Seminar Paper, 2006
18 Pages, Grade: 1,4
1.1. Nature of the Problem and Objective
2 Basic Definitions
2.1. Supply Chain
2.2. Strategic Partnerships
2.3. ompetitive Advantage
3 Gaining Competitive Advantage Through Strategic Partnerships
3.1. The Cooperative Forms of Partnerships
3.2. Strategic Alliances
3.3. Areas of Application
3.3.1. Entering Markets
3.3.2. Defending and Expanding Competitive Positions
3.3.3. Developing New Technologies
4 Building Strategic Partnerships
4.1. Preliminary Considerations and Prerequisites
4.2. Steps of the Implementation of Strategic Partnerships
5 Concluding Remarks and Outlook
6.1. Exhibit 1: Supply Chain from an Institutional- and Process-oriented Perspective
6.2. Exhibit 2: Strategic Alliances as a Special Form of Cooperation
6.3. Exhibit 3: Effect of Interdependence on Supply Chain Relationships
illustration not visible in this excerpt
Due to the impact of globalization on our economy and the growing dynamic of markets, competition between companies has changed over the last decades. Shorter product life cycles, the pressure on prices, or the high costs of research and development for better products have made it difficult for today’s companies to prevail against their competitors in the contest for profits. But also the challenge to meet the high levels of customers’ quality and service demand has weakened a company’s ability to differentiate itself from its competitors. Especially small and medium-sized enterprises have to face this problem when competing against bigger companies. Thus, these facts contribute to the implication of finding new and alternative ways of gaining a strategic and competitive advantage.
One measure of doing so is to establish so called strategic partnerships, by leaving the stage of company-versus-company competition. By this means, the partners use synergy effects and bundle their strengths to aim for growth and profit enhancement. Such strategic partnerships have become very popular over the last years. This form of collaboration is used in particular by large multinational firms to develop new products and services, and to enter new markets.
Even though strategic partnerships are strongly increasing in number, approximately 50-60% of them fail in achieving their original goals. Therefore, it is important to analyze what strategic partnerships are, how they work and whether they are more suitable for some areas than for others. The goal of this seminar paper is to discuss to which extent strategic partnerships can help companies to gain a strategic advantage in the supply chain. I will thereby focus on two points: Firstly, which are the areas most applicable for strategic alliances? And secondly, what are the decisive parameters a company has to take into account when building a strategic partnership?
The second chapter starts with the basic definitions of the fundamental terminology underlying this seminar paper. After the answer to the question what a supply chain is and a brief insight into supply chain management, the definition of strategic partnerships aims to show the difference between strategic partnerships and other collaborative forms between companies, followed by the definition of competitive advantage. The concrete forms of strategic partnerships are briefly introduced in the third chapter, while focusing for the progress of this seminar paper on a specific form, the strategic alliance, due to the limited length of this seminar paper. In the next steps, the various application areas are being described while focusing again on a selected number of the most significant ones. The fourth chapter will deal with what companies have to face and watch out for when building strategic alliances. This includes the preliminary considerations and prerequisites as well as the steps needed to set up a strategic partnership. The seminar paper closes with a short summary of the main points, some concluding remarks and a brief outlook on the future development of strategic partnerships.
When looking at the traditional value chain of a company on an operational basis, a product passes through the company’s functional areas (planning, procurement, operations, distribution), each performing a value-adding process, until it reaches the final buyer of this product. The problem is that this is seen as a process which is performed within the boundaries of the focal firm, neglecting the importance of all the other business entities which are involved in this process.
Leading to the term “supply chain”, a multitude of definitions exists, each using a different way of description. A common terminological understanding has so far not emerged. Therefore, two definitions of the leading authors in this area shall be compared in the following paragraph.
Martin Christopher defines the supply chain as “… the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer.” Sucky uses, similar to Christopher, the approach of an institutional as well as a process- and resources-oriented perspective and defines the supply chain as: “… ein unternehmensübergreifendes Wertschöpfungssystem, das eine Netzwerk-Struktur aufweist.” Both authors have in common that they emphasize the network aspect, while implying that the term “chain” is unsuitable due to the fact that the firm is only the focus of a whole network of suppliers and customers. However, the companies involved keep their legal independence, yet representing a high degree of interdependence.
Regarding the term SCM, there is as well no uniform concept and definition so far. But taking the characteristics from the supply chain, SCM copes with the management and the configuration of the supply chain, as well as with the goal-oriented coordination of its processes. As a result, the goal of SCM is to manage the relationships within the supply chain, aiming for “… a more profitable outcome for all parties in the chain.” As mentioned in the introduction one way to achieve this is the formation of strategic partnerships which will be defined in the next chapter.
Strategic partnerships are often equated with a lot of other expressions relating to co-operative notions, like “joint venture” or “collaborative agreement”. Partially, those notions correspond to the actual meaning of strategic partnerships. For that reason, this seminar paper intends to clearly mark off these inter-business cooperations and concentrations.
When describing strategic partnerships it can be helpful to look at the two terminological components, “strategic” and “partnership”, in order to get a better understanding. “Strategic” means a long-term orientation of the behavior between the two or more companies which are involved, and aims for the achievement of one specific or more common goals. Furthermore, “strategic” implies a course towards success potentials which is to be developing during the progress of the cooperation in partnership. On the other hand, “partnership” describes the close relationship between the implicated parties. It is of Latin origin and can be translated as “cooperation” or the “collaborative fulfillment of tasks”. In addition, it is characterized by a higher degree of integration of the other partner and its business processes than it is the case with common tactical co-operative measures, for example day-to-day market transactions. This means that the relationship is based on a level of mutual benefit – both sharing profits and losses at equal parts. Thereby, the persisting self-governance and independence “… grenzt Unternehmenskooperationen von hierarchischen Organisationsformen und Formen der Unternehmenskonzentration ab.”
 C.f. Christopher (2005), p. 6.
 C.f. Hahn, Tayor (2005), p. 186.
 C.f. Dacin et al. (1997), p. 3.
 C.f. Porter/Millar (1985), p. 149.
 C.f. Sucky (2004), p. 7.
 Christopher (2005), p. 17.
 See Exhibit 1 in the appendix.
 Sucky (2004), p. 18. Own translation: [… a cross-company value-adding system which features a network structure.
 C.f. Christopher (2005), p.5.
 C.f. Sucky (2004), p. 21.
 Christopher (2005), p. 5.
 C.f. Mellewight (2003), p. 9.
 C.f. Lysons (2003), p. 365; Christopher (2000), pp. 117-118.
 Mellewight (2003), p. 10.; own translation [.. distinguishes cooperations between companies from hierarchical forms of organisation and from forms of concentration of companies.]
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