Discuss Global Multi Lateral Alliances Commerce Essay

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/Discuss global multilateral alliances," where partners are cooperating in one business segment but possibly compete in another", where the managerial challenges concern, on one level, how to make the alliance work and, on another level, how partners cope with multiple alliances and how they manage their relationships with the other parties.

The removal of regulative barriers has increased the global competition where competitors have well-established international presence, high standard industry, intensive knowledge and expertise in telecommunication and electronic field and have capability to develop the multi technological platform. In order to survive in high competitive global business environment demands a high investment and strong distribution channel and operational efficiency. In response to all these challenges companies are crucially focusing on the streamlined strategic alliances with their competitors. The usually assumptions about the strategic alliance is companies cooperate with one competitor and compete with other, and it can be defined as a single line alliance where the element of cooperation is prominent. The extended form of single line alliance can be defined as a multiple alliances or network alliances where firms cooperate in some activities and at the same time compete in other activities. The element of cooperation and competition is prominent in multiple alliances.

According to (Refik 2002) when visibility of the both elements is find in any specific relation is called 'coopeation. Moreover, coopeation is the most complex and also the most advantageous relationship between competitors. The nature of relationship between the competition and cooperation is based on different shapes for instance, on the one hand it consists of merely cooperative activities and on the other hand it consists of merely competitive activities. Furthermore, these coopeation relations can be divide into three different categories of relationship such as cooperation dominated relationship, in which partners mainly focuses on the cooperative activities rather than competitive activities, second is equality relationship, in which both partners will mainly focuses on equality and on the last is competition dominated relationship, in which partners mainly focuses on competitive activities rather than cooperative activities.

In addition, Refik (2002) explain, activities in coopetitive relation can be separate by the structure of the value chain or the magnitude of the firm. By functional these activities can be divided into two separate categories such as business unit's activities and production area activities. The main objective of this classification is the identification of those areas where competitor compete each other.

As concerning to the managerial issues, Sari, Ghauri and Luchien (2007) define the first challenge for the any alliances manager is to find out the complexity of the network and setting the strategic vision of the organization. As following the word "complexity of networks" (Thomas, Wilkinson and Johnston 2004) define different approaches to analyze the complexity of networks which can further distinguished into four levels.

For instance, "Managing Relationship" approach can define the management of internal resources, such as how firm exchanges the resources, capabilities, activities and relationship. In addition, (Bonner, Kim and Cavusgil 2005) defines this approach as a network sensing, in which firms manage the existing relationship and continuously seeks the new partners, resources and opportunities with those who provide unique complementary resources to compete in the high competitive business environment.

On the contrary, Ritter, Wilkinson and Johnston (2004) argue that during the seeking of new partner for complementary resources in alliances group, many of new alliances organisation will accept the institutionalise strategies in network. However, during the formation of long term alliance strategies at corporate level, Despite the fact, many big companies in the network has evolve for high positioned, therefore, this action can be affect on the new entrance as well as the existing small companies in the network.

Moreover, Refik (2002) define, "Managing Exchange Relationship approach", the purpose of this approach is to focus on the analysis of the firm interaction with alliance's, also mainly focus on the exchange of elements and the basic relevant factors which influence the business interaction. As relating to word "exchange of elements", in depth it can be define as exchange of strategies, resources, technology and so on. In addition (David, 2003) suggest during the exchange of strategies, managers need to focus on the interdependency approach which could be relates to the companies sales, technology, supplier information, company development and access to other companies in the surrounding networks. Apart from this manager also need to discuss those issues which might be create problems on the second stage, for instance, a company is responsible for its own analysis, development and the implementation of its own strategies which can be base on its own resources,

On the contrary, Hanseth, Aanestad, and Berg (2004), argue that, the interdependency strategic approach on the alliance network will maximise the risk of conflict between organisations. Due to the excessiveness of risk, interdependency approach could affect the relationship which could be takes an ultimately bad turn and results is break up of the agreement, which adversely affects the financial performance of both companies involved in relationship, also creates the negative impact on the all network partner.

Furthermore, Refik (2002) define "Industries as Networks approach", which is focus on the firm's behaviour and explain the key elements such as actors, resources, with in the existing network. further it explain how management operates a firm in the same environment. Moreover (Hoffmann, 2005), gives an extensive comments on the network visioning capability, such as network vision capability is an essential strategic approach in the network alliances which refers to management's skills and competencies to create the valid views of networks and their potential evolution, also it is closely related to the organizational learning construct and helps to systematically generate the information relevant to its current and future operations. Although this capability is refers to manage the supplier and customer portfolios in analytical aspects for instance, creating and using databases also conducting supplier and customer evaluation, and organizational aspects such as to develop the organisational solutions for handle the exchange relationships.

Moreover, "Managing focal Nets and Network Position approach" is describes the environmental context of a firm and consists of those actors that are within its network horizon and relevant to the management perceives. For instance how a firm relates to its internal and external environment and what strategies firm will adopt to maintain its position with in network and how coopetition will influence on the firm strategy. In addition (John, Faulkner and Tallman 2005), gives the same comments such as, it is important for managers to consider different network collaboration strategies and understand the dynamics of collaborations and competition. Further managers need to consider that how a partner can affect on the company or overall network performance.

In addition as relating to the word "Managing Network" (Reflik, 2002) define two different dimension of network alliances for instance, from an organisational prospective and second is a managerial prospective. From the organisational point of view, network alliances is the product of strategic decision making process which consist the formation of new cooperative strategies, also operation in new market, provide the platform to achieve economic scale for the sustainable growth, reduce the risk, and effective cost saving step, also help to access the internal and external markets, further promote and develop new technology and products, provide acquire resources depends on the firm weakness in any value chain activities and competencies in R&D, production, or marketing, these could be a organisation achieve by having a member of network alliances.

On the contrary, Ritter, Wilkinson, and Johnston, (2004) argue that, from the managerial prospective, multilateral alliance can be divided into two steps for instance first the domestic level alliances with competitor, and second the global level alliances with global competitor. On the domestic level, the concerning issue for managers, for instance as they are already stick to their existing partner and spend lots of time and effort to plan strategies to work with the new partners, also at the same time, struggling to find out the partner firms strategic intention and the history of cooperation experience, which gives a good indication of its future behaviour, on the other hand, the global level alliances brings the different geographical distance problem, cross culture barriers issues, economical issues, as including all the domestic issues and problems .

As a consequence, Reflik, (2002) suggest a circular model for alliance managers to understand the problems and issues regarding the domestic and Global level, which provides the practical insights into different alliances formation and consist the elements of need, partner selection, structure choice, control and evaluation, and adjustment. Although, to follow the circular model, It is easy to take the necessary actions, such as on the early stage of alliances manager should balance the resources, also follow the needs and desire of the partner firm and on the later stage manager should be strategic sponsor focus on the firm strategic direction and also visionary which promote alliances and should be a facilitator and able to link business area and its resource with in the multi alliances. Moreover on the interpersonal level manager should manage relationship with subordinate not only on the firm level but also with competitor alliance partner's firm's managers in the existing network.

According to (Hoffmann, 2005) "Companies can develop and institutionalise alliance management capabilities by deliberate learning mechanisms articulating and critically reflecting learning experiences and codifying alliance management knowledge Provide an important way to support organisational learning processes. Contributes to making alliance management more professional and improve alliance management capability".

In addition, David(2003) define building a core competitive position in alliance's requires a long term commitments and process with the back hand support of contingency plan, also it is important to understand the changes in network and considers the different network collaboration strategies to understands the dynamics of collaborations and competition. In addition (Hoffmann 2005) give the same comments such as, on the network alliance companies can only achieve the strategic target by the management of alliance portfolio which can be classify in four steps ,

For instance, portfolio strategy, in which companies described the main strategic direction for all alliance partners in their particular business units; moreover the main objective of the alliance's strategies portfolio is the balance of trade between exploration and exploitation. From the exploration point of view, it helps to use the resources with in the alliances, and from the exploitation point of view it helps to find the new resources for instance the good example of this balance can be seen in siemens alliance's portfolio regarding to its rail and transportation system. From exploration point of view siemens has established many different alliances for the exploration of "magnetic elevated railways and leaning train technology". On the hand, from the exploitation point of view, to maintain the high position in European high speed train market, company is the part of the "intercity express" (ICE-3) with its main competitors, such as "Adtranz, Alstom and Bombardie".

as following the above paragraph, Hoffmann (2005) further explain Portfolio Monitoring strategy will help companies to control and monitor the implemented business strategy, moreover, Portfolio coordination strategy will suggest companies to utilise their efforts to achieve strategic goals and eliminate conflicts among network partners, moreover it minimise the redundancy danger, and last stage in portfolios is to establish a network alliance management system which can help to support all other relevant task of alliance management. As a consequence, by managing alliance management portfolio will improve the internal coordination between companies and due to this companies can arrange and standardised important management process which can be help to monitor and evaluate the network performance.

In conclusion, it is generally believed that networks alliances are not easy to observable due to its dense nature and intertwined relationships. Moving beyond dyadic alliance to the multilateral alliance, the formation of multilateral alliances has allowed companies to leverage its own resources and capabilities to achieve the strategic goals which could otherwise be difficult or impossible to achieve in competitive global business environment . However, formation of multilateral alliances has presents many new challenges for managers and organisations, cooperation among competitor for achieving the core competitive positions in network is considerably a hard task for managers which demand a good understanding of intertwined relationships, long term commitments and process with back hand support of contingency plan as well as, the network sensing and different network collaboration strategies to understands the dynamics of collaborations and competition and also the clear understanding of the organisation objective and goals. Therefore it is crucial for alliances manager is to establish a network alliances management system to control and monitor the strategies, and important management process and evaluate the network performance.