Partnerships for Profit Structuring and Managing Strategic Alliances

Partnerships for Profit Structuring and Managing Strategic Alliances

Faced with new levels of savage competition, tens of thousands of companies, including fierce competitors, are sharing their resources and expertise to develop new products, achieve larger scale economies, and gain access to new technology and new markets. These strategic alliances are justifiably hailed by many as the competitive weapon of the 1990s. But because they are blurring and reshaping the very structure and boundaries of corporations in unprecedented ways, the process of designing and managing these alliances confronts managers with the awesome task of inventing theory and practice on a daily basis. Up to now, they have had few places to turn for guidance.

In Partnerships for Profit, Jordan D. Lewis, an internationally recognized expert on strategic alliances, now provides the first full-scale analysis of this surging global phenomenon. During five years of intensive field research, including 500 interview hours with more than 100 executives from some 40 American, European, and Asian firms, Lewis has observed firsthand some of the most successful strategic alliances and alliance practitioners in the world. Drawing on the experiences of IBM, Fuji Xerox, Ford, Dow Chemical, Intel, Komatsu, Corning, Sony, Apple Computer, Ciba-Geigy, and many other companies, Lewis brilliantly describes in detail how managers at each of these pioneering firms structure and manage various kinds of alliances — from informal cooperation, minority investments, and risk-sharing contracts to full-fledged joint ventures and strategic networks. Through actual examples, Lewis shows for the first time how alliance partners build trust, develop mutual understandings, and make joint decisions, and at the same time protect core interests and critical technology — a major concern of direct competitors. Lewis explains how to avoid the “Trojan horse” blunder many American firms made when they gave their Asian manufacturing partners key information about tailoring their products to local preferences. Particularly important is an entire chapter devoted to working with other cultures. The employment of strategic alliances, Lewis concludes, requires nothing short of a revolution in the conduct of business. Unlike arm’s length relations, in which initial commitments govern, alliances involve shared risks and ongoing mutual adjustments. Lewis shows how alliances inevitably shape the business strategy of an entire firm, since the decisions to target certain markets and commit resources involve groups of firms acting in concert. Finally, Lewis shows how the use of alliances will affect internal management policies and practices, especially methods to bring about an outward focus and overcome the “not invented here” syndrome. We have entered the age of strategic alliances.

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