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Strategic Alliances in Distribution

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Title: Strategic Alliances in Distribution Author: weaverd Last modified by: weaverd Created Date: 2/28/2006 7:31:40 PM Document presentation format – PowerPoint PPT presentation

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Title: Strategic Alliances in Distribution


1
Strategic Alliances in Distribution
  • Chapter 11 with Duane Weaver

2
What is a Strategic Distribution Alliance?
  • when two or more organizations have a
    connection that cause them to function according
    to a perception of a single interest whereby the
    connections that bind the organizations are
  • Enduring
  • Substantial
  • Cut across numerous aspects of each business

3
Establishing Strategic AlliancesThree Areas of
Consideration FIT
  • Chemistry Fit
  • Operations Fit
  • Strategic Fit
  • Reference
  • Lynch, Robert P., 1993. Business Alliances
    Guide The Hidden Competitive Weapon -- How to
    plan, negotiate, and manage strategic
    partnerships for increased corporate profits.

4
Establishing Strategic Alliances Corporate FIT
  • CHEMISTRY FIT
  • A measure of the quality of the relationships
    among the people involved in operating the
    alliance
  • A fool may be known by six things
  • Anger without good cause
  • Speech without profit or direction
  • Change without progress
  • Inquiry without object
  • Putting trust in a stranger
  • Mistaking foes for friends.
  • -- Arabian Proverb

5
Establishing Strategic Alliances Corporate FIT
  • OPERATIONS FIT
  • Some executives fall into their own trap by
    assuming that a good strategic fit implies a
    good operational fit.E.g. Olivetti and ATT

6
Establishing Strategic Alliances Corporate FIT
  • STRATEGIC FIT
  • Looks at STROI to build strategic synergy whereby
    the weaknesses of one company are offset by
    complementary strengths of the other.Thus,
    strategic direction is similar while operational
    strength and weaknesses are dissimilar.
  • STROI Strategic Return On Investment
  • measures Market Strength, Innovative Capacity,
    Financial Gain, Organizational Capability, and
    Competitive Advantage.

7
Styles of Alliance Operations
8
Motives for creating distribution alliances
  • Upstream Motives
  • Respect downstream, motivate to represent us,
    coordinate marketing, small players to giants
    (mergers) trend, erect barriers to entry,
    logistics cost reduction
  • Downstream Motives
  • Assure stable supply, make marketing efforts more
    successful, cut costs, differentiate from other
    distributors,
  • Alliances as out performers of ordinary channels
  • Discuss in your groupswhat do you think?

9
Building Alliance Commitmentvia incorporating
mutual vulnerability
  • Expectations of Continuity
  • Necessity of Mutuality
  • Gauging Commitment
  • Actions Binding Distributors to Suppliers
  • Actions Binding Suppliers to Distributors

10
Building Commitment bymanaging daily interactions
  • Manufacturing Trust
  • Relative to your confidence in each others
    integrity and concern for mutual well-being
  • Economic Satisfaction
  • Positive affective response to economic rewards
    from the union
  • Non-economic Satisfaction
  • Psychosocial affect relationship valued
  • Choosing Partner and Setting
  • Need complementary capabilities that can be
    exploited for competitive advantage
  • Decision Making Process
  • Centralization hurts trust

11
Life of a Marketing Channel PartnershipRelations
hip Stages
  • See Figure 11.3, p. 339
  • Marketing Channel Relationship Stages
  • Awareness
  • Exploration
  • Expansion
  • Commitment
  • Decline and Dissolution

12
Conditions of potential success
  • One side has special needs
  • The other side has the capability to meet the
    needs
  • Each side faces barriers to exiting the
    relationship
  • The FIT is good across all three areas of fit

13
Thank You!
  • Have a great day
  • ?
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