The strategic alliance between Avebe and Noveon that failed to achieve its objectives

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The strategic alliance between Avebe and Noveon that failed to achieve its objectives

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Abstract

Today organizations operate in a global environment that is characterized by changing economies of scale, technological superiority and instability. Thus it is very difficult for the companies to survive on their own and fulfil their global ambitions. Thus companies are increasingly turning to strategic alliances to compete and survive in the global market. (Achrol, 1991).

Both in profit and non-profit organizations strategic alliances seem to be the order of the day. Strategic alliance is one of the common strategies used by organizations to increase market shares, reduce costs or create synergy. They provide access to competence and a local intelligence base without carrying a burden of starting up a subsidiary from zero.(Cartwright and Cooper, 1996)

Introduction.
The strategic alliance between Avebe and Noveon.
Three categories of strategic alliances.
1. Equity alliance.
2. Joint venture.
3. Non-equity alliance.
Stages in the development of the strategic alliance.
1. Formation stage.
2. Operation stage.
3. Outcome stage.
The important factors in the Operational phase.
1. Control.
2. Conflict.
3. Communication.
The important variables in the operational phase.
Conclusion.
References.

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[...] 98- 102 Pisano.G; M.V.Russo and D.J.Teece, (1988), ‘Joint venture and collaborative agreements in the telecommunication industry', InMowery,D.C.(ed.),International collaborative venturesinU.S manufacturing,pp.23-70,Cambridge,M.A,Ballinger Dussauge.P; B.Garrette and W.Mitchell, (2000), ‘Learning from competing partners : Outcome and duration of scale and link alliances in Europe', Strategic Management Journal, Vo.21,issue 2. Dussauge .P and B. Garrette, (1999), ‘Cooperative Strategy: Competing successfully through strategic Alliance, England, John Willey and Sons Ltd. Dussauge .P and B. Garrette, (1998), ‘Anticipating the evolution and outcome of strategic alliances between rival firms', International studies in Management and Organizations, Vol.27,No.4,pp. 104-126 Bleeke. J and D. [...]

[...] (Pisano et al, 1988) Avebe and Noveon come under this type of form of strategic alliance because both decided to build a superior product at a affordable price, they both decided to sell the product separately and only decided on R and D of the product and manufacturing together. And lastly Quasi-concentration alliance is in which partners decide on contributing similar assets and technologies and knowledge to develop, market or manufacture a product. Achieving greater economies of scale is the main objective. [...]

[...] Lastly the evaluations phase both the companies results proved that they had failed to meet their desired results, and the alliance collapsed after 4 years. Unsuccessful sales was the strong reason forth termination of the alliance. Both the companies faced communication problem because of cultural distinguishes. Both companies lacked commitment as they did not try hard to make the alliance successful. CONCLUSION: The author feels that Avebe and Noveon had many strong reasons which eventually lead to termination of the alliance. [...]

[...] Trust and Communication are the basis of the alliance formation without which it wouldn't stand long enough, therefore companies entering the alliance should bear in mind that trusting each other and communicating effectively, would lead them to desired needs and expectation. REFRENCES: Cartwright, S. & Cooper, C.L. (1996). “Managing Mergers, Acquisitions & Strategic Alliances- Integrating People and Cultures”. 2nd edition. Butterworth-Heinemann. Oxford. Achrol, R.S., (1991), “Evolution of the marketing organization: new forms for turbulent environments. Journal of Marketing. Vol 77- 93. [...]

[...] Strategic alliance either succeed or fail, Bleeke and Ernst (1995) found out that there are two important phases in the alliance development process, first occurs when companies who have formed an alliance are not happy with their relations and this happens in the period of 2 to 3 years and secondly when alliance are ready to move to another direction, which mostly happens in the period of 5 to 6 years. Das and Rahman (2002) identified three staged in the development of the strategic alliance, and they are: Formation stage: In this stage the companies decide on the establishment of the alliance, they select the partner and negotiation take place and finally sign a partnership agreement. [...]

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