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WHAT IS AN ALLIANCE?

WHAT IS AN ALLIANCE?. Kuglin and Hook. WHAT IS AN ALLIANCE?. An alliance is business agreement and relationship with two or more firms interfacing to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations. DEFINITIONS OF “ALLIANCE”.

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WHAT IS AN ALLIANCE?

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  1. WHAT IS AN ALLIANCE? Kuglin and Hook

  2. WHAT IS AN ALLIANCE? An alliance is business agreement and relationship with two or more firms interfacing to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations

  3. DEFINITIONS OF “ALLIANCE” • By Webster defines the word “alliance” as • An allying or close association, as of nations for a common objectives, families by marriage • An agreement for this • The countries, groups in such association • By Synonyms from Webster’s Thesaurus • The state of being allied, connection, membership, affinity, participation, cooperation, support, union, agreement, common understanding, marriage, collaboration, partnership and the act of joining, etc.

  4. Sales Alliance Solution-Specific Alliance Geographic-Specific Alliance Investment Alliance Joint Venture Alliance Types of Alliance

  5. WHEN TO USE? Two companies agree to enter the market together to sell complementary products and services. MAIN PURPOSE? To create sales; especially for companies that have joint selling activities with specific clients. Sales Alliance

  6. Example: i2 Technologies : Ernst & Young (CGE&Y) Exclusivity is NOT a requirement Sale Alliance (cont’d)

  7. WHEN TO USE? Two companies agree to jointly develop and sell a specific marketplace solution. MAIN PURPOSE? Joint selling of a jointly developed solution Usually there are incentives to maximize the return to both parties for their parts of joint development effort. Solution-Specific Alliance

  8. Example : Whirlpool, Hearst, and Boston Consulting Group Solution-Specific Alliances (cont’d)

  9. WHEN TO USE? Two companies agree to jointly market or co-brand products and services in a specific geographic region-has been practiced for many years in the beer industry MAIN PURPOSE? Being able to enter to an important geographic market without having to bear high-cost from exportation. Geographic-Specific Alliance

  10. Example: Fosters Brewing Company (Australia) : Molson (Canada) Geographic-Specific Alliance

  11. WHEN TO USE? One company makes an investment in another company and at the same time developing an agreement to jointly market their products Example : viaLink : CGE&Y and i2 HP : viaLink Investment Alliance

  12. WHEN TO USE? Two companies come together and form third company to exclusively market and/or develop specific products and services. Setting up a separate organization and financial structure Ownership interests and incentives will be stated when the join venture alliance is established. Joint Venture Alliance

  13. Positive Aspect: There is a financial and legal commitment between two companies Negative Aspects Failure of joint venture alliance can be PAINFUL. Responsibility of a separate company, including financial implications that are tied to the performance of both companies Joint Venture Alliance

  14. Example : Northern Telecom (now known as Nortel) : Motorola Joint Venture Alliance

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