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Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited
Article Type: Editorial From: Journal of Facilities Management, Volume 9, Issue 1
Does the FM industry take full advantage of strategic partnering alliances?
Two or more decades ago, strategic alliances were a tool only used by large industrial organisations but the situation has changed dramatically in the last few years. A strategic alliance is “an agreement between two or more partners to share knowledge or resources, which could be beneficial to all parties involved” (Vyas et al., 1995). These alliances can range from a simple sharing of resources, to complex R&D alliances involving several partners. The most important reasons for alliances given in the literature are the creation of synergies and sharing of risk (Lorange and Roos, 1992). Contractor and Lorange (1988) report on several other reasons. Access to complementary technologies and patents, blocking competition and overcoming trade barriers or government regulations can be achieved through an alliance. Alliances have also proven to be an effective internationalisation strategy. They can also be used to (vertically) integrate a supply chain in order to gain access to, e.g. markets, materials, labour, and capital. General economic forces like privatisation, intensified foreign competition, shortened product life cycles, and demand for new technologies also drive companies to cooperate (Goh and Uncles, 2001; Vyas et al., 1995).
In general, the reasons that firms form alliances can be divided into market-related factors and technology-related factors, based on the industry that the partners operate within (Vyas et al., 1995). Mature markets often show market-related alliances, because of a tough competitive environment. Market-related alliances often deal with operational issues, like production, distribution, or cost sharing. Defending market share or gaining access to a new market is one of the motivators to engage in the alliance (Vyas et al., 1995). Other market-related examples of reasons to cooperate are, e.g. access to foreign markets, access to raw materials, risk sharing, sharing R&D costs, access to resources like facilities and expertise, and enhancing or retaining competitive advantage through economies of scale or image.
In contrast, younger markets often show technology-related alliances, because of the innovative character of newer markets. Cooperation is based on technology transfer and joint R&D development. Alliances are aimed at improving product development, accessing new technologies, accelerating product introductions, and limiting strategic risk. A combination between market- and technology-related factors is also possible. High-tech industries often have both market-related and technology-related alliances (Vyas et al., 1995). Alliances that strive for diversification of target-markets are good examples of alliances based on both factors.
Most alliances are classified according to dependence of both partners (Lorange and Roos, 1992; Contractor and Lorange, 1988; Vyas et al., 1995). Although not all previous work ranks the several forms of alliances in the same order, a general grid can be established. Different classifications of alliances do exist however. One possible dimension would be the “reach” of the alliance. Alliances can be domestic or international, resulting in different opportunities and problems. The nature of the industry would be another significant dimension defining an alliance. Alliances can be inter-industry or intra-industry, the latter of which can result in problems based on possible competition in the future (Lorange and Roos, 1992).
Michael Pitt, Marjolein van Werven
Contractor, F.J. and Lorange, P. (Eds) (1988), Cooperative Strategies in International Business: Joint Ventures and Technology Partnerships Between Firms, Lexington Books, Lexington, MA
Goh, K. and Uncles, M. (2001), “The benefits of airline global alliances: an empirical assessment of the perceptions of business travelers”, Transportation Research Part A, Vol. 37, pp. 479–97
Lorange, P. and Roos, J. (1992), Strategic Alliances: Formation, Implementation and Evolution, Blackwell, Cambridge, MA
Vyas, N.M., Shelburn, W.L. and Rogers, D.C. (1995), “An analysis of strategic alliances: forms, functions and framework”, Journal of Business & Industrial Marketing, Vol. 10 No. 3, pp. 47–60