SELECT THE PARTNER ?

HOW TO

Group 1

Selecting the Partners

Alliances are often compared to marriages

There is no recovery from choosing the wrong spouse

Alliance Framework Process

STEP 1: Appointing the planning and negotiating teamSTEP 2: Achieving internal consensusSTEP 3: Approaching potential partners: strategic firm

assessmentSTEP 4: Conducting resource fit assessmentSTEP 5: Selecting the partnerSTEP 6: Negotiating the agreement

Alliance Framework: STEP5STEP5 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?

In an ideal world the best partner in step 3 and 4.

In the real world hard to find or 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!!!!

Looping Back to Step2, Achieving Internal Consensus

Strategic fit and resource fit assessments provide the information for each partner 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

STRATEGIC FIT RECONCILIATION MAP?

WHAT IS

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

Structure & Process

Get to know some symbols:

OK : the partner accepts our position on the sale ? : have disagreement and are unsure of the resolution : have disagreement but partner accept our position : have disagreement but partner’s position is acceptable

to us = : compromise can be negotiate to meet both firms’

strategic need X : deal killer, have disagreement and cannot accept

A Sample Case Large pet food company alliance with biological

firm to come up with new nutrition ingredients into its pet foods. The goal of the alliance project is to jointly develop a series of new product lines with a biological firm. The pet food company will distribute the improved products through its distribution network.

A Sample Case (cont)

Problem: - Two candidates (company A and B) to ally with the pet food company- The pet food company decided to go on the process of strategic assessment- Both firms tend to have conflict with the pet food company

A Sample Case (cont) Conflict:

-Company A wants its name associated with the new pet food

The pet food company wants to establish and maintain its reputation for innovation through sole branding of any jointly developed product.

-Company B will give the pet food firm a one year exclusive right to use the nutrient, after that company B will be free to provide license to others.

The pet food firm expected that they will have global, long-lasting, and sole rights to use the partner’s new nutrients in pet food.

A Sample Case (cont)

Resolving the disagreement: Reconsidered whether is sole branding necessary? • If they jointly develop with company A, will also

help them to achieve their marketplace objective.

• The solution for company B was impossible • It is more risky to have only a year in building a

strong foothold in the market to defend competition.

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’ resources• Example:Key Resource Company A Company B

Resource 1

Resource 2

Example: Case of the pet food company (cont)

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 productsCompany 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 BResearch capability OK+ OK+Technical support OK OK

Contribution to joint development of product based on preexisting nutrients OK OK+

Self-Selection: The Intangible Factor in Partner Selection

Strategic fit + Resource fit not enough The sense of motivation made by partners toward

the project another factor to consider as well Self-Selected themselves into the deal = the energy

is tangible+ translate into positive alliance results.

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

For example

Battelle’s MicroCATS alliance, The resource fit assessments show that an alliance with several partners could best meet Battelle’s needs. Before starting step 6 negotiations you will need to review the strategy fit and resource fit assessment carefully. In that review, you must evaluate the linklihood that all of the companies involved will agree to compatible positions on all Alliance Framework element in step 6.

Thank You for

Your Attention