Strategic Alliance - a Panacea for Start-ups’

survival & growth

Introduction:
The strategic alliance envisages integration of strategies of both the firms apart
from pooling of their resources. Choosing an alliance partner and managing
alliances is critical. Two companies with strategic fit may form alliance partners
with a mission to develop new product/ services. Many a times Multi-national
company or Transnational Company with geocentric approach may scout for an
alliance partner for Distribution based alliance, Technology based Alliance,
Production based alliance may look for a start-up because it benefits both.
Research problem:
1. The key lies in the processes used to understand our own businesses and create
alliances with others
2. For many companies, alliances are the most expedient way to obtain knowledge,
market access, and strategic growth, But relationships between organizations, are
complex and demand management’s finest skills, and more so for Start-ups.
3. Your organization may not have the optimum personality characteristics to
succeed in a particular alliance.
Objectives:
1. Corporate Self-Analysis - critical internal study
2. The Mind shift Method of personality Diagnostics

3. Integrating Alliances into Corporate Strategy and Preparing for the Alliance
4. Issues on Cross – Cultural Alliances
5. Implementing and Managing the Alliance

Sources of Data: Secondary Source

Research Methods:
It is based on explorative study based on a Case study analysis. The framework for
case study will be based on tools and techniques suggested by Lerraine Segil who
has provided a framework on corporate self-analysis and diagnosing an alliance
partner
MANAGING STRATEGIC ALLIANCES: A DIAGNOSTIC
APPROACH
General issues of Strategic alliance
 The failure statistics regarding business alliances are disheartening.
 The key lies in the processes used to understand our own businesses and
create alliances with others.
 Recognizing what drives your company, motivates your managers, and
creates successful projects for you is a threshold requirements for the
development of effective partnerships with others.
 For many companies, alliances are the most expedient way to obtain
knowledge, market access, and strategic growth.
 But relationships between organizations, whether small or large, for profit or
not-for-profit, are complex and demand management’s finest skills.
 Personality issues in business are intriguing; they add a human dimension to
management theory.
 The hard part is to integrate the information into a planning and
implementation methodology to manage your business and create better
alliances.
 Your organization may not have the optimum personality characteristics to
succeed in a particular alliance.
 The Mind shift system will help you make that determination, leading to
more realistic expectations and a higher probability of a success in the
alliances you choose to enter.
 Management of Alliances
 Alliances Revisited
 The Mind shift Method of personality Diagnostics
 Integrating Alliances into Corporate Strategy
 Corporate Self-Analysis examines the critical internal study
 Preparing for the Alliance, explains how to plan an alliance
 Cross – Cultural Alliances, addresses the issues that arise in
international alliances
 Implementing and Managing the Alliance

Alliance Revisited
Key Issues
 Where is the appropriate place for decision-making authority
regarding the selection of an alliance partner and of the team to
manage the relationship?
 How should the organization sort out and define core company
competencies?
 How should a team measure or quantify the success of an alliance?
 What is an intelligent strategy for resolving alliance conflicts without
resorting to termination of the alliance or litigation?
 What is the role of the corporate director of alliances in relation to the
members of operating management?
Crucial alliance questions of why, who, how and when sooner rather than later
The management problems that occur in established alliances. They begin with the
partners’ definition of what the alliance means to them.
What is an Alliance?
The term “alliance” can be applied to many kinds of relationships and is freely
used in business, whether it is appropriate or not. Here is a plan definition of an
alliance.
An alliance is a relationship that is strategic or tactical, and that is entered into for
mutual benefit by two or more parties having compatible or complementary
business interests and goals.
Strategy is the process of planning and directing operations into the most
advantageous position before entering into engagement.
Tactics is the process of organizing during engagement.
Operations is the process of being in action – the stage of being actively involved
in business activities and transactions.
Mutual Benefit
Mutuality is the moving target of alliances.
True Alliance or pricing Squeeze Play?
It mainly a purchasing relationship without any true potential for joint product
development.
Mouthing words of mutuality and alliance benefits.
Business Interests or Goals
All too often, organizations have not clearly defined “success” or even “benefit”.
Our definition of an alliance describes the philosophy behind alliances.
Original Equipment Manufacturer (OEM): One company manufactures
products to be marketed and sold by another.
Private Label: One company manufactures a product for sale under another
company’s label
The organizational life cycle adds an important element to the challenge of
managing alliances. Communication can be especially complicated between
organizations that are in different stages of their life cycles.
The Mind shift system was developed from observation of over six hundred
companies.

The Corporate Life Cycle

Figure 1 is the graphic representation of the corporate life cycle in which Time and
Revenues are the two dimensions.
Stage 1 in the life cycle is the start-up - that of a new and small company, or a new
joint venture between two large organizations.
Stage 2 is the Hockey stick phase. Here the organization sees a rapid growth in
revenues.
Sate 3 is the professional phase. As the company matures, the very rapid growth of
its early years generally slows down. Growth in revenues continues, but not at the
same rate as during the Hockey stick phase.

Stage 4 is the Mature and consolidating phase. Here revenues gradually level off,
as the company completes its penetration of available markets and in many cases,
competition begins to make inroads into the company’s territories.
Stage 5 and 6 are alternate directions that a Mature and consolidating organization
can take.
Stage 5, the declining phase, awaits organizations unwilling to change to adapt to
new market conditions, the emergence of strong competitors, technological
innovations and other new challenges. Unless an organ transplant is undertaken, a
Declining company usually dies, through either bankruptcy or takeover by stronger
firm.
Stage 6 is the sustaining phase, often heralded by the arrival of visionary manager
with a strategy for slowing or reversing the aging process. A truly gifted leader
may even be able to launch the firm on a whole new growth cycle, redirecting it
into a second Hockey stick phase of rapid growth and expansion.
Corporate Personality Types
An organization’s stage in the cycle is often manifested not only by the revenue
curve but also by certain corporate personality characteristics. Figure 2 shows
corporate personality characteristics generally associated with the different
corporate life-cycle stages.
The reasons for analyzing your corporation’s personality type are, first, to
recognize the culture and characteristics of the organization within which you
operate; then to understand your compatibility with that organization; and finally,
to use that information to better understand the opportunities and risks of both your
organization and yourself as a manager.
 Figure 2 Diagnostic: Corporate Personality Characteristics

Stage1: Start-up Stage 2: Hockey stick

Insecure Confident
Proactive Quick to react
Emerging Aggressive
Focus on single goal Multi-focused
Risk-intense Lacking management depth
Founder-driven “sales come first” philosophy
Non-continuous delegation Command and control philosophy

Stage 3: Professional Stage 4: Mature and consolidating

Systematic Complacent
Planning/Predictive Protective
Emphasis on marketing, not just Risk-averse
sales Rigid administrative structures
Cautious Form valued over substance
Conflict-resolving Profit-driven (to reduce costs)
New hires/old fires Middle management proliferates
Consensus-building
Stage5: Declining Stage 6: Sustaining
Over planning/Budget-driven Entrepreneurship planned
Ritualistic-form valued Controlled
Over substance Structurally systematic
Hierarchical Aggressive
Non-active (less in more) Flexibility sufficient to be proactive
Change makers seen as
problem creators

Individual Managerial Personality Types

Where do I fit into the scheme of things?
Am I in the right company at the wrong time?
This section will help you start to answer some of these questions. As Figure 3
indicates, there are five main managerial personality types.
 Figure 3 Diagnostic: Managerial Personality Types

1. Adventurer 2. Warrior
Risk taker Aggressive
Has personal vision Self-confident
Obsessive Wins battles (may lose war)
Driven Abrasive
Sometimes unrealistic Result-focused
Sense of urgency Resistant to process
Omnipresent

3. Hunter 4. Farmer
Leader Member of old boy network
Good team and consensus Formal
builder Risk-averse
More formal Conforms in behavior
Systematic

5. Politician 6. Visionary
“Cover your rear” Results-oriented
(CYA) philosophy Assertive
Risk-averse Confident
Polite but self-protective Inspires hope, empowerment
Emphasizes form over substance in Team builder
behavior Risk taker
Uses paperwork as protection Flexible
 against reality
Isolationist
Bureaucratic

Applying the Mind shift Method

 First, discover the stage of the life cycle that your unit, division group,
or organization is in.
 Determine the organization’s corporate personality.
 Look at your personal managerial characteristics to see how you fit
within the stages of corporate cycles of change.
 Examine the project personality characteristics
 Use the diagnostic tools to analyze your actual or prospective partner
as you have analyzed your own company and managers.
 Finally, develop strategies based on observed personality differences
that will allow you and your partner to communicate.