Strategic alliances and how would that affect on the stakeholders?

Introduction

We watched a video of Tesco and Carrefour establishing a strategic alliance collaboration. Afterwards we discussed about, what does this would mean for business and about the consequences and possibilities and how this would affect on the suppliers.

How companies can collaborate with competitors?

Building a relationship with a competitor is learning how to turn a potential threat into a tremendous benefit. Competitive collaboration can help boosting profits, attract your target audience and improve brand awareness. Advantages are also self-reinforcement, reduced costs, improved quality and the result of more creativity due to better sharing. (Harisson, 2019)

There are many good examples mentioned in the article (2019) about the ways how companies can collaborate together. For example, Uber and Deliveroo, Deliveroo is a company, that finds clients to restaurants, that don’t have delivery options. Uber bring the customers there. Both companies have built their strategy in collaboration.

Collaboration with Pfizer and Merck has a powerful alliance partnership. They established this strategic partnership with each other to bring new cancer treatments to the market. (Harison, 2019)

When the companies plan the partnership, it might be good to sign a non-disclosure agreement, which protects both parts. (Harisson, 2019)

I find this collaboration in many cases, between big companies as a positive thing. I personally travel when I can and a good example about good collaboration is Star Alliance, which started 1997 with 5 different airlines, but has now many top aviation companies in collaboration. This kind of collaboration increases customer service quality, communications, co-locations at the airports and helps with infrastructural matters. One simple example, for instance, is that the luggage is checked to the final destination even though there are 3 different airlines, as long as they are part of Star Alliance.

What are the pros and cons of collaborating with competitors?

Strategic partnership can offer plenty of advantages for large companies and startups. In the business world this form of partnership has become more popular. Companies might want strategic partnership when they share a common goal and binding their resources will help them to reach their individual goals more effectively. (Canarelli, 2016)

Canarelli (2016) explains the case between Apple pay and Mastercard. Apple pay was just entering to the market and Mastercard was looking the first place from Visa, by possessing the highest number of currently circulated credit cards. In this case both parties wanted to expand their presence and reach at the point sale, so collaboration was rewarding.

Benefits of these partnerships are reaching the goals faster. Collaborating with partner outside of own industry, will enable to create services or products that offer greater innovation, value and results. Strategic partner might be able to offer financial assistance if needed but as well this strategic partner gets help exceeding its initial capabilities. In strategic partnership, the brand awareness will increase, and the quality of the product can improve. (Canarelli, 2016)

“Nowadays the best partner might be your direct competitor”, says professor Paavo Ritala from LUT Uni of technology, in Garrett´s (2009) article. Competitor tend to face same similar markets and use same technologies and resources. Therefore, it would make sense to collaborate for many companies on joint manufacturing, innovation and product development. Companies tend deal with similar challenges when they are large, so collaboration would be beneficial.

Coming together with another company will put the own company into a risk. There might be mistreat or misuse by collaborating partner. There might be disagreements with declaring ownership or about new products or production. In worst case disagreements can lead that the company will suffer financially or into lawsuits. Financially, there can be also misunderstanding with sharing the expenses. (Canarelli, 2016)

There might be also a struggle to understand the company strategy, or how to implement it. Business owners might not have clear understanding the unique functions of the company, if these are rival, they don’t want to collaborate with those areas. (Garrett, 2019)

How can stakeholders be affected by alliances?

Alignment in different contexts can be challenging between alliance and stakeholders. Hearld (2012) has a point of view from healthcare field. Alignment in this study, means shared understanding about the alliance´s vision, strategic goals and sense of commitment, collaboration and cooperation among different stakeholders.

Alliances might have the stage of competition-collaboration, from stakeholders’ point of view. Stakeholders were worried that work of the alliances might hurt their competition and their currently to do structured business according to study (2012)

From shareholders point of view credibility was important thing affecting by alliances. Especially long standing, productive working relationships brought much more credibility and increased the trust of cooperation (Hearld, 2012)

Also history of collaboration with the alliance and how it has worked before was mentioned important factor and having a clear strategy how the stakeholder and alliance could literally work together. (Hearld, 2012)

References:

Canarelli, M. 2016. The pros and cons of strategic partnerships. URL: https://medium.com/@MikeCanarelli/the-pros-and-cons-of-strategic-partnerships-7eca4b8bd681 Accessed 21.11.2019.

Harisson, J. 2019. Foundr. Partner with the enemy? How competitive collaboration can improve your business and boost your profits. URL: https://foundr.com/competitive-collaboration Accessed 21.11.2019.

Hearld, L. 2012. Barriers and strategies to align stakeholders in healthcare alliances. URL: file:///C:/Users/ekono/Downloads/A413_12sep_Hearld_S148to55.pdf. Accessed 21.11.2019

Garrett, B. 2019. Forbes Media. Why collaboration with your competition can be a great idea. URL: https://www.forbes.com/sites/briannegarrett/2019/09/19/why-collaborating-with-your-competition-can-be-a-great-idea/#5379ddcddf86. Accessed 21.11.2019