5 Reasons Why Foxconn Wants Sharp

1] iPhones
Foxconn already assembles most of Apple Inc.’s iPhones and supplies some components such as metal casings for the devices. It’s
also seeking to supply iPhone screens, as they are the most expensive parts of the devices and provide better profit margins
than assembly work. Sharp is one of Apple’s iPhone screen suppliers.

2] Diversification
Foxconn has been seeking to diversify from contract manufacturing, a low-margin business, into high-end component production.
Sharp’s display technology can help Foxconn make inroads in screen-production and reduce its reliance on contract
manufacturing.

3] Brand
While Foxconn doesn’t make products under its own brand, it has been seeking alternative paths to boost its brand. The Sharp
brand is well-known and could be valuable if Foxconn can stem the company’s losses.

4] Compete with Samsung

Foxconn wants in on next-generation displays which Apple is expected to begin using in future iPhones.  Samsung is a primary
supplier of organic light emitting diode screens, which are thinner and brighter. With a Sharp purchase, Foxconn could invest in
next-generation technology and become a key supplier.
 
5] History
In 2012, Foxconn Chairman Terry Gou personally invested in one of Sharp’s production facilities in Japan. The plant has since
become profitable, and Foxconn wants closer collaboration.

7-1
 Chapter
7

Strategic
Relationships

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 Strategic relationships at IBM

* Collaborative projects across all major parts of

business services
* Funding universities in services science
* Partnership with Sony and Toshiba to produce new
processor
* Computer code shared with Apache open-source
web-server
* IBM programmers work on Linux projects
* Collaborating with customers and competitors to
invent new technologies
* Strategy of openess
7-3
 Goals of Strategic Relationships
•Gaining access to markets
•Enhancing value offerings
•Reducing the risk caused by rapid environmental
change
•Sharing complementary skills
•Acquiring new knowledge
•Building sustained close relationship with major
customers
•Obtaining resources beyond those available to a
single company
7-4
 Increasingly ,
Business & Marketing strategies
involve
more than
a single organization

7-5
 Strategic relationships
End-User
Customers Intermediate
Suppliers
Customers

Joint Strategic Competitors

Ventures Relationship
s
Strategic Internal
Alliances External Partners
Partners

7-6
 Strategic Relationships

1. The rationale for interorganizational relationships

2. Forms of organizational relationships
3. Managing interorganizational relationships
4. Global relationships among organizations

7-7
 1) The rationale for interorganizational
relationships
Classical relationship between organizations was Tactical or Transactional
Value-enhancing
opportunities

Rationale for
Skills and Environmental
Forming
resource complexity
gaps Strategic
Relationships

Competitive
strategy

7-8
The rationale for interorganizational
relationships (1)
* Opportunities to enhance value
* Environmental complexity
* Competitive strategy (Hollow org.)
* Skills and resource gaps
* Technology constraints
* Financial constraints
* Market access
* Information technology

7-9
 Collaborations in open-source software

* IBM and Sun aggressive supporters of Linux open-

source software
* Technology sharing and partnerships
* Rebuilding the technology “ecosystem”
* Reducing dependence on Microsoft

7-10
 Airline Alliances

* Major global alliances

* Oneworld
* Skyteam
* Star Alliance http://www.staralliance.com/en/
* Contain 18 of the world’s largest airline
* Account for 60% of total world airline capacity
* But a history of alliance failures and desertions

7-11
The rationale for interorganizational
relationships (1)
* Evaluating the potential for
collaboration
* What is the strategy?
* The costs of collaboration
* Is relationship strategy essential?
* Are good candidates available?
* Do relationships fit our culture?
* BT and AT&T Failure

7-12
 Mapping the Path to Market
Leadership
Market-Oriented
Culture and
Process

Superior
Organizational Relationship Customer
Change Strategies Value
Proposition

Positioning
with Distinctive
Competencies

7-13
2) Forms of organizational relationships

Supplier
relationships

Internal Firm Lateral

partnerships partnerships

Customer
relationships

7-14
Illustrative interorganizational
relationships
Strategic Alliance

S\M M M
Supplier/
Manufacturer
Collaboration M JV
Joint Venture
W
Distribution
Channel
R Relationship

EU
7-15
 Supplier relationships:

1) Strategic suppliers
2) Outsourcing

7-16
Forms of organizational relationships (2)

* Intermediate customer relationships

KFC >Transcom Foods Ltd.

7-17
Forms of organizational relationships (2)
* End-user customer relationships

7-18
7-19
Forms of organizational relationships (2)

* Strategic customers
* Dominant customers
* Strategic account management (SAM)

7-20
 Forms of organizational relationships (2)

* Strategic alliances
* Alliance success
* Alliance weaknesses
* Types of alliance
* Requirements for alliance success
* Alliance vulnerabilities

7-21
Forms of organizational relationships (2)
* Joint venture

7-22
 Forms of organizational relationships (2)

* Internal partnering
* Business Units
* Functional Departments
* Individual Employees

Internal Partnership is very important for

Microsoft OS/ Microsoft Mobile Handset

7-23
 CostCo Versus Wal-Mart

* CostCo has achieved major position in U.S. warehouse club

business against strong competitors
* Success based on customer choice and constant innovation
and productivity improvement
* CostCo compensates employees more generously than
competitors - to motivate and retain good workers - they get
lower staff turnover and higher productivity

7-24
 Managing interorganizational
relationships (3)
* Objective of the relationship
* New technologies and competencies
* Developing new markets and building
market position
* Market selectivity
* Restructuring and cost reduction

7-25
 Managing interorganizational
relationships (3)
* Relationship management
* Planning
* Trust and self-interest
* Conflicts
* Reputational Risk
* Leadership structure
* Flexibility
* Cultural differences
* Technology transfer
* Learning from partner’s strengths
7-26
 Managing interorganizational
relationships (3)
* Partnering capabilities
* Control, evaluation and review
* Exiting from alliance
* Identify/agree what triggers exit
* Detail rights of each partner to
assets/products
* Design disengagement process
* Communication plan for all involved
parties
7-27
Managing Interorganizational relationships

Objective
of the
Relationship
Control
and
Relationship Evaluation
Management
Managing
Inter- Exiting from
Organizational Alliance
Partnering Relationships
Capabilities

7-28
4) Global relationships among organizations

* The Global Integrated Enterprise (Next Slide)

* Inter-nation collaborations (bd-japan)
* The strategic role of government
* Government interventions (aircraft-building
* Mitsubishi & JP Govt 1/3 cost by govt.)
* Competing with state-owned enterprises
(Teletalk)
* Collaborating with state-owned enterprises
(**Next Slide)
* Government regulation > unholy alliance 7-29
Open / Omni Relationship

7-30