WHAT IS AN ALLIANCE?

by Group8 Sec.2

4880569 Kampanart Padungvorasart

4980277 David Alexander Gray

4980359 Nattida Sathirathai

4980425 Sara Choi

Definitions of “Alliances”

Webster defines the word “Alliance” asI. An allying or close association, as of

nations for a common objective, families by marriage

II. An agreement for thisIII. The countries, groups, etc. in such

association

Definitions of “Alliances”

participation

affinitymembership

support

connection

cooperation

union

agreement

Common understanding

relation

collaboration

kinship

bondaffiliation

coalition

partnershipfusion

combination

coupling

Types of Alliances

Sales Alliance Solution-Specific Alliance Geographic-Specific Alliance Investment Alliance Joint Venture Alliance

Sales Alliance

Sell complementary products Usually revolves around targeted

clients or targeted industries

Solution-Specific Alliance

Jointly develop and sell a specific marketplace solution

E.g. Whirlpool, Hearst and Boston Consulting Group

Exclusivity may or may not be “in play” with solution specific alliances.

Geographic-Specific Alliance

Two companies agree to jointly market or co-brand their products and services in a specific geographic region.

Very popular in the beer industry.

Investment Alliance

One company makes an investment in another company while at the same time developing an agreement to jointly market their products and services.

The company provides data synchronization and scan based trading solutions to the consumer products, retail and other industries. Hewlett Packard, i2 Technologies and Cap Gemini

Ernst & Young have all invested in viaLink.

Joint Venture Alliance

Two companies come together and form a third company to specifically market and/or develop specific products and services. It usually means setting up a separate organization and financial structure, with ownership interests and incentives specified as the joint venture is established.

There is a legal aspect to the alliance which protects interests, but a separation can be very painful.

Real World Examples

A solid investment in terms of organization and planning, but it did not take into account supply chain execution and real-time product promising and order status.

Lets customers fill out an online questionnaire, and receive a purchase recommendation from dealers in the buyer’s geographic area. The buyer then receives real-time pricing and product availability from the retailer or dealer.

Real World Examples

Competition for Customer Relationships eMarketplace alliances compete for control of customer

relationships. These relationships directly translate into purchase

orders. For appliance sales, it is the major appliance retailers

who own the customer relationships. These retailers have the on-site appliance inventories (or knowledge of their regional warehouse inventories) and can commit to specific delivery dates and times.

Maytag.com took this customer centered approach into consideration, and succeeded in the alliance, whereas Brandwise.com did not, and failed within two years.

Framework to Determine The Need for an Alliance

I. Business and Market StrategyII. Marketplace ScanIII. Product Portfolio Assessment vs.

Marketplace ScanIV. “Build Internally” vs. “Acquire Externally”V. Organizational Readiness and Speed to

Market DemandVI. Proceed to “Build Internally” or “Acquire

Externally”

Framework to Determine What Type of Alliance Is Needed

I. Do you need an Alliance that is Sales-Based? II. Is there a Need for Joint Solution

Development?III. Is the Need Geographic-Based?IV. Is there a Necessity for a Direct Investment in

the External CompanyV. Is there an Overriding Reason to Set Up a

Company to Acquire the Needed Products and Services from the External Provider?

VI. Pulling Together the Answers from the Framework

Real-World Examples

When two companies entered into a solution-specific alliance, not considering the need for a sales or client-based alliances, when a sales plan could not provided as the alliance agreement was executed, the alliance had to be postpone just by missing the validity of the type of alliances needed by these two companies.

Under two-year alliance agreement, one company was attempting the alliance into a sales mode, while the other company was trying into a joint solution development direction. Since these two companies were progressing in different directions, the two companies did get together and agreed to jointly develop a marketplace solution that embrace the new piece of technology.

Summary

The need to rapidly recognize the need for alliance partners and select the right alliance partner may determine being a world-class company and an average company.

The “Framework to Determine the Need for an Alliance” let you determine whether or not an alliance is needed. After it has been decided, then the “Framework to Determine What Type of Alliance Is Needed” provides a map into the five types of alliance.

The combination of the two frameworks will establish successful alliances.