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SELECTING THE PARTNER ?
HOW TO
Group 8
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Selecting the Partners
Agenda:
• Overview of partner selecting• Strategic fit reconciliation map• Resource fit reconciliation map• Self-selection• Multiple partner option
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Alliances are often compared to marriagesThere is no recovery from choosing the
wrong spouse
Alliance Framework: STEP5 Partner Selection
Three issues of selecting partners
1) Which partners shows the least trouble for some disagreement ?
2) Which partners give the best match required resource?
3) Which partners agree with the deal?
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In an ideal world the best partner in step 3 and 4.
In the real world difficult to narrow down the partners who fit with all the needs completely.
So our presentation will come up with how the firms can use the framework to make best choice of potential partners!!!!
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Looping Back to Step2, Achieving Internal Consensus
Strategic fit+ Resource fit Assessments provide the information for each partner
More importantly see the strategic interest of the firm whether both firms come together or difference
The planning and negotiation team understand the quality and quantity of each partner’s resources
If having problems, go back step2 to resolve it
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STRATEGIC AND RESOURCE FIT RECONCILIATION MAP?
WHAT IS
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Three possibilities in dealing with SAE disagreements:Agree with the partner’s position Convince the partner to agree with your position Develop a compromise between the two positions
Purpose:
“ To help company see and evaluate the potential partner’s strategy whether it will fit with company’s strategy or not”
Strategic fit reconciliation map
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Example of Strategic Fit Reconciliation MapExample of Strategic Fit Reconciliation Map
Strategic Assessment
Elements (SAE)
Our firm Partner 1 Partner2
Objective
Roles
Market Models
Strategic fit reconciliation map
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Get to know some symbols:
Strategic fit reconciliation map
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A Sample Case
Background:
- Large pet food company wants to do the alliance
with a biological firm to come up with the new nutrition
ingredients for its pet foods. The goal of the alliance
project is to jointly develop series of new product lines
with a biological firm. The pet food company will distribute
the improved products through its distribution network.
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A Sample Case (cont)
Problem: Two candidates (company A and B) to ally with the pet
food company Both firms tend to have conflict with the pet food company The pet food company decided to go on the process of
strategic assessment
Pet food’s strategy• To establish and maintain reputation for innovation though sole-branding• The customers would see the pet food company brand only, not biotechnology brand • Intended to do the alliance to achieve long-lasting advantage over competitors
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A Sample Case (cont)
Conflict: Company AWanted its name associated with the new pet
foodAny jointly developed product will be cobranded
Company B Gave a pet food firm a one-year exclusively right
to use the nutrients, after which Company B would be free to provide licenses to others
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A Sample Case (cont)
Putting it in the Strategic Map….
SAESAE Pet food Pet food companycompany
Company ACompany A Company BCompany B
Our objective Sole brand ? [cobranded] OK
Market Model Sole brand ? [cobranded] OK
Strategic Exclusivity
Exclusive rights OK ? [one-year head start]
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A Sample Case (cont)
Resolving disagreements Reconsidered whether is sole branding necessary? If they joined with company A, will this help them to achieve
their marketplace objective.
Updating the strategic map
SAESAE Pet food Pet food companycompany
Company ACompany A Company BCompany B
Our objective Sole brand OK
Market Model Sole brand OK
Strategic Exclusivity Exclusive rights OK X
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Resource Fit Reconciliation MapPurposesPurposes
• To summarize the resources that potential partners
provide whether which one is best fitted to the
company in order to develop a successful joint venture
• To test the quality and quantity of the potential
partners’ resourcesExampleExample
Key Resource Company A Company B
Resource 1
Resource 2
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Company A: • Outstanding research commitment and development• Satisfactory level of technical support provision• Satisfactory ability to work closer with the pet food company’s staff to jointly develop new products
Company B:• Outstanding research commitment and development• Satisfactory level of technical support provision• High ability to work closer with the pet food company’s staff to jointly develop new products
Key Resource Company A Company B
Research capability OK+ OK+
Technical support OK OK
Contribution to joint development of product based on preexisting nutrients
OK OK+
A Sample Case (cont)
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Final Decision• Pet food company wants to build a last long relationship rather than short-term one• Pet food company agrees the co-branding
Therefore,
““Company A is chosen” Company A is chosen”
A Sample Case (cont)
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Other Examples:
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Self-Selection: The Intangible Factor in Partner Selection
Strategic fit and resource fit do not guarantee the successful alliance
Without
The sense of MOTIVATION made by partners toward the project
The sense of MOTIVATION made by partners toward the project
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The Multiple Partners Option
In the best case, one potential partner stands out above the other and is clear choice for step 6 negotiation. However, sometimes, the strategic fit, resource fit, and commitment level show that two or more candidates are highly qualified.
In this case,
The best course of action is to move forward to step 6 negotiations with multiple firms. Final partner selection depends on the results of other Alliance framework elements such as Financial Pie-split.
There is another situation where multiple step 6 negotiation is required. Sometimes, step 2, 3, and 4 show that the alliance should be a multiparty relationship
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Thank You