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D. ROUACH, ESCP-EAP 10.01 Intel's Manufacturing Strategy World's largest semiconductor company Two dominant products: Microprocessors Flash memories Multiple.

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Presentation on theme: "D. ROUACH, ESCP-EAP 10.01 Intel's Manufacturing Strategy World's largest semiconductor company Two dominant products: Microprocessors Flash memories Multiple."— Presentation transcript:

1 D. ROUACH, ESCP-EAP Intel's Manufacturing Strategy World's largest semiconductor company Two dominant products: Microprocessors Flash memories Multiple manufacturing sites for the same product Huge volumes at each site

2 D. ROUACH, ESCP-EAP Reasons for Semiconductor Alliances Competitive Alliances: share costs, resources and technology reduce risk and time-to-market raise customer confidence in success improve customer sourcing position Non-Competitive Alliances: diversify into new business or technology guarantee source of supply

3 D. ROUACH, ESCP-EAP Copy EXACTLY! Transfer of new technologies in both new and existing factories accomplished in record time Less startup problems and faster time to resolve them Equal productivity from the start One learning curve Less problems, therefore more resources per problem Source: C.J. McDonald, Intel

4 D. ROUACH, ESCP-EAP The future of AT&T in Europe depends on its alliances AT&T is building a strong network of partners in Europe Unisource (Sweden, The Netherlands, Switzerland) in 17 countries Telecom Italia (Europe and Latin America) Local Partners (France, Germany, Italy) Our services development depends on our alliances Business services (Communications, On-line) Consumer services World Partners for global reach The growth of European customer base is the keystone to develop US skills transfer Value added services Commercial attitudes Source : AT&T

5 D. ROUACH, ESCP-EAP Map of overseas laboratories (National/Panasonic) PERDC AVTC AVIRC AMS MACRAD R&D Center MTV Corporate Laboratories: Global mission Regional mission Division Laboratory Corporate Organization MITT PTI/TAD-West STL PTI MADC PDC MCC KMERL PTI MIERL PTI PTI/Technoresearch Office PTI/Boston Office PTI/TAD-East ATVL MARL PTI MITL PTI CSTL PTI ATVL: Panasonic Adv. TV - Video Laboratories, Inc. AVIRC: AV/Information Research Center CSTL: Communication Systems Technology Laboratory MARL: Matsushita Applied Research Laboratory MITL: Matsushita Information Technology Laboratory MITT: Matsushita Electric Institute of Tech. (Taipei) Co.,Ltd. PERDC: Panasonic European R&D Center (Panas. Europe (HQ) Ltd. PTI: Panasonic Technologies, Inc. (parent company for 6 US-based R&D Laboratories STL:Speech Technology Laboratory TAD: Technology Administration Div.

6 D. ROUACH, ESCP-EAP Knowledge Management Matrix Source: Conference MBA, Lars Ch. Smith Know Don't know Know EXPLICIT Known knowledgeGaps Don't know TACIT Unknown knowledge Gaps

7 D. ROUACH, ESCP-EAP Knowledge Management Matrix "Chief knowledge Managers" Knowledge that you know you have Knowledge that you don't know that you have Knowledge that you know you don’t have Knowledge that you don't know that you don't have Source: Conference MBA, Lars Ch. Smith Know Don't know Know Don't know

8 D. ROUACH, ESCP-EAP American Proverb Prod. by MrJR (-: Coopetition « If you cannot beat them » Join them !

9 D. ROUACH, ESCP-EAP Jack Welsh Chairman of General Electric Prod. by MrJR (-: Coopetition « Who is my client in the morning, my rival in the afternoon, and my supplier in the evening? »

10 D. ROUACH, ESCP-EAP The development of alliances and partnerships is part of Gemplus’ strategy to benefit from external sources and competencies. The co-operation agreement covers joint marketing sales and development efforts in the smart card market. The agreement brings together the card technology of Gemplus with IBM’s systems capabilities and expertise, and will involve development of multi-application cards, for use in electronic commerce and other electronic business transactions. Gemplus, Alliances and partnership Cooperation

11 D. ROUACH, ESCP-EAP The industry is dominated by well established players…. Chip Manuf. Chip Manuf. Terminal Suppliers Terminal Suppliers System Integ. System Integ. S/Ware End User End User Card Manuf. Card Manuf. ST Siemens Hitachi Philips Motorola Gemplus Bull G & D Schlumberger Oberthur Ingenico Dassault Hypercom Verifone IBM Bul Ski Data Cap Gemini Sun Microsoft Informax

12 D. ROUACH, ESCP-EAP Strategic Alliances; a vital need... Now that Gemplus has gained sufficient scope and maturity; it is replacing its original sole financial partners with investors from the manufacturing and service industries who have a strategic interest in a link up with Gemplus. Market penetration and development Sharing Technology Horizontal Integration Finance to reach critical size

13 D. ROUACH, ESCP-EAP The main difficulties in technology alliances are managerial TYPE OF PROBLEM FREQUENCYFREQUENCY Different priorities of the involved companies 52% Difference in company culture 42% Change in strategies / priorities 39% Lack of technical competence on partner ’s side 25% Difficulties to adapt the cooperation to new commercial conditions 23% Difference in organizational level status of concerned staff 23% Changes in ownership 21% Source: Hakanson & Lorange, 1988 by Francis Bidault

14 D. ROUACH, ESCP-EAP Innovating all together? Technological Alliances Increasing technological integration: Data-processing and telecommunications Micro-electronics Composite materials and optical technologies Increasing sectors integration: Agriculture, chemistry and energy, telematics and mass media Direct or indirect covering of every potential sector

15 D. ROUACH, ESCP-EAP Innovating all together? The boomerang effects of technology transfers THE RISKS

16 D. ROUACH, ESCP-EAP Key question: How to detect technologies likely to bring a competitive advantage? Answer: The Technological and Competitive Intelligence Key question: How to detect technologies likely to bring a competitive advantage? Answer: The Technological and Competitive Intelligence Innovating all together? Innovation as a necessary Competitive instrument The technology as an innovation support Technology Innovation Competitiveness

17 D. ROUACH, ESCP-EAP The risks: The Infeudation In the case of an exclusive transfer, the company can progressively increase its dependance on the partner's technology, and then be assimilated by him. The risk of loosing its independence Innovating all together?

18 D. ROUACH, ESCP-EAP The risks : "the trojan horse" : Not transferring everything he promised to give, Taking more than what he asked for, Trying to weaken the company or to increase its dependance towards him. The partner can have hidden intention Innovating all together?

19 D. ROUACH, ESCP-EAP Global alliance in Smart Cards systems will provide benefit to all actors By creating new markets opportunities ! But Silicon suppliers should be much more involved at the beginning of the process : Standards Definition of key products Value added on Silicon Card Suppliers Card Suppliers Terminals & Applicative Software Suppliers Terminals & Applicative Software Suppliers System Developpers System Developpers Build and operate new businesses Build and operate new businesses Chip Silicon Suppliers Chip Silicon Suppliers

20 D. ROUACH, ESCP-EAP The future of Smart Cards businesses depends on Partnerships Build a new business environment : Smart Card replacing Paper Computer processing replacing manual or semi automatic processing & Information System New era of interactive information systems: VISA, Master Card... or Microsoft, Oracle, Netscape, etc. Card manufacturer should be able to provide complete solutions by effective alliances withterminals providers Software companies System integrators

21 D. ROUACH, ESCP-EAP Smart Cards partnership programs : Distributors & value added resailers (VAR) Partnership programs -Terminals -Suppliers -Integrators Direct sales to key account Internal Silicon Supplier Internal JV LicenseJV Design of new products Buying components & modules Production Cards & Printing Personalization Commer- cialization

22 D. ROUACH, ESCP-EAP General cooperation agreements : anchor point Distribution agreements Ways of... Research contract Common Research Common purchase Subcontracting Engineering contract Patent licence Common production Trademark licence Consortium (common marketing) Designing Supplying ProducingMarketingDelivering

23 D. ROUACH, ESCP-EAP Is it a tactic or a Marriage? Broad Scope of Alliance Activity Narrow Expected Duration ShortLong A Short Term Tactic A Long Term Marriage

24 D. ROUACH, ESCP-EAP What do you want from your partner, after the deal is done? All we wanted was the cash, the nationality, the brand name, the patents rights, access to your distribution Just teach us To use your technology A true partnership Combining brains and resources Nothing A One Time Transfer Ongoing managerial Input matched by us

25 D. ROUACH, ESCP-EAP Keeping an Alliance Healthy Monitor the state of the partner relationship, and adjust payoffs and processes as you go. Watch for "strategic space" collisions, between alliance and parents. Put some of your best managers in alliances and at the partner interface. "Good cop, bad cop" bard members. Recognize and manage cultural differences. Communicate, more than you think is reasonable. Do not "micro" manage, from the parent level. If the alliance has served its purpose, end it.

26 D. ROUACH, ESCP-EAP What are the alternatives? Pros Working with familiar people and resources Fast decision making Control Cons May be too financially risky May be too slow May need help Pros Achieve major change quickly Control Cons Expensive Integration may be difficult Irreversible Pros Risk sharing Economies of scale Quick access to resources and skills Political necesity Learning opportunity Cons May be difficult to manage well May prove inflexible Go it alone...Form an alliance...Make an acquisition...

27 D. ROUACH, ESCP-EAP To Get Partnership and Alliances "Right"... Should we? What do we really need? What are the options? Rewards and risks of each? Scope and duration Type of alliance Partner choice Ownership Payoffs Reacting to unexpected events Adjusting original design and payoffs Alliance Design Operating over time

28 D. ROUACH, ESCP-EAP Desired Partner Characteristics The "Three C's" Importance Level LowMediumHighLowMediumHigh C apability C ompatibility C ommitment

29 D. ROUACH, ESCP-EAP Implementing Technology Transfer strategies AUTONOMOUS WAY COOPERATIVE WAY DEVELOPING BUYING Internal R&D « Intraprenariat» Joint R&D agreement Common R&D subsidiary company R&D consortium Subcontracted R&D Licence purchasing Investment in an innovative company Licence SWAP Joint licence purchasing Joint acquisition of an innovating company

30 D. ROUACH, ESCP-EAP Definition Alliances Stand alone Transactions Joint venture Merger An alliance is any formal arrangement between two or more independent or organisations for purposes of mutual gain through cooperation for a limited period of time Source : KMPG

31 D. ROUACH, ESCP-EAP Forming global alliances and Network organisations Companies try to find new competitive space and build business outside their business column New surprising combinations of Technology areas; more and more converging branches Changing configurations between companies towards active networks Trans cultural collaboration becomes more rule that exception Learning organisations are better equipped to master the business dynamics « The Company of the Future combines all these elements » Source : KMPG

32 D. ROUACH, ESCP-EAP In general strategic alliances are underperforming Success rate of alliances is only a meagre 30 – 40 % Alliance-formation is not a common management skill Underestimation of ‘soft’ aspects (company culture, chemistry of persons, commitment) Source : KMPG survey 1996/97 Nevertheless sharp increase in number of alliances is to be expected

33 D. ROUACH, ESCP-EAP Alliances brings management in paradoxal situation Challenge: Increasing the level of comfort Source : KMPG But…… ?! Past way of thinking: Control + To be in control is normal practice in business Companies can’t do it all alone anymore; too much to handle Alliances are a way out, but at the same time you loose control a low ‘Comfort level’

34 D. ROUACH, ESCP-EAP The Base for alliances: Commitment Reputation Teamwork Act, without escapes Small steps Contract Source : KMPG « Think in terms of credible commitments » Commitment Contract

35 D. ROUACH, ESCP-EAP Gradually the importance of ‘soft’ issues is regocgnised importance t ‘soft’ ‘hard’ Source : KMPG


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