Evaluate the decision by the two firms to use an alliance. Was an alliance the most effective growth alternative for the firms pu

Exemplar 1:

(1) Evaluate the decision by the two firms to use an alliance. Was an alliance the most effective growth alternative for the firms’ purposes and objectives? Why or why not?Alliances, like many relationships, can vary and can take many forms. Fundamentally, their purpose is to solidify collaboration between independent entities in which they are contributing their resources to an activity that brings additional value (typically in the form of profits) to themselves and the other party. An important element of a successful alliance is the continual maintenance and attention given to the relationship of the two companies to ensure mutual benefits; this looks like transparent expectations, understanding of their purpose/goals (short and long term), and a strategic approach to the alliance's execution and maintenance. In 1999, Nissan was in desperate need of a miracle; with falling market share and a mountain of debt, their chances to come out of the year with high hope were slim to none without outside support. Renault was doing fair, but desired to expand into new markets to build greater recognition as a global brand. Both companies needed to form a relationship with a firm with compatible goals yet allow for independence, as both companies desired a retention of company culture and autonomy. When determining if an alliance is the best course of action for a firm, an internal analysis needs to be completed, specifically around Strategic Resource Gaps. In the case of Renault and Nissan, both companies were not in a position to develop internally, due to lack of resources; Renault did not have the reputation to expand and Nissan did not have the financial means. With Nissan’s extensive debt, there was minimal collateral that could be provided for the financial backing needed to form a relationship of tradable resources via contract. Similarly, the tradability of resources requires a quantifiable measurement thus complicates Renaults ability to borrow via contract. The last piece of this analysis is determining the desired closeness with the partner; both companies have strong company cultures and neither wanted to uproot their foundations, thus focusing on a low level of closeness would be advantageous. These pieces all indicate an alliance as a positive step forward. Continually, this decision is supported through the utilization of Table 4.2, in which the scope of collaboration is evaluated, as is the compatibility of firm goals. Below is the analysis of Nissan and Renault’s positioning. With the majority of answers indicating “yes”, the results of using an alliance will be favorable.Knowledge Question: Scope of CollaborationN/YWould collaboration involve few functions and people at our firm?NOSpan of activitiesWould collaboration involve few functions and people at the partner’s firm?NOWould collaboration involve few points of contact between our people and the partners’ people?NOWould each partner’s contributions be specialized and require only limited coordination to sustain the partnership?YESComplexity of coordinationWould the need for co-learning be limited?YESGovernance Question: Partners’ Goal Compatibility Competitive overlapIs there little competitive overlap between our firm and our partner?NOResource contributionWill our firm and our partner contribute a balanced share of key resources?YESAlliance importance Will an alliance be of similar strategic importance to our firm and our partner?YES

Learning opportunitiesWould an alliance provide our firm and our partner with similar valuable learning opportunities?YESAlliance execution skillsDo both our firm and our partner have the relevant skills and people to manage an alliance over time?YESBoth firms achieved their initial goals as well as set themselves up for future success. Nissan was able to strategize their operations to capitalize on profits and decreased their total debt; even drafting a three-year plan to eliminate net automotive interest-bearing debt by 2004. Renault was able to improve profitability and expanded their market share to North America. Overall, the utilization of an alliance was an effective growth option.(2) What is your assessment of the alliance’s success prospects? Why?At the end of the day, this alliance brought immense success to both parties. With this alliance, the share in the world market was 9.2% and ranked them in the top 5 automakers, proving that their presence was successful on a global scale. This alliance also allowed both companies to enter new markets. Nissan increased its presence in Mexico, through increased productivity in their plant as a result of making a Renault vehicle and instigated Renault’s return to the Mexican market. Renault had an industrial complex in Brazil which was used to build the first plant that had been planned together and built to be shared by both Nissan and Renault; this was also the arrival of Nissan into the Brazilian market. Research and Development (with a focus on knowledge and innovation resources) also represented signs of success. In March 2001, a joint program for basic fuel-cell technologies was created; allowing the companies to share knowledge which saved financial resources and will set up both companies for future success in energy efficiency. Their extensive communication also allowed for organizational resource growth through efficiency maximization, especially in manufacturing. Nissan had great quality and was a reliable brand (even with their financial struggles), while Renault struggled with productivity; Nissan helped Renault streamline production processes while also increasing their standards. The Japanese are very detail oriented and specific, the French are big picture oriented; they complemented each other well and drove each other to success.Additional success factors include careful partner selection. Renault previously had a failed collaboration with Volvo and knew that in future endeavors, they needed the due diligence to build a lasting relationship. Nissan knew they needed a company experienced in consistent market returns and they found that in Renault. The negotiation of their deal was another success; with integration of executives from both companies highly involved in the creation and execution of their alliance, it created a balanced governing process; this continued as their relationship progressed. Through Cross Company Teams (CCTs), the Alliance Coordination Bureau (CB), and the integration of executives in both companies, there were high levels of collaboration and continual conversation between Renault and Nissan. Each CCT had members from both companies and most had sub groups, which further integrated interdependent practices and goal execution. The most prominent reason for Renault and Nissan’s success resides in the preparation and research done prior to the formation of the alliance. However, there is a hesitation in assuming perpetual future success. In the case, there is no outlined exit strategy for either party; an exit from this collaboration will affect the alliance portfolio, and with extensive integration it will be a difficult process. Furthermore, the Renault and Nissan alliance has proven successful to this point, but the prospects of future success are moderate due to unclear elements of the Managing Alliances Effectively Framework

Collepals.com Plagiarism Free Papers

Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.

Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS

Why Hire Collepals.com writers to do your paper?

Quality- We are experienced and have access to ample research materials.

We write plagiarism Free Content

Confidential- We never share or sell your personal information to third parties.

Support-Chat with us today! We are always waiting to answer all your questions.