Alliance development and management, social capital and value creation. – HITT et al:

 

 

 

 

 

 

 

 


Strategic alliances are complex and must be entered into with a clear a rationale and processes for their management and fully understood reasons for the alliance. See notes.

Consider each option in terms of the Hitt et al

 

 

SouthCo

(Contractual not Alliance)

Nextron

(Joint Venture)

IDJ

(Joint Venture)

Alliance development & management

 

 

 

Alliance scope

·         Renting of spare facilities

·         Light assembly & injection moulding provision

·         Fully integrated supply infrastructure

·         Warehousing

·         Distribution

·         Customer support

·         Chinese sales team

·         Full control by XTech

·         No ownership issues

·         Selling                   } XTech

·         Manufacturing  } in

·         Support                                } China

·         New company – ‘LeanTek’

·         Engineering & marketing of XTech products.

·         Manufacturing subsidiary in US

·         70/30% ownership (Nextron/XTech)

·         $2M investment

 

·         Use of excess facilities

·         New company (Chinese registered)

·         10,000Sq ft of space (rented)

·         Local manpower

·         80/20% ownership (XTech/Meng)

·         $200,000 investment??

·         Bilingual manager required

Partner selection

·         Resources required in place & mature

·         Long standing relationship – trusted

·         Symbiotic relationship

·         Sheet metal & injection moulding in place – remainder requires new facilities

·         New partner

·         Space only – required plant, eqpt & inventory

·         New relationship with Meng

·         Long standing relationship with IDJ - trusted

Resource configuration, optimisation & exploitation

·         Chinese presence – strategic aim

·         May not have capacity

·         Lower production costs

·         Chinese experience valuable

·         Chinese presence – strategic aim

·         Lower production costs

·         Chinese experience valuable

·         Chinese presence – strategic aim

·         Lower production costs

·         Chinese experience valuable

Social capital

 

 

 

Information sharing

·         Chinese experience

·          

·         Chinese experience

·         Sheet metal & injection moulding experience

·         Chinese experience

 

Trust

·         Trusted long-term supplier

·         Unknown

·         Aggressive sales tactics reputation

·         Some trust but untried

Norms of reciprocity

·         Cultural issues minimised

·         Cultural issues a possible difficulty

·         Cultural issues minimised – Meng experienced with US business (IDJ)

Value Creation

 

 

 

Build & enhance resources & capabilities

·         Chinese presence

·         Increased capacity

·         Chinese presence

·         Increased capacity

·         Access to Chinese markets

·         Chinese presence

·         Increased capacity

Facilitate learning

·         Knowledge of operating in China

·         Possible loss of own valuable knowledge

·         Knowledge of operating in China

·         Possible loss of own valuable knowledge

·         Knowledge of operating in China

·         Possible loss of own valuable knowledge

Enlarge the strategic network

·         Network enlargement but minimal and so easier to manage but small diversity

·         Network enlargement but minimal and so easier to manage but small diversity

·         Network enlargement but minimal and so easier to manage but small diversity