Building strategic alliances

Dana Poklepovic

Students Worksheets
Aims
toimprovespeakingskillsinthe contextofstrategicalliances topractisereading comprehensionskills developvocabularyandidiomsin thecontextofstrategicalliances topractiselisteningforspecific information todescribetheoutcomesofan action todevelopdecisionmakingskills inEnglish Tasks discussbusinessleaders quotationsaboutstrategic alliances readaninterview,relay informationaboutalliancesand matchsentencehalvesonkey concepts Completevocabularyactivities withtheaidofthewrittentext watchavideoaboutareal strategicalliance holdadecisionmakingmeeting

Leadin Formtwogroups.Readthequotationassignedtoyourgroup. Doyouagreewiththisquotation?Why/Whynot? Shareyourtextwiththeothergroup.Whatarethesimilaritiesanddifferences betweenthetwoquotations? Beforereading 1. Whatkindofalliancescanyouthinkof?Tellyourpartner. 2. Inyouropinion,whatisimportantforanalliancetosucceed? Reading Abusinessjournalhasinterviewedanexpertinstrategicalliances.Readthearticleonthe nextpageandthendiscuss: a. Themaindifferenceamongalliance,mergerandacquisition. b. Thebenefitsanddrawbacksofstrategicalliances c. Thedecisionmakingprocesstoformanalliance

Howwouldyoudefineastrategicalliance?
Basically, a strategic alliance is an association between two or more companies that have decided to share resources in a specific, mutually beneficial project. Alliances are often confused with mergers and acquisitions. Although these business solutions share similarities, they are far from being the same. While mergers and acquisitions represent permanent, structural changes for the company, an alliance is simply a businesstobusiness collaboration. For small businesses, strategicalliancesareawaytoworktogetherwithotherswhilenotlosingtheirindividuality.

Whyarestrategicalliancessopopularthesedays?
Well,marketglobalizationandconstanttechnologicaldevelopmentshavemadeitverydifficultfor companies to get ahead by themselves. Instead, by teaming up with others, they complement resources and capabilities, minimize risks and therefore are able to grow more quickly and efficiently. They are an essential driver for growth. Yet, what impresses me is that rivals are becomingalliesandcompetitionisturningintocooperation.

Basedonyourexperience,whatistheoutcomeofalliances?
In most cases, the benefits outweigh the drawbacks. For example, by forming an alliance a company expands its customer base and gains access to new markets, which are key elements for any company. Companies also benefit from the transfer of skills and knowhow and thus are able to accelerate their product development process. In all cases, a welldeveloped alliance will definitely strengthen the companys image. But, it could also have some drawbacks. Managers may have to deal with diverse operating practices. Another disadvantage may be the need to overcome language barriers. Cultural factors may also complicate the smooth running of the project. In my view, the antidote to these drawbacks is to keep an open communication flow. Finally,alliancesmightleadtounexpectedbusinessopportunitiesforthecompaniesinvolved.

Howdocompaniesdecidetoformanalliance?
This is a strategic decision, so its not a question of pulling together at any cost. The process involvesholdingalotofmeetings.Initially,thecompanyhastoidentifythestrategyobjectivesand the potential partners strengths and weaknesses. Then, it has to assess the opportunity and leverage it represents for the business. At this stage, they should be able to decide if they join forces. Only then will they negotiate each partners contributions and rewards as well as protect anyproprietaryinformation,addressterminationclausesandpenaltiesforpoorperformance,etc. Oncethecompaniesagreeonthetermsandconditions,theybegintoimplementthealliance.

Inyouropinion,whicharethecriticalsuccessfactors?
If you want to have a reasonable chance of success, you should focus on assuring senior management commitment, building a trustworthy relationship and trying to match corporate cultures,asfaraspossible.

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1.COMPREHENSION Matchthesephrasessothattheyreflectideasfromthetext. 1 Inasuccessfulalliance 2 Astrategicalliance 3 Inourchallengingenvironment 4 Amerger 5 Companyculture 2.VOCABULARY a b c d e offersflexibilitytothebusinessesinvolved partnerstrusteachother involvesstructuralchanges companiesneedtopoolresources needstobealignedtotheallianceobjectives

a) Fillinthegapswiththewordsinthebox. coalition cooperative network jointventure merger association

1. Theoppositionpartiesformedatowinvotesintheparliamentary elections. 2. SonyEricssonisacompanythatgrewoutofatomanufacturemobile phones. 3. BoeingacquiredMcDonnellDouglas,inarenownedtransaction. 4. WhenPetergraduated,hejoinedtheEngineering. 5. Freelanceprofessionalsusuallyformpartofatoshareresourcesand information. 6. Localfarmersdecidedtoworktogether,shareprofitsandlosses,sotheysetupa . b) Matchthewordstocompleteeachidiom. 1 team 2 join 3 get 4 pull 5 do 3.LANGUAGE a b c d e businesswith together up inwith forces

Makesentencesdescribingpositiveandnegativeoutcomesusingthefollowing expressions. outweigh benefitfrom amajoradvantage/disadvantage complicate resultin

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Video WatchthevideoabouttheStrategicAlliancebetweenPSAPeugeotCitronandGMand answerthequestionsbelow. www.euronews.com/2012/02/29/peugeotgmalliancetargetssavings 1. 2. 3. 4. WhatwilltheFrenchcarmakerdotoconstitutethealliance? Whatresourceswillthetwocompaniesbringtothenewassociation? Howwilltheybenefitfinancially? Whichfactorshaveledbothcompaniestomakethisdecision?

Roleplay:Adecisionmakingmeeting Scenario NATIVAisaSouthAmericanbasedsmallsizedcompanythatproducesandmarketsherbal infusions.T.T.Ltd.isawellknownEuropeansmallsizedcompanythatsellsexoticteasand beverages. The general managers of both firms meet to look for synergies and to decide whethertomakeastrategicallianceornot. Instructions Readtherolecardwhichyouteachergivesyou.Discusstheadvantagesand disadvantagesofastrategicmergerwithapartner.Writetheseinthetableonthe nextpage.RankthebenefitsunderPositive;thedrawbacksunderNegative;and anypossiblenewbusinessunderPossibilities.Together,prepareabrief presentationofyourcompany. Holdthemeeting:trytofindacommonobjectivewiththemanageroftheother company,discusstheadvantagesanddisadvantagesofanalliance,andmakea decision.Addanyideastoyourtable. Tohelpyoudecideifthepotentialallianceisbeneficialforyourbusinessusethe followingtable.Evaluatetheresultsandmakeyourdecision.

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Positive Negative Possibilities

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Building strategic alliances

Dana Poklepovic

Teachers instructions
Level: C1(Advanced) Timing: 90120minutes(dependingonthegroupsizeandthetimeusedforthemeeting) Target: JobexperiencedbusinessEnglishlearnersandbusinessstudents

Aims
toimprovespeakingskillsinthe contextofstrategicalliances topractisereading comprehensionskills developvocabularyandidiomsin thecontextofstrategicalliances topractiselisteningforspecific information todescribetheoutcomesofan action todevelopdecisionmakingskills inEnglish

Tasks
discussbusinessleaders quotationsaboutstrategic alliances readaninterview,relay informationaboutalliancesand matchsentencehalvesonkey concepts Completevocabularyactivities withtheaidofthewrittentext watchavideoaboutareal strategicalliance holdadecisionmakingmeeting

BuildingstrategicalliancesisawinningentryintheProfessionalEnglishOnlineIATEFL BESIGLessonPlanCompetition.ItcanbeusedonitsownorwithBusinessAdvantage Advanced,Unit6,Leadership.Strategicallianceshavebecomeamajorexpansiontoolfor companiesaswellasakeytopicfordiscussionintheBusinessEnglishclassroom.This lessonhelpsstudentstoworkwiththevocabularyandlanguageofthisareaandtoapply itincontext. TofindoutaboutBusinessAdvantage,visit: www.cambridge.org/elt/businessadvantage Preparation: Copyandcutupenoughcopiesofthequotationsonpage8sothatonehalfoftheclass hasthefirstquotationandtheotherhalfthesecondone. CopyandcutupenoughcopiesoftherolecardssothathalftheclasshasRolecard1and halftheclasshasRolecard2.Ifyouhaveanoddnumberofstudents,copytheConsultant Rolecardforonestudent. YoumaywishtohavedictionariesavailableforReadingexercise2.

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Instructions: Leadin
Distributethecutoutquotations.Allowstudents2minutestoreadandanalysethem. Movestudentsintogroups,ensuringthateachgrouphasbothquotations.Letthegroups expresstheiropinions.Elicitthesimilaritiesanddifferencesbetweenthetwoquotations. Similarities:theneedtoworkingroups,associationsetc.insteadofworkingisolated.Both arewarnings.Differences:thepointofview,whileoneisfocusedonglobalizationand todayseconomicenvironment,theotherisfocusedonthefutureandtheneedtoact rightnow.Checkstudentsknowtheexpressiongoitalone:todosomethingwithout otherpeople.

Beforereading
Studentsaregoingtoreadaninterviewwithanexpertinstrategicalliances.Putstudents intopairsandaskthemtodiscussthequestions.Askthemtofeedbacktheirresponsesto theclass. 1. Alliancesmaybeformedatdifferentlevels:Nationsmayenterintoformalagreementsto cooperate;statesmaycooperatethroughmilitarytreaties.Politicalpartiesordelegates worktogetherinthepursuitofacommongoal.Atbusinesslevel,companiesmake alliances.Andofcoursemarriageisalsoanalliance. 2. Commitment,cleargoalsandtrust.Checkwithstudentsiftheyknowothers.

Reading
Putstudentsintopairsandinstructthemtoreadtheinterview.Checkunderstanding: Mergers and acquisitions involve structural and permanent changes in the company. An alliance involves collaboration in a mutually beneficial project; it does not need to be permanent. Benefits: extended customer base, access to new markets, transfer of skill and know how, accelerated product development, strengthened company image. Drawbacks: dealing with diverseoperatingpractices,languagebarriers,anddiverseculturalfactors. The process: identify the common objective of the alliance, partners strengths and weaknesses, assess the opportunity for business, and then negotiate contributions and rewards, and legal issues. Following agreement of terms and conditions implementation cantakeplace. 1.Getstudentstocompletetheexercise.Answers:1b;2a;3d;4c;5e 2.Askstudentstofocusonthewordsinbold.Itmaybeusefultohaveadictionaryathand. Answers:1.coalition;2.jointventure;3.merger;4.association;5.network;6. cooperative Getstudentstocompletetheidiomsexercise.Answers:1c;2e;3d;4b;5a 3.Language.Thisexerciseintendstofamiliarizestudentswiththevocabularytodescribe outcomes,advantagesanddisadvantages,etc.Theywillneeditlateronfortheroleplay. Supportmaterial:Forfurthermaterialonthistopic,seethewebsiteoftheAssociationof StrategicAllianceProfessionals:www.strategicalliances.org

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Video
Watchingthevideoisanoptionalpartofthelessonifyouhavetime,oryoumaywishto recommendthisvideoforstudentstowatchathomeandallowmoretimefortheroleplay. www.euronews.com/2012/02/29/peugeotgmalliancetargetssavings BeforeplayingthevideofromEuronews,letstudentsspeculateabouttheadvantagesand drawbacksofthisalliance.Allowstudentstoreadthequestionsbeforewatchingthevideo.Pre teachorelicitovercapacity. Answers: 1. (AsGMwilltakea7%stakeinPSAPeugeotCitroen),theFrenchcarmakerwillissuenew sharesforthat. 2. TheywillpoolResearchandDevelopment,vehiclesplatformsandtechnology. 3. Yes,theyexpecttosave1.5bnEurosover5years. 4. SlowsalesandovercapacityinEurope Discusswithstudentstheirknowledgeandexperienceintheareaofstrategicdevelopments,ifthis taskisdoneinclass,orfollowthisupinthenextclassifstudentswatchathome).

Roleplay:Adecisionmakingmeeting
Instructstudentstoreadthescenario.Checkunderstanding. Distributerolecards.Ifyouhaveanoddnumberofstudents,usetheConsultantrolecard. Groupofstudentstogetheraccordingtotheirrole,sothatmanagersofthesamecompany remain together. Give them some time to discuss the possible advantages and disadvantages.Instructstudentstowritetheseinthetableprovided. Divide class into pairs or threes, ensuring each person in each group has a different role. Instructthemtoholdameeting. The goals of the meeting are: to briefly present their own company, find a common objective between the companies, to discuss the advantages and disadvantages that a strategic alliance would mean for each partner, and finally to decide if they move forward ornot. Monitorandprovidefeedbackforeachgroup.

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Quotationsandrolecards: Quotation1: Ifyouthinkyoucangoitaloneintodaysglobaleconomy,youarehighlymistaken JackWelch,CEOandChairmanofGeneralElectric Quotation2: Alliancesarenotanimportantpartofthefuture,theyAREthefuture.Anyonewhodoesnot understandthisisnotgoingtobearoundforlong JonathanS.Linen,VPAmericanExpress RoleCard1:NATIVAgeneralmanager Yourcompany: Hasaproductioncapacityof10,000tonsayear. Sellsonly4,000tonsayearinSouthAmericanmarketandholdsa60%marketshare. In order to enter new market, would have to pay ordinary freight and transportation costs (witha30%impactoncosts) YourstaffonlyspeakSpanish. Yourmanagementteamhasneverworkedwithotherorganizationalcultures. Additionalinfo:herbsaregrownaccordingtoorganicproductionstandards. Rolecard2:T.T.Ltd.generalmanager Yourcompany: IstheownerofalargesalesanddistributionnetworkinEurope Supplies80%ofspecialitystores,restaurantsandhotels. Holdsa5yearglobaltransportationagreementwithalargeshippingandhandlingcompany. Yourstaffcomefromdifferentpartsoftheworld. Yourmanagementteamhasworkedwithdifferentorganizationalcultures. Additionalinfo:yourcompanyattendsaworldorganicfoodeveryyearinsearchofnewbusiness. Rolecard3:Consultant Yourtaskisto: Helpthepotentialpartnerstoidentifyacommongoal. Identifystrengthsandweaknessesofeachbusiness. Giveideashowtoleveragethestrengths Suggestwaystooffsetweaknesses Giveafinalrecommendation ProfessionalEnglishOnlineCambridgeUniversityPress2013..PHOTOCOPIABLE.. 9