HAMEL, G., DOZ, Y., & PRAHALAD, C. (1989): COLLABORATE WITH YOUR COMPETITORS AND WIN THERE ARE MANY AIMS FOR COMPANIES TO ENGAGE IN INTERNATIONAL ALLIANCES WITH THEIR COMPETITORS. LIST THESE AIMS! FOR EACH AIM LISTED, DEVISE BEST PRACTICES THAT WILL HELP THE COMPANY TO ACHIEVE ITS AIMS! Group 8: Aleksi Jokela, Emmi Peltonen, Maria Sundin, Saara Sulonen TU-E1120 Strategic Management of Technology and Innovation

“Keep your friends close but your enemies closer.” Alliances Acquire capabilities Avoid investments Keep up or catch up Alliances Summary

Alliances What does it mean? “A strategic alliance is where two or more organisations share resources and activities to pursue a strategy.” (Johnson et al. 2011) In a strategic alliance companies remain distinct What kind of alliances are there? Equity alliances, e.g. joint ventures, consortium alliances Non-equity alliances, e.g. franchising, licensing, long term subcontracting Acquire capabilities Avoid investments Keep up or catch up Alliances Summary Alliances

Motives for alliances Scale alliances Access alliances Complementary alliances Collusive alliances (Johnson et al. 2011) Same alliance can be based on different motives depending on the point of view Acquire capabilities Avoid investments Keep up or catch up Alliances Summary Alliances

Acquire capabilities New technological products, processes, skills, and market understanding Best practices: Enhance capacity to learn Acknowledge who is teacher and who is student (roles can change) Exploit all opportunities to learn Control the knowledge flow - Do not teach “extra” Employees should be more dedicated to the company than to scientific knowledge Acquire capabilities Avoid investments Keep up or catch up Alliances Summary Acquire capabilities

Example: Japanese and Western companies Japanese and Western companies “Our Western partners approach us with the attitude of teachers. We are quite happy with this, because we have the attitude of students.” (Japanese senior executive) Asian companies know not to “open the kimono” Western companies have their engineers telling too much Dedication: taking notes when it is not even one’s task to Technological knowledge Marketing Acquire capabilities Avoid investments Keep up or catch up Alliances Summary Acquire capabilities

Avoid investments Share investment risk e.g. reduce costs and risks of entering a new market or business Collaboration as sophisticated outsourcing deals OEM (original equipment manufacturing) or other big outsourcing deals can be leveraged to gain competitiveness with low effort Acquire capabilities Avoid investments Keep up or catch up Alliances Summary Avoid Investments

Avoid investments Collaboration should have goals beyond investment avoidance It is possible to avoid investments while building process capabilities and creating new technologies Companies who had more diverse goals benefitted more for collaboration Monitor competency leak Even product orders can give a lot of information about your market preferences Routing all collaboration requests through one department enables monitoring of outgoing information Acquire capabilities Avoid investments Keep up or catch up Alliances Summary Avoid Investments

Example: Outsourcing or not? General Motors buys cars and components from Korea's Daewoo. Siemens buys computers from Fujitsu. Apple buys laser printer engines from Canon. The traffic is almost entirely one way. Acquire capabilities Avoid investments Keep up or catch up Alliances Summary Avoid Investments

Keep up with the industry or catch up with it Gain skills and competences to catch up with the industry Avoid the dependency spiral A laggard attempts to compensate for past failures. The latecomer uses the alliance to close a specific skills gap Paradox/dependency spiral (if based on short-term gains): Laggard becomes more and more dependent on latecomer while latecomer gains new competencies and capabilities To keep up reciprocity the laggard has to reveal more and more knowledge Keep up or catch up

Example: Laggards and latecomers Rover and Honda In the 1970’s Rover turned to Honda for technology and product- development support Rover had fallen behind in key skills area Attempt to compensate for past failures Acquire capabilities Avoid investments Keep up or catch up Alliances Summary Keep up or catch up

Successful alliances “Strategic goals converge, competitive goals diverge” Different competitive goals, same strategic goals Common enemy - the (much bigger) market/industry leader Successful alliances often occur between companies of modest size and market power compared to industry/market leader Acquire capabilities Avoid investments Keep up or catch up Alliances Summary

Successful alliances Warning: “Alliances seem to run most smoothly when one partner is intent on learning and the other is intent on avoidance.” However, a competitive product is not the same as a competitive organisation Acquire capabilities Avoid investments Keep up or catch up Alliances Summary

Limit transparency of operations: limit scope of formal agreement (e.g. partner over one process, not all processes) control the knowledge flow ! monitor and control access to critical skills and technologies Learn from the partner: Formal and informal transfer Benchmarking Beware of deepening dependence! Acquire capabilities Avoid investments Keep up or catch up Alliances Summary