SELECTING THE PARTNER ?

HOW TO

Group 8

Selecting the Partners

Agenda:

• Overview of partner selecting• Strategic fit reconciliation map• Resource fit reconciliation map• Self-selection• Multiple partner option

Alliances are often compared to marriagesThere is no recovery from choosing the

wrong spouse

Alliance Framework: STEP5 Partner Selection

Three issues of selecting partners

1) Which partners shows the least trouble for some disagreement ?

2) Which partners give the best match required resource?

3) Which partners agree with the deal?

In an ideal world the best partner in step 3 and 4.

In the real world difficult to narrow down the partners who fit with all the needs completely.

So our presentation will come up with how the firms can use the framework to make best choice of potential partners!!!!

Looping Back to Step2, Achieving Internal Consensus

Strategic fit+ Resource fit Assessments provide the information for each partner

More importantly see the strategic interest of the firm whether both firms come together or difference

The planning and negotiation team understand the quality and quantity of each partner’s resources

If having problems, go back step2 to resolve it

STRATEGIC AND RESOURCE FIT RECONCILIATION MAP?

WHAT IS

Three possibilities in dealing with SAE disagreements:Agree with the partner’s position Convince the partner to agree with your position Develop a compromise between the two positions

Purpose:

“ To help company see and evaluate the potential partner’s strategy whether it will fit with company’s strategy or not”

Strategic fit reconciliation map

Example of Strategic Fit Reconciliation MapExample of Strategic Fit Reconciliation Map

Strategic Assessment

Elements (SAE)

Our firm Partner 1 Partner2

Objective

Roles

Market Models

Strategic fit reconciliation map

Get to know some symbols:

Strategic fit reconciliation map

A Sample Case

Background:

- Large pet food company wants to do the alliance

with a biological firm to come up with the new nutrition

ingredients for its pet foods. The goal of the alliance

project is to jointly develop series of new product lines

with a biological firm. The pet food company will distribute

the improved products through its distribution network.

A Sample Case (cont)

Problem: Two candidates (company A and B) to ally with the pet

food company Both firms tend to have conflict with the pet food company The pet food company decided to go on the process of

strategic assessment

Pet food’s strategy• To establish and maintain reputation for innovation though sole-branding• The customers would see the pet food company brand only, not biotechnology brand • Intended to do the alliance to achieve long-lasting advantage over competitors

A Sample Case (cont)

Conflict: Company AWanted its name associated with the new pet

foodAny jointly developed product will be cobranded

Company B Gave a pet food firm a one-year exclusively right

to use the nutrients, after which Company B would be free to provide licenses to others

A Sample Case (cont)

Putting it in the Strategic Map….

SAESAE Pet food Pet food companycompany

Company ACompany A Company BCompany B

Our objective Sole brand ? [cobranded] OK

Market Model Sole brand ? [cobranded] OK

Strategic Exclusivity

Exclusive rights OK ? [one-year head start]

A Sample Case (cont)

Resolving disagreements Reconsidered whether is sole branding necessary? If they joined with company A, will this help them to achieve

their marketplace objective.

Updating the strategic map

SAESAE Pet food Pet food companycompany

Company ACompany A Company BCompany B

Our objective Sole brand OK

Market Model Sole brand OK

Strategic Exclusivity Exclusive rights OK X

Resource Fit Reconciliation MapPurposesPurposes

• To summarize the resources that potential partners

provide whether which one is best fitted to the

company in order to develop a successful joint venture

• To test the quality and quantity of the potential

partners’ resourcesExampleExample

Key Resource Company A Company B

Resource 1

Resource 2

Company A: • Outstanding research commitment and development• Satisfactory level of technical support provision• Satisfactory ability to work closer with the pet food company’s staff to jointly develop new products

Company B:• Outstanding research commitment and development• Satisfactory level of technical support provision• High ability to work closer with the pet food company’s staff to jointly develop new products

Key Resource Company A Company B

Research capability OK+ OK+

Technical support OK OK

Contribution to joint development of product based on preexisting nutrients

OK OK+

A Sample Case (cont)

Final Decision• Pet food company wants to build a last long relationship rather than short-term one• Pet food company agrees the co-branding

Therefore,

““Company A is chosen” Company A is chosen”

A Sample Case (cont)

Other Examples:

Self-Selection: The Intangible Factor in Partner Selection

Strategic fit and resource fit do not guarantee the successful alliance

Without

The sense of MOTIVATION made by partners toward the project

The sense of MOTIVATION made by partners toward the project

The Multiple Partners Option

In the best case, one potential partner stands out above the other and is clear choice for step 6 negotiation. However, sometimes, the strategic fit, resource fit, and commitment level show that two or more candidates are highly qualified.

In this case,

The best course of action is to move forward to step 6 negotiations with multiple firms. Final partner selection depends on the results of other Alliance framework elements such as Financial Pie-split.

 

There is another situation where multiple step 6 negotiation is required. Sometimes, step 2, 3, and 4 show that the alliance should be a multiparty relationship

Thank You