An Overview and Analysis of Strategic

Alliances on the Example of the Car

Manufacturer Renault:

`A Story of Success and Failure′

University of Lincoln

January 2007

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Assignment International Marketing

Strategy

Authors:

Martin Patz

Nina Rakowski

Topic 4: A) Discuss the major factors that

are encouraging the formation and

development of strategic partnerships

between different organisations. B) Select

a company of your choice and analyse how

its strategic relationships are resulting in

competitive advantage

Amount of words: 3962

Hand in date: 23/01/07

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Table of contents

Page

Introduction 4

Strategic Alliances

Definition

5

Sources for the formation of Strategic Alliances

6

Theoretical approach - the Game theory

7

Transaction Cost Economics

9

Strategic Positioning

9

Organisational Learning

10

Resource Based View

10

Partner Selection

11

The alliance between Renault and Volvo in 1993

12

Why the alliance failed

13

The alliance of Renault and Nissan

15

Renault Nissan: an alliance success

16

Conclusion 19

Appendix 20

References 25

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Introduction

Within the last decade trends like globalization, internationalization and advanced

information technology had tremendous effects on the world of business. These trends

have led to an increased competition in almost every industry as more and more companies

enter the same market. As a consequence of this development companies are forced to

cooperate in order to remain competitive and to ensure their survival. These strategic

partnerships have been linked with creating competitive advantage by sharing knowledge

and resources. (Auster, 1987)

Source: Narula and Hagedoorn, 1998

Especially in the car industry competition has become fiercer, which has led to an

increased number of strategic partnerships. According to a study conducted by the finance

consultant company PriceWaterhouseCoopers in 2002 transactions due to strategic

partnerships within this industry reached the highest amount in history with a volume of

35 billion US$ (PwC, 2002).

There are many different types of partnerships like joint ventures, consortia, licensing,

networks and strategic alliances. For a detailed analysis this work concentrates on strategic

alliances. To give an insight on the topic this work analyses the alliences between the car

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manufacturers Nissan and Renault and Renault and Volvo. These partnerships are

examples of alliance′s success and failure. On the basis of these examples this work

illustrates the sources of alliance formation and how alliances are able to create competive

advantage but also the reasons why so many alliances fail. Before the case studies of the

above mentioned companies will be discussed this work explains the sources of alliance

formation on a theoretical basis.

Strategic Alliances

Definition

"A strategic alliance is a cooperative arrangement between two or more organisations

designed to achieve a shared strategic goal. There are two types of alliances: Equity based

and non equity based. Equity-based alliances include minority stock investments, joint

ventures, and the extreme end, majority investments. Non-equity based alliances tend to be

governed primarily by a contractual arrangement that specifies the responsibilities of each

party, the mode of operation of the alliance, and the considerations involved in expansion

or termination." (Singh and Gulati, 1998)

In strategic alliances the companies involved do not loose their independency and strategic

autonomy in any way although the alliance may have effects on their strategic direction.

(Dussage & Garrette 1999)

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Source: Yoshino & Rangan (1995)

Strategic Alliances can also be divided into alliances between competitors and between

non-competing firms. There can be identified three different types under each category.

Alliances between competing firms can be divided in shared supply alliances, quasi-

concentration alliances and complementary alliances. In general alliances between

competing firms present an interesting paradox because these firms are supposed to

compete with each other for resources and customers rather than joining forces. Achieving

the goals of such an alliance requires close collaboration and cooperation among the

parties. ( Dussage and Garrette, 1999)

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