MAN4054 Final

Collective Research Organizations

Organizations formed to facilitate collaboration among a group of firms.

impact on strategic decision

Would the collaboration help the firm achieve its strategic intent?

Equity ownership:

each partner contributes capital and owns a share of equity in the alliance

Quadrant D of technology alliance strategies table

firms that use a NETWORK OF ALLIANCES to exchange capabilities and jointly develop new capabilities

participation in a collective research organization is usually long term or short term?

long term

Relational Governance typically emerge....

over time through repeated experiences of working together

strategic alliances can enhance the firm's overall level of ___

flexibility

Strategic alliance:

formal or informal agreements between 2 or more organizations to cooperate in some way

when did worldwide use of technology/research alliances peak? why?

mid-1990s; driven by dramatic increases in alliance activity by IT firms

warning for strategic alliances:

must ensure that the alliance doesn't inadvertently result in giving too much away to a potential competitor

contract manufacturing

when a firm hires another firm to manufacture its products

Does the worldwide formation of technology or research alliances vary over time?

yes; rises and falls randomly

Yves Doz and Gary Hamel say that it's useful to categorize a firm's alliance strategy along 2 dimensions:

1. the degree to which alliances practice capability complementation vs. capability transfer; 2. whether the firm manages each alliance individually or managers a collective network of alliances

alliance contracts

Legally binding contractual arrangements to ensure that partners a) are fully aware of their rights and obligations in the collaboration and (b) have legal remedies available if a partner should violate the agreement.

5 Advantages of Collaborating:

Obtaining needed skills or resources more quickly; Reducing asset commitment and increase flexibility; Learning from partner; Sharing costs and risks; Can build cooperation around a common standard

relational governance can facilities more extensive...

cooperation, sharing, and learning by partners

a firm's effectiveness at managing its collaborations will ____ with the number of collaborations to which it's committed

decline

alliance relationships often lack the shared language, routines, and coordination that are needed to...

facilitate the transfer of knowledge

Downsides of Outsourcing

firm may be forfeiting important learning opportunities; imposes large transaction costs for a firm

Quadrant A of technology alliance strategies table

firms that forge an INDIVIDUAL alliance to combine COMPLEMENTARY TECHNOLOGIES or skills needed for a project

Quadrant C of technology alliance strategies table

firms that use INDIVIDUAL alliances to TRANSFER CAPABILITIES between them

Quadrant B of technology alliance strategies table

firms that use a NETWORK OF ALLIANCES to combine COMPLEMENTARY TECHNOLOGIES or skills needed for a project

Trade-offs & Advantages for outsourcing

medium control, medium cost, medium speed, sometimes potential for leveraging existing competencies, no potential to develop new competencies, potential for accessing other firms' competencies

licensing can be a good way for a firm to obtain enabling technologies that are..

necessary for its products/services but are not central to the firm's competitive advantage

firms that don't possess the competencies, facilities, or scale to perform all the value-chain activities for a new innovation might

outsource

for the licensor, licensing can enable the firm's technology to

penetrate a wider range of markets than it could on its own

Trade-offs & Advantages for licensing

quick speed, lower cost, low control; can offer opportunities for leveraging existing competencies/developing new ones

licensing enables a firm to...

rapidly acquire a technology it doesn't possess

2 dimensions that influence how well suited partners are to each other:

resource fit & strategic fit

Evaluate Partner Selection by 5 qualities:

resource fit, strategic fit, impact on opportunities & threats, impact on internal strengths & weaknesses, impact on strategic direction

collaborations based on supplementary resources are motivated by

seeking resources that are similar to those possessed by the firm

Trade-offs & Advantages for solo internal development:

slow & expensive since the firm bears all the costs; good b/c the firm retains total control and offers potential for the firm to leverage its existing competencies and develop new competencies

Trade-offs & Advantages for strategic alliances

speed, cost, and degree of control varies; many offer opportunities for leveraging existing competencies/developing new ones

Doz and Hamel created the ____ ____ ___ table

technology alliance strategies

Strategic Fit

the degree to which partners have compatible objectives and styles

resource fit

the degree to which potential partners have resources that can be effectively integrated into a strategy that creates value

collaborations based on complementary resources are motivated by

the need to access resources the firm doesn't possess

contract manufacturing allows firms to meet .... without....

the scale of market demand without committing to long-term capital investments or an increase in the labor force

Outsourcing

When an organization (or individual) procures services or products from another rather than producing them in-house.

cooperation may be crucial for technologies in which...

compatibility and complementary goods are important

capability complementation

Combining ("pooling") the capabilities and other resources of partner firms, but not necessarily transferring those resources between the partners.

capability transfer

Exchange of capabilities across firms in such a manner that partners can internalize the capabilities and use them independently of the particular development project.

Impact on Opportunities and Threats

How would collaboration impact bargaining power of customers and suppliers, degree of rivalry, threat of entry or substitutes?

ex of a failed joint venture

IBM, HP, & Apple's Taligent failed to overthrow Microsoft's Windows

Relational Governance

Self-enforcing norms based on goodwill, trust, and reputation of the partners

Types of Collaborative Arrangements

Strategic Alliances, Joint Ventures, Licensing, Outsourcing, Collective research

impact on internal strengths and weaknesses

Would collaboration enhance firm's strengths? Overcome its weaknesses? Create a competitive advantage?

Licensing

a contractual arrangement that gives an organization (or individual) the rights to use another's intellectual property, typically in exchange for royalties.

Joint venture:

a partnership between 2 or more firms involving a significant equity stake by the partners and often resulting in the creation of a new business entity; strategic alliance

joint ventures entail significant structure & commitment because it involves

a significant equity investment from each partner and often results in establishment of a new separate entity

equity ownership partnerships help..

align incentives and provide sense of ownership

Trade-offs & Advantages for joint ventures

can take as long as solo internal development (maybe slightly faster); firms share cost and control; offer opportunities for leveraging existing competencies/developing new ones

collective research organizations are formed through..

government, industry, or private association intitiatives

why do firms use strategic alliances?

to assess a capability no possess in-house; or to more fully exploit their own capabilities by leveraging them in another firm's development efforts; or to share the risk of a venture

licensing out a technology offers a fast way for a firm

to extend the reach of its technology that is nearly free and offers the potential for royalties

firms should match the _______ of a collaboration mode to their needs

trade-offs