In planning alliances, top management teams often overlook critical issues. This is especially true in
the area of information technology. Many alliances fail because the computer systems or internal
information reporting systems are not well matched. For each type of alliance structure described in
the text, what issues do you believe would be critical in planning for the integration and sharing of
information in an alliance partnership? How do these issues differ by type of alliance?
Alliances
A number of alliances have been described in the text by text by Margaret White and
Garry Bruton. The alliances could be grouped into formal alliances such as franchises and
joint ventures, and intermediate alliances such as licensing agreements and consortia.
International and domestic alliances are also discussed. In this paper, the issues for different
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types of the alliance structures described in the book that would be crucial in planning for the
integration and sharing of information within an alliance partnership are described in a
detailed manner.
Joint venture: This is a type of a formal alliance. In a joint venture, 2 or more
different business organizations merge their equity to create a new 3 rd organization. White
and Bruton (2011) reported that the equity level could differ from substantial multi-million
dollar investments to very small amounts. For this kind of alliance structure, the issues that
would be crucial in planning for the sharing and integration of information within an alliance
partnership include the level or amount of equity contributed by each party in the alliance,
what each party in the joint venture can expect, and how each party would operate in the
alliance (Sahlman, 2013).
Franchise agreements: in this type of alliance, the company/franchisor establishes a
contract with the entity that purchases the business unit/franchisee to operate a business or
sell a particular product under the trademark of the company (White & Bruton, 2011). For
this kind of alliance structure, the issues that would be crucial in planning for the sharing and
integration of information within an alliance partnership include period of time and the
geographical region in which the franchisee would be required to carry out these business
activities. The other issues are extensive direction on how the franchisee would need to be
operated, and payment of an initial charge by the franchisee to purchase the contract as well
as continuing royalty.
Consortia: these alliances are typified by a number of businesses that join together to
share financing and expertise for developing, collating, and disseminating new knowledge
(Mowery, 2012). For a consortia alliance structure, the issues that would be critical in
planning for the sharing and integration of information within an alliance partnership include
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the types of organizations that join together, the amount of funding that each organization in
the alliance is expected to contribute, how expertise would be shared, the role of each party in
contributing their expertise, and duration of the consortia (White & Bruton, 2011). Another
critical issue is knowledge leakage, which is a disadvantage of this type of alliance.
Licensing agreements: in this sort of alliance structure, White and Bruton (2011)
stated that one business organization will agree to pay another business organization for the
right either to sell or make a given product. The company that sells the right to the product
will generally lose the right to control different facets of the products, for instance pricing of
the product, when it would be made or sold, and how it would be marketed by the licensee
(Christensen, 2012). For this kind of alliance structure, the issues that would be crucial in
planning for the sharing and integration of information within an alliance partnership include
what product is to be sold or produced by the licensee and what the licensee would receive
for licensing the product.
Subcontracting: this type of alliance essentially entails subcontracting of activities to
other business organizations. According to White and Bruton (2011), the subcontracted
activities might or might not be high value-adding activities to the company, but the activities
which are outsourced would often not be where the competitive advantage of the company is
built. For subcontracts, the issues that would be essential in planning for the sharing and
integration of information within an alliance partnership include how the companies will
support each other in some way, the types of activities being subcontracted to other
businesses, nature of the interdependence between the contracting company and the
subcontractor, and the duration of the subcontracting agreement (White & Bruton, 2011).
Another critical issue is that in subcontracts, there is little control over quality issues and it is
not easy to enforce quality even if in contract.
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International alliances: in these sorts of alliances, the companies face various
challenges including cultural norms, trusting relationships, and languages. However, they
also present opportunities for developing new markets and products (Tidd, 2011). For this
kind of alliance structure, the issues that will be vital in planning for the sharing and
integration of information within an alliance partnership include potential synergy,
participant reward and risk, and mutual strategic fit. Other issues include how the company
will benefit for instance through organizational learning by gaining knowledge regarding
markets, processes, and products from its alliance partners; how the alliance will allow cost
savings for the company; and how the alliance could be pursued for various strategic reasons
(White & Bruton, 2011). The alliance should add value to the company’s technological
capabilities. It should also contribute to the company’s internationalization.
Conclusion
In conclusion, there are a number of alliances discussed in the text by Margaret White
and Garry Bruton. They include franchise agreements, consortia, joint ventures,
subcontracting, licensing agreements, and international alliances. This paper has spelt out the
issues which would be vital in planning for the sharing and integration of information within
an alliance partnership of each of these forms of alliance.
References
Christensen, C. M. (2012). The innovator’s dilemma: The revolutionary book that will
change the way you do business. New York City, NY: Cengage Learning.
Mowery, J. (2012). Strategic alliances and interfirm knowledge transfer. Crescent City, CA:
South-Western College Publishers.
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Sahlman, K. (2013). Structures of strategic management of technology. Boca Raton, Fl:
Prentice Hall
Tidd, S. (2011). Managing innovation. Boston, MA: Harvard University Press.
White, M. A., & Bruton, G. D, (2011). The management of technology & innovation: A
strategic approach (2 nd ed.). New York City, NY: Cengage Learning.
