Eva Švandová_2012 Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 1 Strategic partnerships spolupráce Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 2 Eva Švandová_2012 Content of the lecture nFacts representing cooperation nReasons to cooperate – cooperation theories nForms of strategic partnerships nStrategic alliances nCooperation in retail and wholesale nCase study: Microsoft Yahoo! cooperation - n n Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 3 Eva Švandová_2012 Some statistics nvolume of direct foreign investment exceeded 70 billion EUR in 2008 n99,8% of all the Czech companies in the CR belongs to SME n60% of all the employees in the national economy are employed in the SME nGreat importance of SME in the CR for GDP nAbility to compete in the EU can be acquired when co-operating with other companies around even if they are competitors Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 4 Eva Švandová_2012 Volume of direct foreign investment inflows 31.12.1995 31.12.1996 31.12.1997 31.12.1998 31.12.1999 31.12.2000 31.12.2001 31.12.2002 31.12.2003 31.12.2004 31.12.2005 31.12.2006 31.12.2007 31.12.2008 31.12.2009 30.6.2010 5 741,0 6 909,9 8 367,4 12 254,6 17 478,7 23 323,2 30 717,2 36 883,8 35 852,0 42 035,0 51 424,4 60 620,5 76 337,8 81 301,7 84 614,9 90 299,2 Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 5 Eva Švandová_2012 DFI into the CR from chosen countries – top 20 Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 6 Eva Švandová_2012 Classification of an enterprise nEurostat: ¨micro enterprise – up to 9 employees ¨small enterprise – up to 99 employees ¨medium enterprise – up to 499 employees ¨large – more than 500 employees n n Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 7 Eva Švandová_2012 Disadvantages of SME´s nlimited possibility of financing (this disadvantage causes other secondary problems) nhigher interest rates at the bank nunderutilization of production machines nemployees motivation n Disadvantages of large companies ngrowth of bureaucracy nlow flexibility n Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 8 Eva Švandová_2012 Main purposes of the alliances 1.activities and resources shared between partners – co specialization 2.competition battle reduction – co-option. coopetition 3.knowledge creation, transmition and utilization – co-learning, learning and internalization 4.power shift (change in bargaining power), image and trustworthiness shift 5.cost reduction n n Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 9 Eva Švandová_2012 Theories explaining interorganizational cooperation nResource dependance theory ¨Formalized by The External Control of Organizations: A Resource Dependence Perspective (Pfeffer and Salancik 1978) nTransactional cost theory ¨R.Coase in 1937 nSocial network theory ¨Sociometry, Moreno, Milgram, Granovetter, Burt Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 10 Eva Švandová_2012 Business Collaboration: The Four C's Companies can link their businesses in the following ways: Level of business collaboration Description Business benefits Competition Business as usual Zero-sum: If I win, you lose Communication Make information about business operations available to partners so they can work more effectively and return some of the benefits to you Win-win: Both companies operate better than before Coordination One company does a job traditionally done by the other (e.g., outsourcing) or both companies work to the same schedule Leverage: One company uses the competencies of its partner company Cooperation Both companies work together as if they were one company; key operations are controlled mutually because the companies have shared goals Symbiosis: Each company depends on each other for success Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 11 Eva Švandová_2012 Intensity of linkages intensity of linkages No co-operation „Open“ Strategic Alliance Joint Ventures „Close“ 0 1 Transactional structures Groups Strategic supplier relationships Tactical market alliances Strategic alliances Joint ventures Mergers •minor equity share •contracts concerning joint action •Long-term business contracts •joint projects (programmes •licensing, franchising, trade agency •Multilateral agreements (conglomerate, trust) low concentration high concentration Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 12 Eva Švandová_2012 Strategic Partnerships ¨„open“ form of co-operation noccasional co-operation n„salient“ informal agreements ¨informal collaboration with information sharing nhandshake agreement ¨production, assembly, buy, back agreement, ¨management, marketing, service agreement ¨licensing (outsourcing) ¨franchising ¨preferred suppliers and buyers ¨joint ventures ¨„close“ form of co-operation nmerger nacquisition ¨ risk, resources, costs SA Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 13 Eva Švandová_2012 Strategic alliance nalliance → one form of strategic partnership nA relationship formed by two or more organizations that share (proprietary), participate in joint investments, and develop linked and common processes to increase the performance of both companies. Many organizations form strategic alliances to increase the performance of their common supply chain. Source: http://www.apics.org/ nA Strategic Alliance is a partnership between two or more companies to pursue a set of agreed upon goals while remaining independent organizations. Strategic alliances come in all shapes and sizes, and include a wide range of cooperation, from contractual to equity forms. Source: Encyclopedia, Wikipedia, http://en.wikipedia.org/wiki/Strategic_alliance nDefinition accroding ASAP: ¨agreements with „open“ end ¨between separated companies ¨sharing common interests or goals Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 14 Eva Švandová_2012 Informal collaboration with information sharing nSharing of information which are interesting for the both sides (supplier and subscriber) nThe partners can share the experience and other data resources concerning the market conditions, experience with other partners, computer programs nHandshake agreements nQuestion of trust – it can be problem in the CR Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 15 Eva Švandová_2012 Preferred suppliers and buyers nAgreements connected with the special position of the partners nLong-term co-operation nEnteprises tend to have fewer suppliers and to create with them longer relationship based on the trust nŠKODA Auto Mladá Boleslav škoda auto Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 16 Eva Švandová_2012 Sole agency nThe company Starlift s.r.o. is the exclusive agent of the Mithsubishi Caterpillar Forklift Trucks (manufacturer of material handling equipment for a wide range of industrial and commercial applications, ) nStarlift is a distributor of the lift trucks and alongside it provides the customer of Mitshubishi company with maintenance services nThe co-operation started 15 years ago nStarlift company is also sole distributor for the Slovak market Starlift Praha Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 17 Eva Švandová_2012 Production / assembly / buy back agreements nThe participating companies are trying to exploit the advantages coming from the economies of scale nCo-operation connected with fluently recovery of the capital equipment and later with buy back by the supplier of the equipment n toyota-corolla-matrix-2009-1 General Motors 180px-Toyota_stojan nummi_img_logo Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 18 Eva Švandová_2012 Management / marketing / service agreements nAgreements concerning the collective solution and implementation of external processes nThe external processes can be presented by mutually coordinated marketing, assembly and servicing of complicated equipments, commen distribution nThe example of Technicoat and DuPont, co-operation in the strategic planning of marketing activities nCooperation of airlines – Sky Team, Star Alliance AeroFlot, AeroMexico, Air France, KLM, Alitalia, China Southern, Continental Airlines, Czech Airlines, Delta, Korean Air, Northwest Airlines, AirEuropa, Copa Airlines, Kenya Airways Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 19 Eva Švandová_2012 Licensing nThe Czech company Technicoat s.r.o. operates in the surface coating business specializing in the application of industrial coatings (Teflon, Xylan, Dykor, Halar, Rilsan) nTechnicoat was awarded DuPont license to apply Teflon® Fluoropolymer coatings „DuPont Licensed Industrial Applicators“ nTechnicoat is supplying also Slovak and Polish market nSuccess of the co-operation: troublefree communication, sharing of know-how, knowledge of Czech and Slovak market technicoat du pont Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 20 Eva Švandová_2012 Joint ventures nAn agreement between two or more firms to undertake the same business strategy and plan of action nIt has its legal form nTwo companies want to co-operate (share knowledge, markets, and profits) and they decide to create another company together – JOINT VENTURE nIn the CR typical for the enterprises with foreign capital Barum a Continental Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 21 Eva Švandová_2012 Barum Continental ntires producer nJV partner – German company CONTINENTAL – 1992 nBarum – part of Continental Group barum continental Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 22 Eva Švandová_2012 SEPLAST nThe company Plastika s.r.o. Kroměříž established joint venture with the French company Seat Ventilation, SA in 1994 – SEPLAST s.r.o. nSeplast is a producer and distributor of industrial ventilators units and plastic industrial ventilators nPlastica provided the French partner with knowledge of the Czech market seat ventilation plastika seplast Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 23 Eva Švandová_2012 Close form of cooperation nmerger nacquisition nAcquisitions – key success factor: ¨ability to integrate the company (85) ¨synergies (84) ¨competitive position of the company acquired (81) ¨evaluation of acquisition candidate (80) ¨management abilities of company acquired (77) ¨prior experience making acquisitions (69) ¨market growth of the company acquired (69) ¨technology position of the company acquired (68) ¨compatibility of management styles (67) ¨price paid (64) ¨aid from public authorities nWall Street Journal/Booz-Allen &Hamilton Survey 2002 n Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 24 Eva Švandová_2012 The process of strategic alliance creation •Strategy •Goals •Search •Evaluation •Idefinition of occasions •Setting competencies •cooperation plan •implementation •interested groups •advanteges •disadvantages Alliance negotiation Alliance management Assesment and termination Partner assessment and selection Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 25 Eva Švandová_2012 PETT, L.T., DIBRELL, C.C. A process model of global strategic alliance formation. In: Business Process Management Journal; 2001; 7, 4; pg. 349 Process model of strategic alliance formation Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 26 Eva Švandová_2012 Microsoft Yahoo! cooperation nCooperation within the Internet search market to tackle the biggest competitor Google ¨Yahoo! 17 %, ¨Bing – 11 %, ¨Google – 65 % [Yahoo-microsoft.jpg] microhoo The cooperation involves search technology and advertisement technology. Yahoo web sites will be equiped by the microsofts technology – by the bing search and yahoo will provide their technology to microsoft. Yahoo will také care of advertising The term of the agreement is 10 years; Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and Microsoft will have the ability to integrate Yahoo! search technologies into its existing Web search platforms; Microsoft’s Bing will be the exclusive algorithmic search and paid search platform for Yahoo! sites. Yahoo! will continue to use its technology and data in other areas of its business such as enhancing display advertising technology; Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform, and prices for all search ads will continue to be set by AdCenter’s automated auction process; Each company will maintain its own separate display advertising business and sales force; Yahoo! will innovate and “own” the user experience on Yahoo! properties, including the user experience for search, even though it will be powered by Microsoft technology; Microsoft will compensate Yahoo! through a revenue sharing agreement on traffic generated on Yahoo!’s network of both owned and operated (O&O) and affiliate sites; Microsoft will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate of 88 percent of search revenue generated on Yahoo!’s O&O sites during the first five years of the agreement; and Yahoo! will continue to syndicate its existing search affiliate partnerships. Microsoft will guarantee Yahoo!’s O&O revenue per search (RPS) in each country for the first 18 months following initial implementation in that country; At full implementation (expected to occur within 24 months following regulatory approval), Yahoo! estimates, based on current levels of revenue and current operating expenses, that this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million; and the agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies. The agreement maintains the industry-leading privacy practices that each company follows today. Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 27 Eva Švandová_2012 The whole story n1.2. 2008 Microsoft made a bid 44,6 bil. USD for Yahoo (in cash and stock) n11.2. 2008 Yahoo! Rejected the offer n22.2. 2008 pension companies sued Yahoo! For rejecting the cooperation n4.4. 2008 Microsoft´s offer declined to 42,2 bil. USD n5.4. 2008 Ballmer informed Yahoo! to have 3 weeks to think about the offer and then Microsoft would try to reshuffle the board of directors n7.4. 2008 Yahoo! reacted and wanted better offer n10.4. 2008 Yahoo! started to deal with Google n29.4.2008 Yahoo! didn´t answer Ballmer´s offer – violent acquisition verged n3.5. 2008 Ballmer raised the offer, but Yahoo! Again rejected n7.5. Ballmer announced Microsoft would invest in own development n12.5. Cooperation between Yahoo and Google – during june, cooperation in internet advertising n7.7. Ballmer would make another bid if the directors of Yahoo! Would be change at the annual meeting hold on 1st of August n30.11.2008 Microsoft offered 20 bil. USD nJanuary 2009 chief executive Jerry Yang withdrawen and was replaced by Carol Bartz n29.7. 2009 announced 10-years agreement between Yahoo! And Microsoft n18.2. 2010 agreement received approval from US and EU regulators nhttp://www.reuters.com/news/video?videoId=108804 n "substantially undervaluing" Yahoo!'s brand, audience, investments, and growth prospects. As of February 22, two Detroit based pension companies have sued Yahoo! and their board of directors for breaching their duty to shareholders by opposing Microsoft's takeover bid and pursuing "value destructive" third-party deals. Microsoft offered 31 dollars per share and the real price was 28 value of Microsoft's cash and stock offer declined with Microsoft's stock price, falling to $42.2 billion by April 4.[46] On April 5, Microsoft CEO Steve Ballmer sent a letter to Yahoo!'s board of directors stating that if within three weeks they had not accepted the deal, Microsoft would approach shareholders directly in hopes of a electing a new board and moving forward with merger talks; this is known as a hostile takeover.[47][dead link] In response, Yahoo! stated on April 7 that they were not against a merger, but that they wanted a better offer. In addition, they stated that Microsoft's "aggressive" approach was worsening their relationship and the chances of a "friendly" merger.[48] Later the same day, Yahoo! stated that the original $45 billion offer was not acceptable. Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 28 Eva Švandová_2012 11.2. rejected Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 29 Eva Švandová_2012 Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 30 Eva Švandová_2012 Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 31 Eva Švandová_2012 Yahoo.png Microsoft.png Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 32 Eva Švandová_2012 Co-operation in retail and wholesale Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 33 Eva Švandová_2012 Cooperation in retail and wholesale nStages of co-operation: ¨Purchasing and payment alliance ¨Purchasing and selling alliance ¨Marketing alliance ¨Service organization n Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 34 Eva Švandová_2012 Alliance No of Members Turnover in 2002 in CZK (mil.) 1 COOP Centrum 45 21,000 2 COOP Morava 17 9,500 3 Vega MO,VO obch. 7,500 4 Čepos 23 6,500 5 Ardanas 117 5,655 6 Partner 250 prod. 4,500 7 Enapo 119 4,386 8 SVOP Drobní obch. 2,847 9 Bala 225 prod. 2,746 10 COOPSupermarket 31 2,640 11 Eso Market Drobní obch.+2 2,592 13 Vonet 3 2,200 14 Teta – PK Solvent 1,900 15 Šipka 97 1,750* 16 COOP Terno 4 1,691 17 Flop jih Drobní obch. 1,595 18 Fast – Planeo Drobní obch. 1,529 19 Brněnka 42 1,000 20 COOP Diskont 12 962 21 Koruna potraviny 43 905 22 Racek, Drogerie VO 176 822 23 SPAR Drobní obch. 2,500* Purchasing alliance CIT TT Members (no.) 1. EMD Markant NA 42,00* Oversea business chains, czech retailers 2. COOP Centrum 11,25 18,39 46 3. NC Praha 6,00* 8,60 SPAR Česká obchodní spol., SPAR Šumava 4. COOP Morava 3,70 14,35 20 5. Vonet 3,10 4,40* JAS, Quanto, Tabák Plus 6. Čepos 1,31 3,31 15 wholesalers Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 35 Eva Švandová_2012 MPj04027260000[1] MCj00892840000[1] MCj03980350000[1] member supplier purchasing and payment centre delivery of goods flow of payment flow of goods flow of documents catalogues prices codes of goods Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 36 Eva Švandová_2012 nNC Praha – purchasing and payment alliance SPAR nCOOP Centrum nMarketing alliances - Droxi, RENOME n Spar interspar COOP3 jednota bata blazek droxi fokus renome reserved klenoty § EMD Markant – Globus, Kaufland…. Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 37 Eva Švandová_2012 Traditional Sales Model Finance IT A/P R&D Finance IT A/P Planning Manufact &Distribution Customer Service Marketing Sales Rep Buyer Warehousing Store Ops Merchandising Out of Touch Out of Touch Out of Touch Out of Touch Supplier Retailer Only Point of Contact Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 38 Eva Švandová_2012 The Partnering Model Sales Rep Marketing Manufact &Distrib Customer Service Finance IT A/P R&D Senior Management Senior Management Planning A/P IT Finance Warehousing Store Ops Merchandising Buyer Supplier Retailer Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 39 Eva Švandová_2012 Dissatisfaction with alliances followed by their end nLow rate of strategies conformity nUnrealistic expectation concerning difficulty of establishment and running the alliance nKey workers don't want to work nKey workers don't manage to fulfill qualification requirements nEnemy effort to become independent with regard to the founder n Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 40 Eva Švandová_2012 My experience concerning cooperation in the CR nProblem with trust between the Czech companies being competitors, if they are going to co-operate (the Moravia Silesia Cluster) – problem especially of the co-operation supported by public authority nForeign partners are trying to produce for cheap in the Czech Republic nForeign partners want to expand and don´t know the Czech market nCooperation between Czech firms in the sphere of research and development (24 of innovative research parks in the CR) nExpansion of outsourcing n Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 41 Eva Švandová_2012 Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 42 Eva Švandová_2012 Strategic partnerships ‹#› Eva Švandová_2012 Strategic partnerships 43 Eva Švandová_2012 Thank you