Autumn 2021 1 Strategic partnerships spolupráce Strategic partnerships Eva Švandová —“We all do better when we work together. Our differences do matter, but our common humanity matters more.” (Bill Clinton) —“If you want to make peace with your enemy, you have to work with your enemy. Then he becomes your partner. (Nelson Mandela) — “Alone we can do so little; together we can do so much” (Helen Keller) Autumn 2021 Strategic partnerships 2 Road map —What are strategic partnerships —Types and areas of strategic partnerships —Why are enteprises partnering —Theories explaining cooperation —Basics steps of strategic partnership creation —Keys to successful cooperation —Partnering in the Czech Republic — Autumn 2021 Strategic partnerships 3 What is strategic partnership Autumn 2021 Strategic partnerships 4 — —A relationship formed by two or more organizations that share (proprietary), participate in joint investments, and develop linked and common processes to increase the performance of both companies. Source: http://www.apics.org/ —A Strategic alliance is a partnership between two or more companies to pursue a set of agreed upon goals while remaining independent organizations. Strategic alliances come in all shapes and sizes, and include a wide range of cooperation, from contractual to equity forms. Source: Encyclopedia, Wikipedia, http://en.wikipedia.org/wiki/Strategic_alliance — —TO SUM UP: ¡agreements with „open“ end (ASAP) ¡between separated independent companies ¡sharing common interests or goals ¡mutually beneficial The question is, can wolf and the red girl create a partnership for the puprose visitng the grandmother? Even competitors can cooperate Autumn 2021 Strategic partnerships 5 Lawsiut between Anheuser Busch and Budvar concernig the trademark Budweiser. They were coopertatin from 2007 to 2012. Anheuser Busch Inbev was a sole supplier of budvar name Czechwar in USA market. They were importing distributing and marketing it. Bud in 2008 nwe partner Inbev entered ANB and the business conception hase changed. They wanted to offer thexr small trademarks in the amrecian market. ABI wanted to utilize growing demand for imported beers in USA, co they started to cooperatce. US beverages What is strategic partnership Autumn 2021 Strategic partnerships 6 Typology of strategic partnership Autumn 2021 Strategic partnerships 7 ¡„salient“ informal agreements ¡informal collaboration with information sharing ÷handshake agreement ¡licensing ¡franchising ¡preferred suppliers and buyers ¡joint ventures ¡„close“ form of co-operation ??? ÷merger ÷acquisition risk, resources, costs SA Informal collaboration with information sharing Autumn 2021 Strategic partnerships 8 —Sharing of information which are interesting for the both sides (supplier and subscriber) —The partners can share the experience and other data resources concerning the market conditions, experience with other partners, computer programs —Handshake agreements —Question of trust – it can be problem in the CR Preferred suppliers and buyers Autumn 2021 Strategic partnerships 9 —Agreements connected with the special position of the partners —Long-term co-operation —Enteprises tend to have fewer suppliers and to create with them longer relationship based on the trust —ŠKODA Auto Mladá Boleslav škoda auto Sole agency Autumn 2021 Strategic partnerships 10 —Adjusted by New Civil Code (no. 89/2012 Sb.) —agreement closed between agent and the company to be the only one representative (entity) of repsesented company or to sell a product in a particular area on behalf of represented company —Zepellin CZ a Caterpillar —Anheuser Busch Inbev and Budvar — — Společnost Zeppelin CZ s.r.o., výhradní prodejce stavebních strojů a zařízení Cat® pro Českou republiku, dodává na český trh širokou škálu stavebních, zemních, zemědělských a důlních strojů amerického výrobce Caterpillar. Je také dodavatelem komplexních energetických řešení a systémů od stejnojmenného výrobce. Kromě prodejních a servisních služeb se společnost zabývá půjčováním stavebních strojů a malé mechanizace - autorizovaná půjčovna The Cat Rental Store má pobočky na 11 místech České republiky. Ve spolupráci se společností Caterpillar Financial Services ČR, s.r.o., zajišťuje zákazníkům komplexní finanční servis, spojený s nákupem strojů a služeb. Zeppelin CZ s.r.o. je součástí koncernu ZEPPELIN GmbH, který provozuje 190 poboček ve 30 zemích světa. Aktivity koncernu jsou v globálním měřítku velmi široké a jsou rozdělené do pěti „strategických obchodních jednotek“ (SBU = Strategic Busines Unit). Na území České republiky je společnost Zeppelin CZ aktivní v rámci těchto tří skupin: Stavební stroje EU, Energetické systémy a Půjčovna strojů (The Cat Rental Store). Licensing Autumn 2021 Strategic partnerships 11 —the process of leasing a legally protected (that is, trademarked or copyrighted) entity - a name, likeness, logo, trademark, graphic design, slogan, signature, character, or a combination of several of these elements. —Franchising is a special type of licensing —http://bcove.me/0m0xx9bi — continental Licensing is the process of leasing a legally protected (that is, trademarked or copyrighted) entity Mitas a coontinetal. Mitas vyrábí pneumatiky v licenci Continentalui. 3 výrobní závody v CR, v Srbsku 1 a v USA. Zahraniční pobočky atd. Výrobce mimosilničních pneumatik. a name, likeness, logo, trademark, graphic design, slogan, signature, character, or a combination of several of these elements. The entity, known as the property or intellectual property, is then used in conjunction with a product. Many major companies and the media consider licensing a significant marketing tool. vlastní obchodní značkou Mitas a Cultor a licencovanou značkou Continental Franchising —franchisor provides its franchisees a claim to provide brand, trade marks, know-how, design, bussines and technology systems, procedural systems and other industrial or intellectual property rights, marketing support , but it is also the obligation of franchisee to operate in accordance with the concept of franchising. —Franchisee pays a fee —Czech franchising association (ČAF) - http://www.czech-franchise.cz — Autumn 2021 Strategic partnerships 12 Active in 20 countries, jumping on small trampoline, founded in 2000. (14 european countries, also canada, emirates…) CAF . Support of existing franchising concepots, create conditions fore the next developmetn, established in 1993 Joint ventures Autumn 2021 Strategic partnerships 13 —An agreement between two or more firms to undertake the same business strategy and plan of action —It has its legal form —Two companies want to co-operate (share knowledge, markets, and profits) and they decide to create another company together – JOINT VENTURE —In the CR typical for the enterprises with foreign capital Barum a Continental From 40 to 60 % of JV underperformed their potential Barum Continental Autumn 2021 Strategic partnerships 14 continental barum —tires producer —JV partner – German company CONTINENTAL – 1992 —Barum – part of Continental Group Company with long history, traditional company, tires produced since the 30 in the 20th centruy in Baťas plants. After war the BRAND Barum was created. In 70th, BARUM was exporting their tires into the world and they were popular, because in1971 nwe plant was build and the factory was very uptodate. Change started in 1989, the conditions in the world rubber industry changed and it was very difficult for the company to keep its position in the worls. There wer 8 big manufacturers. Privatiozation started, it was necessary – goodyear, michelin, bridgestone pirelli Sunimoto have showen interest to buy the company, finally Continental won. V roce 1993 tak vznikla společnost Barum Continental, s. r. o.. V letošní roce došlo k přejmenování na Continental Barum, s. r. o. Close form of cooperation Autumn 2021 Strategic partnerships 15 —merger —acquisition —Acquisitions – key success factor: ¡ability to integrate the company (85) ¡synergies (84) ¡competitive position of the company acquired (81) ¡evaluation of acquisition candidate (80) ¡management abilities of company acquired (77) ¡prior experience making acquisitions (69) ¡market growth of the company acquired (69) ¡technology position of the company acquired (68) ¡compatibility of management styles (67) ¡price paid (64) ¡aid from public authorities —Wall Street Journal/Booz-Allen &Hamilton Survey 2002 — Popularity of cooperation in the CR Autumn 2021 Strategic partnerships 16 Informal agreement without written contract Long-term subcontracts Joint venture Business cooperation based on long-term contracts (import/export) Equity capital Strategic alliances Licences/franchising Other forms of cooperation Marketing / distribution/ service agreements Autumn 2021 Strategic partnerships 17 —Agreements concerning the collective solution and implementation of external processes —The external processes can be presented by mutually coordinated marketing, assembly and servicing of complicated equipments, commen distribution —Cooperation of airlines – Sky Team, Star Alliance —Alliance of automobile manufacturers AeroFlot, AeroMexico, Air France, KLM, Alitalia, China Southern, Continental Airlines, Czech Airlines, Delta, Korean Air, Northwest Airlines, AirEuropa, Copa Airlines, Kenya Airways Cost reductions come from sharing operation facilities (e.g. catering or computer systems), operation staff (e.g. ground handling personnel, at check-in and boarding desks), investments and purchases (e.g. in order to negotiate extra volume discounts). Traveller benefits can include lower prices due to lowered operational costs for a given route, different times to choose from, more destinations within easy reach, shorter travel times, More options of airport lounges shared with alliance members, fast track access on all alliance members if having frequent flyer status, faster mileage rewards by earning miles for a single account on several different carriers, round-the-world tickets, enabling travellers to fly over the world for a relatively low price. Airline alliances may also create disadvantages for the traveller, such as higher prices when competition is erased on a certain route or less frequent flights; for instance, if two airlines separately fly three and two times a day respectively on a shared route, their alliance might fly less than 5 (3+2) times a day on the same route. This might be especially true between hub cities for each airline. e.g., flights between Detroit Metropolitan Wayne County Airport (a Delta Air Lines fortress hub) and Amsterdam Airport Schiphol (a KLM fortress hub). Production / assembly / buy back agreements/ purchasing/ RaD —The participating companies are trying to exploit the advantages coming from the economies of scale —Co-operation connected with fluently recovery of the capital equipment and later with buy back by the supplier of the equipment — toyota-corolla-matrix-2009-1 General Motors Strategic partnerships 18 Autumn 2021 180px-Toyota_stojan nummi_img_logo New United Motor Manufacturing, Inc. (NUMMI) was an American automobile manufacturing company in Fremont, California, jointly owned by General Motors and Toyota that opened in 1984 and closed in 2010. After the plant was closed by its owners, the facility was sold to Tesla, Inc. and reopened as a 100% Tesla-owned production facility in October 2010, becoming known as the Tesla Factory.^[1] considered the worst workforce in the automobile industry in the United States," Area of cooperation Autumn 2021 Strategic partnerships 19 Procurement/supply Joint production Consultancy/experience exchange Marketing/acquiring of customers Joint selling HRM/training and development Other Product development/innovation/RaD Joint financing The process of strategic alliance creation Autumn 2021 Strategic partnerships 20 •Strategy •Goals •Search •Evaluation •Idefinition of occasions •Setting competencies •cooperation plan •implementation •interested groups •advanteges •disadvantages Alliance negotiation Alliance management Assesment and termination Partner assessment and selection —Wit, B., Meyer, R. (2010. Strategy: Process, Content, Context : an International Perspective. Cengage learning EMEA Autumn 2021 Strategic partnerships 21 DCH merger — started in 1998, in 2000 german management started taking over the whole´s company management, 2007 Chrysler division sold. —a lot of red tape x no red tape —Long almost endless reports x discussions and reports based on the minimum necessary —Detailed plan and precise implementation x trial- and –error method to come to solution —Methodical decision making x creativity in decision making —Authority, bureaucracy centralized DM x equal rights among all staff —Hierarchies and top-down management flat structures —Low salaries x high salaries — Chrysler Divorce of equals: The Daimler split with Chrysler is all over bar the shouting. Strategic partnerships 22 Autumn 2021 Cultural clashes: DaimlerChrysler Strategic partnerships 23 Autumn 2021 Cultural clashes Autumn 2021 Strategic partnerships 24 http://geert-hofstede.com/czech-republic.html http://www.businessinfo.cz/cs/clanky/organizacni-kultura-a-narodni-kultura-7699.html Autumn 2021 Strategic partnerships 25 Critical success factors of SA (Biggs, 2006) — Autumn 2021 Strategic partnerships 26 Why strategic partnership Autumn 2021 Strategic partnerships 27 —SME —limited possibility of financing (this disadvantage causes other secondary problems) —higher interest rates at the bank —underutilization of production machines —employees motivation —Access to the resources —Large companies —Prevent competition (cheaper acquistion) —Access to technology, expertise, innovation —Competitive advantage —Decrease time to market — — n •Funding, reputation •Plans to become big company •Market validation •Dostribution channel Main purposes of the alliances Autumn 2021 Strategic partnerships 28 1.activities and resources shared between partners – co specialization 2.competition battle reduction – co-option. coopetition 3.knowledge creation, transmition and utilization – co-learning, learning and internalization 4.power shift (change in bargaining power), image and trustworthiness shift 5.cost reduction — — Motives to cooperate (MBV) Autumn 2021 Strategic partnerships 29 Motives to cooperate (RBV) Autumn 2021 Strategic partnerships 30 Theories of cooperation Autumn 2021 Strategic partnerships 31 —Resource dependance theory ¡Formalized by The External Control of Organizations: A Resource Dependence Perspective (Pfeffer and Salancik 1978) —Transactional cost theory ¡R.Coase in 1937 —Social network theory ¡Sociometry, Moreno, Milgram, Granovetter, Burt —Strategic management — Autumn 2021 Strategic partnerships 32 Facts representing cooperation Autumn 2021 Strategic partnerships 33 —volume of direct foreign investment exceeded 9 billion EUR in 2010 —173 000 Czech firms are supported by foreign capital (2012), 70 % of exports are made by these firms —99,8% of all the Czech companies in the CR belongs to SME —CaE Europe is the most atractive region fore investros (Ernst&Young, 2009, European Atractiveness survey) —87 % of Czechs speak at least one foreign language —One of the highest mobile telephone penetration (105 %) —Educated staff —Good transportation infrastructure Volume of direct foreign investment inflows Autumn 2021 Strategic partnerships 34 Czech Republic: Inward Foreign Direct Investment, 1993–2012 (in mil. EUR) 31.12.1995 31.12.1996 31.12.1997 31.12.1998 31.12.1999 31.12.2000 31.12.2001 31.12.2002 31.12.2003 31.12.2004 31.12.2005 31.12.2006 31.12.2007 31.12.2008 31.12.2009 30.6.2010 5 741,0 6 909,9 8 367,4 12 254,6 17 478,7 23 323,2 30 717,2 36 883,8 35 852,0 42 035,0 51 424,4 60 620,5 76 337,8 81 301,7 84 614,9 90 299,2 Cooperation in the CR Autumn 2021 Strategic partnerships 35 —Problem with trust between the Czech companies being competitors, if they are going to co-operate (the Moravia Silesia Cluster) – problem especially of the co-operation supported by public authority —Foreign partners are trying to produce for cheap in the Czech Republic —Foreign partners want to expand and don´t know the Czech market —Cooperation between Czech firms in the sphere of research and development (24 of innovative research parks in the CR) —Expansion of outsourcing —Barriers of cooperation – different wage and cost level, different attitude to work and mentality, low knowledge of the language, bureaucratic and legal obstacles, — — Autumn 2021 Strategic partnerships 36 —Don’t give your brand away, carve out provisions for adequate creative control ¡“We signed a partnership thinking it was going to work perfectly, and it failed dramatically. To be successful today you have to be true to your DNA, and there’s no way an external company can take care of that as you do. You don’t just give away your brand to someone who might have completely different objectives.” (Nicola Andreatta, Vice President and General Manager of Tiffany & Co Swiss Watches) —Don’t underestimate the importance of compatibility from a core value perspective ¡“Lego are a company all about all about children, the future of children and being environmentally sustainable. If you make those kinds of claims as values of your company then it is really important that you examine the relationships that you have with other companies who clearly don’t have the same values” (Charlie Kronick, Senior Climate Advisor at Greenpeace) ¡ —Make sure you establish and practice trust, be clear on what you plan to share, and then share it ¡“Volkswagen AG did not allow Suzuki access to Volkswagen AG’s core technology and it also became clear that there were differences between Suzuki and Volkswagen in the understanding of ‘independence’. Suzuki could not therefore establish a relationship of mutual trust which is the basis for collaboration between the two parties.” (Spokesperson, Suzuki ) ÷ Autumn 2021 Strategic partnerships 37 Autumn 2021 Strategic partnerships 38 Thank you