and/or develop a specific products and services - Example: Northern Telecom and Motorola
Step 1: Business and Market strategy How companys products are incorporated into total customer satisfaction? Mission and Vision of the corporation major objectives companys market strategy - Whether an Alliance relationship is needed? Components of marketing strategy - Product portfolio - Strategy & capital expenditure - Associated marketing programs aim to serve customers satisfaction
Step 2: Marketplace Scan – 4 Stages I. Review of existing competitors & their current market shares II. Review of existing competitors against the identified total customer solution III. Identification of new competitors IV. Identify non-total-customer solution providers which refer to all intermediaries in marketing process. Step 3. Product Portfolio Assessment vs. Marketplace Scan - Identify current product & service in companys product portfolio - Find the keys to drive competitors forward - Eliminating gap of positioning in the marketplace between company and competitors.
Step 4: Build Internally vs. Acquire Externally - First choice, do nothing and give specific market segment to the competitors. -Second Choice, create technology in a corporation - Third Choice, acquire externally A Corporation should determine the cost and benefit analysis Step 5: Organizational Readiness and Speed to Market Demand - Does the corporation is ready to build internally? - Does the products are needed? Step 6: Proceed to Build Internally or Acquire Externally - Consider step 4 and 5 - If acquire externally, make sure that the products and services match with the total customer solution and enhance the companies gaining.
Do you need an alliance that is sales-based? - All alliances must be either directly or indirectly related to sales-based. Otherwise, consider Work for Hire Is there a need for joint solution development? - It is only needed in the solution-specific, investment and joint ventures. Is the need geographic-based? - This is necessary for geographic-specific and joint ventures but sometimes can be related to sales-based alliance. Is there a necessity for a direct investment in the external company? - Usually required by investment and joint ventures. Is there an overriding reason to set up a company to acquire the needed products or services from the external provider? - Only in joint ventures
Pulling together the answers from the framework - Look horizontally and vertically and compare the answer to the framework to find the match of alliance type.