Strategic Alliances: Tools, Techniques and Management Report (Assessment)

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Strategic Alliances

Various companies and firms are coming up with ingenious ways of combating competition. One of the methods through which firms ensure survival in the business environment is by forming strategic alliances. Consequently, an average company has between 20 and 100 active alliances at any given time. Strategic alliances are “formal and mutual agreements on commercial collaboration between firms” (Ohmae, 2009, p. 143). Parties that are involved in a strategic alliance often agree to exchange, pool, or integrate their resources in order to achieve mutual gains.

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The main rationale behind strategic alliances is the changing business environment. Firms have to contend with fast changes that are brought about by globalization, the need for expansion, customer satisfaction, and the needs of suppliers. Alliances can be used as functional responses to unstable business environments. Research has indicated that “companies that successfully embrace strategic alliances perform better than the ones that do not” (Ohmae, 2009, p. 144). Strategic alliances ensure that the diverse needs of the customers are addressed. In addition, firms that embrace strategic alliances can enjoy the services of a wide range of suppliers on special terms. Strategic alliances are known to assist firms in sharing risks and costs, capitalizing on their strengths, and utilizing leverage. Nevertheless, alliances work best when they align with a firm’s overall goals and strategies (Foster & Ganguly, 2007). Furthermore, alliances do not work by default but they also require additional resources for them to be fruitful.

Strategic alliances can easily be utilized by companies in facilitating a company’s quest for quality. First, firms can use strategic alliances as avenues for sharing knowledge. Most firms have their own pool of knowledge and expertise but they also lack these resources in other crucial areas. Strategic alliances assist firms in utilizing the knowledge that they lack. Firms can use the knowledge and expertise that is acquired through strategic alliances to improve the experiences of their customers. The quality of the services and products that are provided by any firm depends on the available knowledge and expertise. Consequently, strategic alliances can easily be used to bridge the quality-gaps that exist in any company. Some of the ways in which a firm can utilize strategic alliances in improving quality is by forming an alliance with a company that has vast production knowledge (Das & Teng, 2000). Furthermore, a company can utilize its strategic partner’s ability to obtain top-quality products. For example, the strategic alliance between carmakers Toyota and General Motors meant that customers in Japan and the United States could enjoy top quality vehicles.

Strategic alliances also contribute to a firm’s quest for quality because they facilitate shared risks. Sharing risks can enable a company to minimize its likelihood of making low quality products. For example, most commercial aircraft manufactures use strategic alliances by ensuring that different plane parts are made by different companies. This form of risk sharing ensures that a firm can come up with a top quality product by using the efforts of its strategic partners. Risk sharing is beneficial to a company, its suppliers, and its customers. For instance, most suppliers are comfortable doing business with a company that has well-distributed risks.

Benchmark Firms

A benchmark firm is a company whose models of operations are so advanced such that the organization can be used by other companies as a standard of measurement. A benchmark firm is often the head of a certain category and all other companies seek to emulate it. Benchmark firms are known for their ability to ensure above-average methods of customer satisfaction (Vorhies & Morgan, 2005). There are various methods of achieving benchmark status but efficient customer service/satisfaction is essential to this process.

It is good practice for a benchmark firm to open its doors and allow others to view its operations and tour its facilities because this position is not permanent and it is subject to changes. Benchmarking is not only useful to the firms that use it, but it is also beneficial to the benchmark firm. Opening doors to others allows a benchmark firm to ensure that the organization is subject to continuous growth (Drew, 2007). Allowing other parties to tour the facility of a benchmark is a strategic tool that can be used to reassure customers about the quality of the firm’s products and services. For instance, allowing others to venture in your premises implies that you have a high quality and transparent process.

One advantage of being a benchmark firm is that the company is able to venture into uncharted territories when it comes to customer satisfaction. For instance, firms that benchmark against a benchmarking-firm reservedly depend on the benchmark-firm to come up with new strategies and modalities. Being a benchmark firm also improves the growth potential of a company because the organization is constantly searching for new opportunities for positive development. Another advantage of being a benchmark firm is that the company has an adequate and effective tool for navigating through competition. A benchmark firm is practically ahead of the competition at any given time.

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One disadvantage of being a benchmark firm is that a company has to employ a lot of resources in order for it to maintain its pole position. Most benchmark companies are tasked with conducting research into new practices and this activity requires resources. The companies that compete with a benchmark firm do not necessarily have to employ these types of resources. Another disadvantage of being a benchmark firm is that the company might lose sight of other aspects of operations such as balancing of accounts. For instance, most benchmarking firms realize a significantly lower profit margin than their competitors do because they require significant resources to maintain their position.

I would want other companies to benchmark against my company because this trend puts my business on a path of continuous improvement. Having other companies emulate my strategies is also a reassurance that my methods are adequate. Over time, benchmark firms master various capabilities that other companies have trouble implementing.

Concurrent Engineering

Concurrent engineering refers to the process through which stages of developing products are conducted at the same time by different sets of workers. This strategy is most common in industrial settings where products such as cars and planes are made. There are various advantages of employing the concurrent engineering method in production environments. First, concurrent engineering is known to cut the development time of products by about 50%. Consequently, concurrent engineering ensures that goods can get to the market at a faster rate. Most of the companies that employ concurrent engineering have the ability to produce a commodity on demand with considerably little waiting time. For instance, a company can be able to ascertain the waiting-time before the completion of a certain product with high levels of accuracy.

Concurrent engineering can be used to ensure higher quality of end products. For instance, “concurrent engineering practices enable workers and managers to discover any production issues early on in the process” (Dowlatshahi, 2009, p. 51). Consequently, through concurrent engineering high quality production can be achieved easily. The concept of concurrent engineering also reduces the number of revisions that can be made in a single product by eliminating unnecessary testing and impractical prototypes. For example, when phones are being manufactured, screen issues are handled independently thereby eliminating the error margin when assembling the whole phone.

Another advantage of concurrent engineering is that it increases the overall productivity of the workforce. Unlike consecutive engineering, concurrent engineering eliminates the waiting periods between different stages of production. Consequently, concurrent engineering allows a worker to be highly productive at any given stage of the production process. Furthermore, concurrent engineering ensures that not all workers lose sight of the final product. It is also important to note that concurrent engineering aids in collaboration between workers. For example, the individuals who are working on a vehicle’s fuel consumption can liaison with the ones who are charged with minimizing carbon emissions.

One of the most significant advantages of concurrent engineering is that the process is responsible for bringing down the costs of developing most products. For instance, research indicates that concurrent engineering can reduce costs by up to 60% (Dowlatshahi, 2009). Cost is a significant factor when developing a new product and concurrent engineering can be used to harness this variable. Concurrent engineering reduces overall production costs by decreasing the duration spent in the initial phases of development and by ensuring that a company can deliver a commodity faster and cheaper than its competitors can.

References

Das, T. K., & Teng, B. S. (2000). A resource-based theory of strategic alliances. Journal of management, 26(1), 31-61.

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Dowlatshahi, S. (2009). A modeling approach to logistics in concurrent engineering. European Journal of Operational Research, 115(1), 59-76.

Drew, S. A. (2007). From knowledge to action: the impact of benchmarking on organizational performance. Long range planning, 30(3), 427-441.

Foster, S. T., & Ganguly, K. K. (2007). Managing quality: Integrating the supply chain. Upper Saddle River, NJ: Pearson Prentice Hall.

Ohmae, K. (2009). The global logic of strategic alliances. Harvard business review, 67(2), 143-154.

Vorhies, D. W., & Morgan, N. A. (2005). Benchmarking marketing capabilities for sustainable competitive advantage. Journal of marketing, 69(1), 80-94.

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IvyPanda. 2020. "Strategic Alliances: Tools, Techniques and Management." May 17, 2020. https://ivypanda.com/essays/strategic-alliances-tools-techniques-and-management/.

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IvyPanda. "Strategic Alliances: Tools, Techniques and Management." May 17, 2020. https://ivypanda.com/essays/strategic-alliances-tools-techniques-and-management/.

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