12 Strategic Alliance

7/27/2019 12 Strategic Alliance

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AZRIN BIN MOHD DINQUANTITY SURVEYING DEPARTMENTKAED, IIUM

STRATEGIC ALLIANCE


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DEFINITION

An agreementbetween two or moreindividualsor entitiesstating that the

involved partieswill actin a certainway in orderto achievea common

goal. Strategic alliances usually makesense when the parties involved have

complementary strengths.
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TERMINOLOGY

Alliance In the private sector, these areLong-term purposefularrangements among distinct but

related organizations thatallow those firms to gain or sustaincompetitive advantage.An adoption of the private sector

model by civil societyorganizations would involve realvalue appropriation (money,time and influence) among theparties in the alliance.


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TERMINOLOGY

Coalition An umbrella termused to describe a

group of people ororganizationscoming together toachieve a specificgoal,usually of a politicalnature.


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TERMINOLOGY

Formal KnowledgeNetwork

A time-bound andpurpose-driven groupof expert institutionsworking together, tobuild each otherscapacity and develop

solutions for useoutside of thenetwork.


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ALLIANCE

It involves linked and commonprocesses necessary to ensure the

achievement of objectives; and

Real value appropriation (sharing offinances, time and channels ofinfluence) among the participatinginstitutions.


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ALLIANCE

Three key drivers

The need to bring more capacityto bear on its work

The need for critical mass in

order to have greater influence The need for new financing

models


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ALLIANCE: Features

Corporate management

real vested interest of the CEOs:

each hopes to gain strategicallyfrom the relationship;

joint ownership and co-managementof the relationship; and

risks and benefits identified,recognized and shared by all parties


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ALLIANCE: Features

Financial management

mechanisms put in placefor managing andreporting on the shared

investments and costs ofthe work.


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ALLIANCE: Features

Project management

greater scope and scale of

projects carried out incollaboration by the parties; and

planned interaction leading to

greater depth and intensity ofknowledge exchange andactions.


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ALLIANCE: Features

Communications management

common language todescribe the relationship;and

protocols for managingdelivery of knowledgeproducts and services of thealliance.


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ALLIANCE: Features

Staff management

incentives and rewardsystems for staff makingthe alliance work

(ensuring that allianceactivities are a priorityamong all parties).


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ALLIANCE: Features

Results management

ensuring common understanding

and ownership of the alliancesgoals and objectives; and

planning and monitoring the fullrange of projects and actions to

determine whether outcomes fromthe alliance activities have broaderreach and impact.


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SETTING-UP

Analyze history of inter-institutionalrelationships

Review organizational mandates and cultures

Define roles within the individualorganizations

Address potential operational challenges

Implement a monitoring framework to assessalliance performance


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RISKS

Two primary types

relational risk in partner cooperation

and performance risk in alliance

performance

Trust and control jointly determine one'sperceived total risk

Goodwill trust and competence trust


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FAILURES

Richard J. Chernesky Strategic alliances,Chernesky, Heyman & Kress PLL, 1996-2006

Poor project management executivesunderestimate how much time andenergy must be committed tomanaging multiple partner alliances

Strategic gridlock - unanticipatedconflicts in objectives, business plansand operations


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FAILURES

Richard J. Chernesky

Losing control of basic strategy -

partner ends up creating acompetitor

Focus on benefits to partners - whatthe other participant is obtaining

from the alliance


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FAILURES

Richard J. Chernesky

Poorly defined goals - failure to

agree upon specific goals andobjectives such as return oninvestment, market share, marketexpansion, cost containment, etc.

Poor partner choice - failure toselect the right partner


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12 Strategic Alliance

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