SAP Module2 ValueChain

8/18/2019 SAP Module2 ValueChain

http://slidepdf.com/reader/full/sap-module2-valuechain 1/26

The Value Chain andAlliances and

Partnership Types

Module 2

Managing Alliances &

Partnerships (SAP)



Introduction

• Strategic alliances and partnerships –

Alliances and partnerships that are developed as part of astratagem – usually as part of a formal strategic plan

• Opposite of tactical alliances – The alliance is formed as a tactical response to forces imposed

on the organisation

• Obvious reasons for forming such strategic alliancesinclude: – Adding value;

– Spreading risk;

–Stimulating growth;

– Accessing new customer bases and markets;

– enerating synergies;

– enerating scale economies;

– Sharing e!pertise;

– "mproving e#ciency;



Some Common Questionsaout Alliances & Partnerships (A&P)

%$ &hy do companies get involved in alliances and

partnerships'a( A way of increasing their competitive advantage

b( A given company can achieve only so much with the limitedresources it contains

c( )ollectively* the competitive advantage of each member company

is greater than it was when the company was acting in isolationd( +Two heads are better than one,

e( Alliances and partnerships may also be aimed at a speci-cre.uirement

/$ &hy go for an alliance or partnership rather than a

merger or ac.uisition'a$ 0i1erence is of degree of commitment and irreversibility

b$ A23 o1er considerably more freedom of action and 4e!ibility thana 52A

c$ 0egree of internal change and reorganisation

d$ 6isk pro-le associated with the change is considerably lower$




7$ 8ow long do alliances last'

a( )an last for decades• 9ord 5otor )ompany and 9irestone Tyres$

$ 8ow important are alliances and partnerships'

a( 5eans of improving e#ciency and adding value

b( oin together to survive in a destabili<ing industry• Oil producers during energy crises of %=>?

• Airlines after =@%%

$ &hat is the main risk that a company faces whenembarking on an alliance or a partnership'

a( 0epends on the individual caseb( An obvious risk is con-dentiality

c( Back of economic 4e!ibility• 9ood chain C soft drink




D$ &hat does Ealue )hain mean'

a( Se.uence of processes and organisations involved in creating valueb( 6epresented as a simple schematic diagram

>$ &hat has the value chain got to do with alliances andpartnerships'a( A23 can be used to strengthen parts of the chain

F$ &hat types of alliances and partnerships are there'a( Gumerous di1erent types

b( Hetween two very similar companies with the obIective of e!ploitinga simple scale economy• Two airlines that form an alliance as a defence against falling world demand for

4ights

c( Eery di1erent companies where the obIective is to reduce risk orstabilise supply and@or sales output• An aircraft manufacturer forming a strategic alliance with an engine manufacturer

d( Two suppliers might form a strategic alliance to increase the volumeof output or the range and types of product they can o1er$




=$ 8ow are alliances distributed through an industry'

a( 5ore popular in some industries than in othersb( 6easons include industryJaccepted practice to economic

necessity• Barge number of companies that are members of a single alliance

• Ksually a small number of maIor alliance partners

• The companies that dominate the alliance distribution stand out asalliance +centres, or +hubs,$

• 5icrosoft is an obvious hub in the "nternet industry$ 5icrosoft has formedhundreds of alliances with all kinds of related companies* from searchengines to 3) manufacturers$

%?$&hat about national and international regulation'

a( BargeJscale A23 may signi-cantly a1ect the level ofcompetition within a sector or industry* either nationally orinternationally$• Two electricity companies form an alliance



Some Common Misconceptionsaout Alliances and Partnerships

%$ Alliances and partnerships are not subIect to regulation

a( Gational and international regulators can impose restrictions onA23• 6egulatory restrictions on a proposed largeJscale alliance between Air New

Zealand (ANZ) and Qantas$

• The Gew Lealand regulator in this case was the Gew Lealand )ommerce)ommission MGL))(

/$ Alliances and partnerships are always based around aformal contract

a( Though A23 are often built around a central core contract* but sucha contract is not a prere.uisite$

b( )ommonplace to -nd A23 without a formal contractual agreements• Kniversity C publisher

7$ Alliances and partnerships always reach a point where theyhave to be dissolved

a( Bogically true* but no particular business reason why it should be so

b( Achievement of the initial strategic obIectives may only signal the

start of a longJterm and ongoing alliance or partnership




$ )ompanies entering alliances and partnerships tend to

have prior e!perience of alliances and partnershipsa( Some do but the maIority of companies have very restricted

e!perience$

b( enerally* the larger the company the more likely it is to havebeen involved in prior alliances$

$ Alliances and partnerships are like mergers andac.uisitions$ "t can,t be proven that they actually addvalue

a( 0e-nition of success is di1erent in di1erent

situations@companiesD$ )ompanies never withdraw from a successful alliance

a( )ompanies sometimes withdraw from longJestablishedalliances* even though the alliance may for several years havemet all the obIectives for which it was established

• &ithdrawal of 5otorola from the Symbian mobile telephone softwarealliance




>$ 5embers of strategic alliances always carry e.ual in4uence within thealliance$a( Alliance partners may be far from e.uals

b( The arrangement might be dominated by one partner* while another partnermakes a much smaller contribution$

F$ )ompanies chose to go either for a merger or ac.uisition or for analliance or partnership

a( There have been numerous e!amples of successful alliances where the partnercompanies have gone on to negotiate and implement a full merger$

=$ There are no particular economic or other conditions that favouralliances and partnerships$a( There does appear to be a relationship between general and speci-c conditions

and alliance and partnership activity$

b( An industry or sector that is subIect to very poor business conditions is likely tosee an increase in alliance and partnership activity as companies struggle tosurvive$

c( 6ecession

%?$5ergers and ac.uisitions are generally more successful than alliancesand partnerships

a( 52A tend to make bigger headlines than A23* often because large numbers ofshares are bought and sold and huge sums of money may be involved$



The Value Chain

• eneral intention of A23 is to increase the value of the

company by increasing the competitive advantage$• "mportant to know how company works

– The process as a whole

– Nach process

– Nach subJprocess

• The entire process from supply to distribution can beconsidered a chain where !alue is added at each step

• The concept of the value chain is closely related to thatof the supply chain"

•

Supply chain management embraces the operationaland production processes of an organisation$



The Supply Chain

• The supply chain concerns the e#cient movement ofraw materials through the production process fromupstream suppliers* through the company and intoproducts* which are then sold downstream to

customers$



#!olution o$ Value Chain Concept

• The value chain concept continued to evolve as a

natural conse.uence of the "T revolution$ The realsigni-cance of value chain management becomes clearwhen companies integrate activities acrossorganisational boundaries with each other in terms of:

• Supply chain management covering the e!istingaspects of the supply chain;

• Customer relationship management Msometimesreferred to as demand chain management ( includingdemand drivers and attempting to develop processes

and systems so that demand can be forecast withaccuracy; and

• Supplier relationship management Msometimesreferred to as supplier collaboration management (*

which ensures that relationships with suppliers are



The Value Chain

•

The main di1erence between the supply chain and thevalue chain is the inclusion of the relationshi



Porter%s Value Chain

• The nearest appro!imation to a generic model is that

provided by 5ichael N 3orter in %=F$



The ynamic Value Chain

• ThreeJway overlap between the supply chain* S65 and

)65 needed for an e1ective value chain$



'ptimiing the Value Chain through A&P



Simple Mapping Prole

• )ompanies should carefully consider any alliance or

partnership in terms of process mapping to ensure thatthe optimum outcome is achieved$



Process Matching Prole $or Company A

• 5atched alliance

Air Gew Lealand Cantas• )ompensatory alliance

Ama<on C Toys 6 Ks• The e1ectiveness of the

-nal competence pro-le *oint or t is crucial indetermining the likelyeventual success or

otherwise of thealliance$

• One of the easiest waysof representing thecompetence pro-le ofan organisation is to



Process Matching Prole $or Company A & +



Types o$ Alliances & Partnerships

• N.uity oint Eentures MNEs( –

Nach founder company has an e.uity share holding – The founding partners both own and control the new company

– Nach founder company can therefore e!pect:• 6epresentation on the board;

• An e.uity dividend

•

Eoting rights@a role in decisionJmaking• GonJN.uity Alliances MGNAs( or )ooperative Agreements

– Agreements involving cooperation

– 0o not usually involve the creation of new companies



Some Specic Types o$ A&Ps

• "rrespective of whether they are NEs or GNAs* it is logical

to consider the alliance in relation to the value chain• Type ,- Supplier.Process Alliance

– The protection of sources of raw materials;

– The supply risk control;

– The securing a market for goods$

• Type 2- Process.Process Alliance – enerate process synergies;

– 6educe process costs through scale economies;

– 0istribute process risk$

–

Type 2(a)- Matched Process.Process Alliance – Type 2()- Compensatory Process.Process Alliance

• Type /- Process.Customer Alliance – One company provides the central process and the other

company provides the customer base* or direct access to it• KS3S C 9edN!





Alliance 0et1ors and 3us

• Alliances and partnerships are often used as a primary

method of positioning a company within a sector orindustry$



Industry or Sector 3u . 0ode iagram



The Po1er o$ 3u



0ational and International 4egulation

• 6egulatory "mpact – "nternational regulators;

• NK

– Gational regulators;• 9ederal Trade )ommission M9T)( J KS

• O#ce of 9air Trading MO9T( J KP

• )ompetition )ommission J KP

– "ndustry regulators;

–

Sector regulators$

Date post:	07-Jul-2018
Category:	Documents
Upload:	cutiepie
View:	218 times
Download:	0 times

SAP Module2 ValueChain

Documents