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Strategic alliances and joint
ventures
Presented to Sir
Shahzaib Haider. 01-220102-045
MuzammilAhmed.. 01-220102-038
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Strategic Alliance
An arrangement between two companies that have decided to share
resources to undertake a specific, mutually beneficial project.
Bottom line, strategic alliances are partnerships that stress mutual
problem solving.
Each party in the alliance maintains autonomy.
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Components of a Strategic Alliance
.
Confidentiality agreement
Mission, vision, values statements
Long-term goals and objectives
Plan for implementation of activities
Plan for managing the process and measuringsuccess
Exit strategy
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Why consider a strategic alliance?
Sharing the risk
Sharing knowledge
Opportunity for growth
Focus on your core strength
Access resources
Access target market
Economic of scale
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Characteristics of a Strategic Alliance
May or may not be a contractual arrangement, but this is always recommended.
Long Term Relationship
High Level of Trust
Win/Win (Mutual Advantage)
Top Management Interchange
Continuous Exchange of Ideas
Business Process Re-engineering
Focus on Significant Value-Addition
Mutual Dependency
High Level of Commitment
Increased Capabilities/Capacities
Enhanced Business Opportunities
Improving Shareholders Value
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Examples of a Strategic Alliance
McDonalds and HAVI -sourcing, transportation, distribution
Banking ATM Machines -service, maintenance, collecting
PSO UBL Auto Credit Card 5%* Free Fuel on transactions at PSO Stations
1%** Free Fuel on transactions at non PSO Outlets
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Joint venture
.A joint venture (JV) is a business agreement in which the parties
agree to develop, for a finite time, a new entity and
new assets by contributing equity.
each of the participants is responsible for profits, losses and costs
associated with it. However, the venture is its own entity or
separate.
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Why joint venture?
A joint venture may be formed to:
Run production facilities in another country.
Set up a marketing and distribution presence.
Use complementary technologies held by each participant.
Access new markets and distribution networks.
Increase capacity.
Share risks and costs with a partner.
Access greater resources, including specialized staff, technology andfinance.
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Factors affecting joint venture
International partnership:
differences in language, culture and business practices.
Also consider:
Intellectual property rights.
Financial considerations.
Potential for political instability.
Impact of local law.
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Legal requirements
A joint venture or strategic alliance will need to changewith circumstances.
Agreements should anticipate these changes andprovide a method for change, termination and disputeresolution.
Partner is selected, generally a Memorandum ofUnderstanding (MoU)
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