1. Alliances and joint-
joint ventures
The way forward in relationship marketing by written Bernard, Lucia,
Chiedza and Admire

2. Cont...

3. 1,With reference to MSU Zim apply the
six markets framework
The “six markets” was developed by Christopher, Payne and Ballantyne as an instrument for
helping managers identify strategically important stakeholders. The Customer Markets are placed
in the center of this model to emphasize the idea that „organizations can only optimize
relationships with customers if they understand and manage relationships with other relevant
stakeholders”[Payne et al., 2005, 859]. The other five markets, described below, have a
supporting role:
 · referral markets (satisfied customers that become advocates of the company and
recommend it to other potential customers);
 · influence markets (unions, business press, regulatory bodies, financial analysts,
competitors,the government, consumer groups etc.);
 · recruitment markets (potential employees and the channels used to access them;
 · supplier and alliance markets (suppliers that the company has partnership
relationshipswith, and other organizations with which the company shares capabilities
andknowledge);
 · internal markets (the organization and its employees).

4. Six markets model

5. MSU and six markets model
 Customers- always the primary focus ie students
 Referral markets
 eg.independent financial advisors, satisfied customers students that become
advocates of the company and recommend it to other potential customers
 Supplier markets
 Win- win sitaution rather than adversarial. suppliers that the university has
partnership relationships with, and other organizations with which the company
shares capabilities and knowledge;

6.  Internal markets
Rationale that by treating employees as customers , levels of customer service
and quality can be improved. employees as internal customers
Buy in leads to motivation
 Influencer markets :
unions, business press, regulatory bodies, financial analysts, competitors, the
government, consumer groups etc.);
 recruitment markets
Potential employees and the channels used to access them ie employment
agency ,other universities

7. 2. Using local and global examples
distinguish a joint venture from a strategic
alliance(20)
 Joint venture is a separate business entity, it is an agreement by two or more parties to form a single entity
to undertake a certain project. Each of the businesses has an equity tstake in the individual business and
share revenues, expenses and profits.
 “Joint Ventures are agreements between parties or firms for a particular purpose or venture
 Participants continue as separate firms
 May be organized as partnership, corporation, or any other form of business
 Formal long-term contract of 8 to 12 years duration
 Examples of JV’s include: Microsoft and NBC (MSNBC); Sony-Ericsson, Nokia Siemens Networks
 Strategic alliances are informal or formal decisions or agreements to cooperate in some form of relationship
between two or more firms
 Created out of uncertainty and ambiguity in nature of industries
 Rapid advances in technology
 Globalization of markets
 Deregulation
 Examples of SA’s include: Oracle and Unisys; Star Alliance in the Airline industry.

8. The Global Airline Industry
 Airline industry consolidation of 1990s
 From code sharing, joint marketing
activities to combining operations.
 Examples of Alliances
 Star Alliance
 ONE world Alliance

9. Airlines Type of Alliance
 United Airlines
 Lufthansa
 Scandinavian
 Thai International
 Varig Brazilian
Air Canada
Air New Zealand
 Mexicana
Star Alliance: Code sharing, joint
marketing; includes up to 15 partners in
2002
Global Airline Alliances

10. Characteristics of joint ventures
 Limited scope and duration
 Generally involve only two firms
 Involve only small fraction of participants' total activities
 Each participant offers something of value
 Joint production of single products
 No sharing of assets/information beyond venture
 Need not affect competitive relationships

11. Characteristics of joint ventures
 Limited scope and duration
 Generally involve only two firms
 Involve only small fraction of participants' total activities
 Each participant offers something of value
 Joint production of single products
 No sharing of assets/information beyond venture
 Need not affect competitive relationships

12. Characteristics of joint ventures Characteristics of strategic alliances
Limited scope and duration
Generally involve only two firms
Involve only small fraction of
participants' total activities
Each participant offers
something of value
Joint production of single
products
No sharing of assets/information
beyond venture
Need not affect competitive
relationships
Need not create new entity
Contract need not be specified
Relative size may be highly
unequal
Less clear contributions and
benefits
Difficult to anticipate
consequences
Allow firms to focus on fewer
core competencies
Often small resource
commitments
Limited time duration

13. Characteristics of strategic alliances
 Characteristics of strategic alliances
 Need not create new entity
 Contract need not be specified
 Relative size may be highly unequal
 Less clear contributions and benefits
 Difficult to anticipate consequences
 Allow firms to focus on fewer core competencies
 Often small resource commitments
 Limited time duration

14. Characteristics of strategic alliances
cont
 May involve relations with competitors and complementory firms
 Synergistic value creation from combining different resources
 Learning and internalizing new knowledge and capabilities
 Can add more value to partnering firms by creating organizational mechanism that
better aligns decision authority with decision knowledge
 Can add value to partnering firms through organizational flexibility
 Move to other alliances as attractive possibilities emerge
 Access to people who would not work directly for them

15. IBM’s Global Alliances
 Early Alliances: Responding to Japan
 IBM’s Initiatives During the 1990s: Rebuilding
Competitiveness

16. 3.With reference to the universities in Zimbabwe discuss
ant 5 benefits five risks that can be associated with
strategic alliances(20)
 Benefits
 Share fixed costs
 Bring together skills and assets that neither institution has or can
develop
 High cost of technology development shared
 Reduce costs through economies of scale or increased knowledge
 Increase access to new technology
 Inhibit competitors
 Enter new markets
 Reduce cycle time
 Improve research and development efforts
 Improve quality

17. Advantages/Benefits
cont
 Risk sharing
 Each participant diversifies risk
 Reduces investment cost of entering risky new research area
 Realizes benefits of economies of scale, critical mass, learning curve effects sooner
 Knowledge acquisition — learning experience for all partners
 Shared technology
 Shared managerial skills in organization, planning, and control
 Augments financial or technical capabilities

18. Advantages benefits cont
 Financing — to raise capital
 Share investment expense
 Small institutions has product idea but no cash
 Joint venture with large company that has cash to develop product
 bring together complementary skills and assets that neither partner could
easily develop on its own
 Economies of scale.
 Risk and cost sharing

19. Risks/Disadvantages:
 Competitors institutions get low cost route to technology and markets
 Inflexibility
 Cultural misalignments
 Variations in Market and customer orientation
 Co-ordination difficulties due to informal cooperation settings and highly
costly dispute resolution.
 High Influence costs because of the absence of a formal hierarchy and
administration within the strategic alliance.

20. Risks cont
 Inflexibility problems similar to other long-term contracts
 Refusal to share knowledge with counterparts in venture — institutions wants to learn as
much as possible but not to convey too much
 Inability of universities to share control or compromise on difficult issues
 Implementation requires substantial commitments of managerial resources
 alliances do not last as long as planned
 About 70% are disbanded before scheduled maturity
 On average they do not last as long as one-half the term of years stated in agreement

21. Other Risks cont
 Lack of skills and technology swaps with equitable gains
 risk of opportunism by a partner
 difficult to transfer technology not meant to be transferred
 Loss of proprietary information.
 Management complexities.
 Financial and organizational risks.
 Risk becoming depending on a partner.
 Partial loss of decision autonomy.
 Partners’ cultures may clash.
 Loss of organizational flexibility

22. 4.State and outline at least 7 Types of
strategic alliances giving local and
international examples
Joint Ventures
 A joint venture is an agreement by two or more parties to form a single entity
to undertake a certain project. Each of the businesses has an equitystake in
the individual business and share revenues, expenses and profits.
 “Joint Ventures are agreements between parties or firms for a particular
purpose or venture. Their formation may be very informal, suchas a
handshake and an agreement for two firms to share a booth at a trade show.
Other arrangements can be extremely complex, such asthe consortium of
major U.S. electronics firms to develop new microchips,” says Charles P.
Lickson in A Legal Guide for SmallBusiness.
 Joint ventures between small firms are very rare, primarily because of the
required commitment and costs involved

23. There are two types of joint ventures:
 Project-based Joint Venture: This type of alliance may commonly be
used on a project by project basis. In other words, the creation of a
separate entity through the alliance of two or more organizations for
the purpose of carrying out a specific project.
 Full-blown Joint Venture: This type of alliance requires significant
resource input. It is expected to remain a viable entity for a significant
length of time, certainly spanning multiple projects.

24. Advantages
 Advantages
 Allows for sharing of risk (both financial and political)
 Provides opportunity to learn new environment
 Provides opportunity to achieve synergy by combining strengths of
partners
 May be the only way to enter market given barriers to entry

25. Disadvantages
 Requires more investment than a licensing agreement
 Must share rewards as well as risks
 Requires strong coordination
 Potential for conflict among partners
 Partner may become a competitor

26. Outsourcing
 The 1980s was the decade where outsourcing really rose to prominence, and
this trend continued throughout the 1990s to today, although to a slightly
 lesser extent.
 The early forecasts, such as the one from American Journalist Larry Elder,
have been shown to not always be true:
 “Outsourcing and globalization of manufacturing allows companies to reduce
costs, benefits consumers with lower cost goods and
 services, causes economic expansion that reduces unemployment, and
increases productivity and job creation

27. Outsourcing
Involves farming out value chain activities to outside vendors.
 Outsource an activity if it:
 Can be performed better or more cheaply by outside specialists.
 Is not crucial to achieving sustainable competitive advantage.
 Improves organizational flexibility and speeds time to market.
 Reduces risks due to new technology and/or buyer preferences.
 Assembles diverse kinds of expertise speedily and efficiently.
 Allows the firm to concentrate on its core business, leverage key
resources, and do even better what it does best.

28. Disadvantages
 Hollowing out resources and capabilities that the firm needs to be a master of
its own destiny.
 Loss of control when monitoring, controlling, and coordinating activities of
outside parties by means of contracts and arm’s-length transactions.
 Lack of incentives for outside parties to make investments specific to the
needs of the outsourcing firm’s value chain

29. Affiliate Marketing
 Affiliate marketing has exploded over recent years, with the most successful
online retailers using it to great effect. The nature of the internet means
thatreferrals can be accurately tracked right through the order process.
 Amazon was the pioneer of affiliate marketing, and now has tens of thousands
of websites promoting its products on a performance-based basis.

30. Licensing
 A contractual agreement whereby one company (the licensor) makes an asset
available to another company (the licensee) in exchange for royalties, license
fees, or some other form of compensation
 Patent
 Trade secret
 Brand name
 Product formulations
 This is a contractual arrangement whereby trade marks, intellectual property and trade secrets are licensed to an external
firm. It’s used mainly as a
 low cost way to enter foreign markets. The main downside of licensing is the loss of control over the technology – as soon as it
enters other hands the
 possibility of exploitation arises.

31. Advantages of licensing
 Provides additional profitability with little initial investment
 Provides method of circumventing tariffs, quotas, and other export barriers
 Attractive ROI
 Low costs to implement to Licensing

32. Disadvantages to Licensing
 Limited participation
 Returns may be lost
 Lack of control
 Licensee may become competitor
 Licensee may exploit company resources

33. Product Licensing
 This is similar to technology licensing except that the license provided is only
to manufacture and sell a certain product. Usually each licensee will be
 given an exclusive geographic area to which they can sell to. It’s a lower-risk
way of expanding the reach of your product compared to building your
 manufacturing base and distribution reach.

34. The two companies made a cross-licensing alliance. Motorola ceded part
of its microprocessor technology, in exchange Toshiba allowed Motorola
part of its memory chip technology. Therefore, the risk of ceding
technology was shared.

35. Franchising
 Franchising is an excellent way of quickly rolling out a successful concept
nationwide. Franchisees pay a set-up fee and agree to ongoing payments so
 the process is financially risk-free for the company. However, downsides do
exist, particularly with the loss of control over how franchisees run their
 Franchise

36. The most notable examples for franchising is
Coca Cola and McDonald’s.

37. R&D alliances
 Strategic alliances based around R&D tend to fall into the joint venture
category, where two or more businesses decide to embark on a research
venture through forming a new entity

38. Distributors alliances/Distribution
Relationships
Distributors
 If you have a product one of the best ways to market it is to recruit
distributors, where each one has its own geographical area or type of
product.
 This ensures that each distributor’s success can be easily measured against
other distributors
 This is perhaps the most common form of alliance. Strategic alliances are
usually formed because the businesses involved want more customers.
 The result is that cross-promotion agreements are established.
 Consider the case of a bank. They send out bank statements every month. A
home insurance company may approach the bank and offer to make an
 .

39. Distributors/Distribution Relationships
cont
 exclusive available to their customers if they can include it along with the
next bank statement that is sent out.
 It’s a win-win agreement – the bank gains through offering a great deal to
their customers, the insurance company benefits through increased customer
 numbers, and customers gain through receiving an exclusive offer