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Course Pack

Module 2

Environment Analysis

1. Environment Analysis
Environmental analysis is a strategic process that helps to identify all external and internal
elements/factors that may have an effect on an organization’s performance. The purpose of
environmental analysis is to find out existing and prospective strengths and threats,
weaknesses and opportunities of a business. Such a process helps an organization to
formulate appropriate strategies to tackle such issues in the future.

Managers usually perform environmental analyses to help them understand the internal and
external environmental factors and the interplay between them. This, in turn increases the
probability of appropriateness of the organizational strategies. In order to perform an
environmental analysis efficiently and effectively, a manager must thoroughly understand the
structuring of the various forces in an organizational environment.

The components of environment analysis are:

General Environment: The general environment largely consists of the macro (external)
environment of a business. The various sub-environments in these category include the
following:
● Economic and Social
● Political and Legal
● Technological and Natural
● International

Operating Environment: The operating Environment includes the task/micro components of a

business. These are:

● Customers
● Creditors
● Suppliers
● Labour
● Publics
● Financers
● Intermediaries
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Internal Environment: The level of an organization’s environment that has an immediate and
specific implication for it is called the internal environment. It includes the following areas:

● Mission
● Objectives
● Internal power relationships
● Human resource capabilities
● Marketing Capabilities
● Physical assets
● Research and Development
● Brand equity
● Brand image

2. Scope of the Firm – How does the firm build competitive advantage

Competitive Advantage
Competitive advantage refers to the ways that a company can produce goods or deliver services
better than its competitors. It allows a company to achieve superior margins and generate value
for the company and its shareholders.

A competitive advantage is something that cannot be easily replicated and is exclusive to a

company or business. This value is created internally and is what sets the business apart from its
competition.

Fig 1: Building Blocks of Competitive Advantage

● Superior Quality: Quality means standard in the product and service as compared to other
products and services of the same type. It is something that makes or breaks a company. It
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provides an edge to the firm over its rival sellers. When the company makes improvement in the
quality of goods and services or provides the best quality products, it becomes unrivalled, as it
provides maximum value and satisfaction to the customers.

● Superior Efficiency: Efficiency refers to the firm’s capacity in increasing the level of production
with the existing resources, so as to lower the cost per unit. When a firm gets success in
attaining efficiency, it is able to deliver products at a lower price than its competitors.

● Superior Customer Responsiveness: Customer Responsiveness can be understood as the firm’s

potential in delivering customized and innovative products and services to the target audience
at a reasonable cost. Competitive Advantage can be achieved by a company if they provide the
customer the desired products and services at a low price.

● Superior Innovation: Innovation implies the company’s capability in making changes in the
already existing product and services, with new ideas. In business, innovation can be made in
the products or processes.

3. Where does the competitive advantage come from

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● Distinctive Competencies: are firm specific strengths that allow a company to

differentiate its products and services from those offered by rivals and/or achieve
substantially lower costs than its rivals.
● Resources: refer to the assets of a company which can be tangible or intangible.
Tangible resources are physical entities such as land, buildings, plant, equipment,
inventory and money.
Intangible resources are non-physical entities that are created by managers and other
employees, such as brand names, the reputation of the company, the knowledge that
employees have gained through experience, and the intellectual property of the
company.
● Capabilities refer to a company’s skills at coordinating its resources and putting them to
productive use. A company’s capabilities are a product of its organizational structure,
processes, control systems and hiring systems.

4. Diversification
Business diversification refers to the strategic expansion of a company into new products,
services, or markets to reduce risk, capture new opportunities, and enhance overall business
resilience.
The goal of diversification is often to reduce the overall risk of the business and to generate new
sources of revenue. A good diversification strategy can kick-start a struggling business. It can
also extend the success of already profitable companies.

Fig 2: Diversification and its importance

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5. Reasons for diversification

Why is diversification important in business?

There are four key reasons why businesses adopt a diversification strategy:

● The company wants more revenue

● The company wants less economic risk
● The company’s core business is in decline
● The company wants to exploit potential synergies

Diversification is important because it helps a business spread its risk across different areas,
reducing dependency on a single market or product. It can also lead to increased revenue
streams and improved long-term sustainability.

Advantages Of Diversification

As the economy changes, the spending patterns of the people change. Diversifying into a
number of industries or product lines can help create a balance for the entity during these ups
and downs. There will always be unpleasant surprises within a single investment. Being
diversified can help in balancing such surprises. It helps to maximize the use of potentially
underutilized resources. Certain industries may fall down for a specific time frame owing to
economic factors. Diversification provides movement away from activities that may be declining.
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Disadvantages Of Diversification

Entities entirely involved in profit-making segments will enjoy profit maximization. However, a
diversified entity will lose out due to having limited investment in the specific segment.
Therefore, it limits the growth opportunities for an entity. Diversifying into a new market
segment will demand new skill sets. Lack of expertise in the new field can prove to be a setback
for the entity. A mismanaged diversification or excessive ambition can lead to a company over
expanding into too many new directions simultaneously. In such a case, all old and new sectors
of the entity will suffer due to insufficient resources and lack of attention. A widely diversified
company will not be able to respond quickly to market changes. The focus on the operations will
be limited, thereby limiting the innovation within the entity.

Horizontal Diversification: This strategy of horizontal diversification refers to an entity offering

new services or developing new products that appeal to the firm’s current customer base. For
example, a dairy company producing cheese adds a new variety of cheese to its product line.

Vertical Diversification: The vertical diversification takes place when a company goes back to
the previous or next stage of its production cycle. For example, a company involved in the
reconstruction of houses starts selling construction materials and paints. It may be forward
integration or backward integration.

Concentric Diversification: In a concentric diversification strategy, the entity introduces new

products with an aim to fully utilize the potential of the prevailing technologies and marketing
system. For example, a bakery making bread starts producing biscuits.

Conglomerate diversification: In this form, an entity launches new products or services that
have no relation to the current products or distribution channels. A firm may adopt this strategy
to appeal to an all-new group of customers. The high growth scope and return on investment in
a new market segment may prompt a company to take this option.

Example of Diversification: Apple

One of the most famous companies in the world, Apple Inc. is one of the greatest examples of a
“related diversification” model. Related diversification means there are commonalities between
existing products/services and new ones in development. Once upon a time (1984), Apple
launched the Macintosh personal computer. They had released products before this, like the
Apple I motherboard, but the Macintosh defined Apple’s early success.

A period of decline hit the company during the mid-1990s. Microsoft had been delivering a
cheaper and simpler (albeit less powerful) PC alternative. Towards the end of the 1990s, Apple
was approaching bankruptcy. Then it all changed. In 2001, Apple launched the iPod and iTunes
software (2003). This was a success. Apple would hit the diversification jackpot a few years later
with the iPhone in 2007. It’s easy to forget that computers and mobile phones bore next to no
similarities from a consumer perspective before the smartphone.
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Operational synergies let Apple share resources and capabilities between the two product
groups. The iPhone used many of the same resources and design principles as Apple's
computers. Apple didn’t stop there, though. The company has since diversified into tablets,
watches, smart-audio, and even electric vehicles. Diversification strategy saved Apple from
failure, and helped them grow into one of the world's biggest corporations.

6. Related and Unrelated diversification

Related Diversification: occurs when a firm moves into a new industry that has important
similarities with the firm’s existing industry or industries. Because films and television are both
aspects of entertainment, Disney’s purchase of ABC is an example of related diversification.
Some firms that engage in related diversification aim to develop and exploit a core competency
to become more successful. A core competency is a skill set that is difficult for competitors to
imitate, can be leveraged in different businesses, and contributes to the benefits enjoyed by
customers within each business.

Unrelated Diversification: occurs when a firm enters an industry that lacks any important
similarities with the firm’s existing industry or industries. Example ITC has 6 segments namely
FMCG, Hotels, Paper Boards, Packaging, Agri Business and Information Technology.

Fig3: Difference between Related and Unrelated Diversification

7. Corporate Development -Mergers and Acquisitions Strategy

What Is a Merger?
A merger is an agreement that unites two existing companies into one new company. There are
several types of mergers and reasons companies complete mergers. Mergers and acquisitions
(M&A) are commonly done to expand a company’s reach, expand into new segments, or gain
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market share. All of these are done to increase shareholder value. Often, during a merger,
companies have a no-shop clause to prevent purchases or mergers by additional companies.

What Is an Acquisition?
An acquisition is a transaction in which one company purchases most or all of another
company’s shares to gain control of that company.Acquisitions are common in business and may
occur with or without the target company’s approval. There’s often a no-shop clause during the
process of approval. Most people commonly hear about the acquisitions of large well-known
companies, but mergers and acquisitions (M&A) occur more regularly between small- to
medium-sized firms than between large companies.

Fig4: Difference between Merger and Acquisition

Merger and Acquisition is a strategy that is applied by businesses when they see the benefits of
merging or acquiring firms. In the process, the bigger companies in the market hunt for smaller
companies for the acquisition process. Companies have different policies for mergers &
acquisitions like expanding an existing business, research, development, etc. All these policies
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should be kept in mind while entering the M&A Strategy by both companies. Failure to
implement proper planning, study, and lack of strategies, also fails the merger & acquisition
strategy. The resulting company cannot survive in the long run. Hence, proper planning,
understanding of the market and the business of both companies, and proper strategies should
be done well in advance before implementing merger & acquisition strategies.

Many small and big companies prefer merger and acquisition strategies to fight or survive in the
competitive environment in the market. Loss-making companies or small companies always
prefer to merge with big companies to save themselves and stand in the market. However, if
there is a lack of proper planning and strategies, the mergers and acquisition strategies also fail.
Hence, both companies should undertake a thorough study and the proper analysis to make the
strategies successful without any failure.

As soon as the mergers and acquisition is adopted, the process gets divided into several steps,
which include the following:

● The most crucial strategy of M&A is the hunting of the target company. Once the company has
decided on its target company for acquisition, it can plan further acquisition steps.
● The next step is a thorough study of the business of the company to be purchased. The study of
the expected business, demand, and future growth is also to be undertaken.
● It will also give an idea of the risks involved in the acquisition or future business.
● Next, the study of the market should be undertaken. It will give the idea of growth factors in the
market.
● The company can also get an idea of future opportunities, trends in the market, and customers’
demands.
● There should be the consent of both the companies, i.e., the acquiring company and the target
company, to take part in the merger and acquisition before implementing the strategy.
● Plans and strategies should also be studied, including staff involving process, work environment,
and work to be done by the staff by gathering knowledge and information.

Finally, there should be shareholders, promoters of both companies, management, and other
key persons of both companies. Then, the merger & acquisition deal should be finalized.

8. Causes & Motives for mergers and acquisitions

Fig 5: The Causes for M&A

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Motives for M&A

● Fills critical gaps in service offerings or client lists
● Efficient way to acquire talent and intellectual property
● Opportunity to leverage synergies
● Add a new business model
● Save time and long learning curves

Benefits of Mergers and Acquisitions (M&A)

Mergers and acquisitions (M&A) can provide numerous advantages to organisations,
stakeholders, and the business environment at large. Several significant benefits are associated
with M&A,

● 1. Economies of Scale: One advantage of mergers and acquisitions is the potential for
economies of scale, which reduces unit costs by increasing production volume and efficiency.
This may result in increased profitability and decreased average costs.
● 2. Enhanced Market Share: M&A transactions may facilitate the acquisition of a greater market
share by companies, thereby strengthening their competitive standing. The expanded market
presence could potentially result in enhanced pricing authority and negotiating strength with
suppliers and clients.
● 3. Diversification: Mergers and acquisitions allow organisations the chance to expand their
customer base, product or service portfolio, and geographic presence. Reduce the hazards
associated with dependence on one market or product through diversification.
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● 4. New Markets Accessibility: Acquiring a company could potentially grant the acquiring entity
entry into untapped markets or distribution routes. This can be particularly advantageous for
businesses pursuing international expansion or entry into regions where they have a limited
presence.
● 5. Cooperation: The integration of operations can lead to the implementation of collaborations,
including revenue shares (such as cross-selling opportunities) and cost benefits (e.g., cost
savings, and productivity increases). The combined effects of these synergies enhance both the
financial performance and overall value.
● 6. Improved Research and Development (R&D): Mergers have the potential to integrate
research and development abilities that are complementary, thereby encouraging innovation
and facilitating the creation of innovative products or technologies. This collaborative effort has
the potential to result in an enhanced and more intimidating market position.
● 7. Financial Strength: The acquiring entity can potentially strengthen its financial strength
through the acquisition of a financially secure company. Such outcomes may include enhanced
credit ratings, expanded borrowing capacity, and improved capital market accessibility.
● 8. Strategic Positioning: Through mergers and acquisitions, organisations can strategically
position themselves within the market, enabling them to adapt to changing consumer
preferences and industry trends. This strategic alignment has the potential to foster
sustainability and long-term success.
● 9. Elimination of Competition: The surviving entity may be able to function in a less intense
environment as a result of competition elimination brought about by the acquisition of a
competitor. This may result in enhanced pricing authority and market supremacy.
● 10. Tax Advantages: M&A transactions may offer tax benefits in certain circumstances, including
the capacity to offset profits against losses or the application of tax credits. The combined
entity’s overall financial performance may be improved by these tax advantages.

9. Strategy, valuation and Integration

Integration Strategies in Strategic Management

Integration strategies involve a company expanding its business by gaining control over its
distribution channels, suppliers, or competitors. There are three main types of integration
strategies:

Vertical Integration
Vertical integration involves a company expanding its business operations into its upstream
suppliers (backward integration) or downstream distributors and retailers (forward integration).
This allows the company to have greater control over its supply chain and distribution channels.
Examples include:

- A car manufacturer acquiring a tire company (backward integration)

- A supermarket chain buying a farm to ensure supply of fresh produce (backward integration)
- A car company opening its own dealerships (forward integration)
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Vertical integration can help a company secure its supply chain, reduce costs, and increase entry
barriers for competitors.

Horizontal Integration
Horizontal integration is the acquisition of a competitor by a company. This allows the company
to expand its market share and achieve economies of scale. Examples include:

- Standard Oil acquiring 40 other oil refineries

- Mittal Steel acquiring Arcelor
- HP acquiring Compaq

Horizontal integration is attractive when the industry is growing, the company has expertise the
competitors lack, and economies of scale can be achieved.

Conglomerate Integration
Conglomerate integration is the expansion of a company into unrelated industries through
mergers and acquisitions. This diversifies the company's risk across different business sectors.
Examples are not as common as vertical or horizontal integration.

Valuation in Strategic Management

Valuation is the process of determining the economic value of a company or asset. It's an
important consideration in mergers, acquisitions, and other strategic moves.
Proper valuation helps ensure a company is not overpaying in an acquisition and that
shareholders are treated fairly. It's a critical step in evaluating and executing integration
strategies.

Executing Integration Strategies

Implementing integration strategies requires careful planning and execution. Key steps include:

1. Identifying integration opportunities that align with company goals

2. Conducting due diligence to assess the strategic fit and value
3. Developing an integration plan with clear objectives and timelines
4. Communicating the vision to all stakeholders
5. Executing the integration plan and tracking progress against milestones
6. Realizing synergies and capturing the expected value

Successful integration requires strong leadership, effective change management, and a focus on
driving operational improvements and synergies.
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In summary, integration strategies are a key part of strategic management, allowing companies
to expand their business, achieve economies of scale, and enhance their competitive position.
Proper valuation and execution are critical to realizing the benefits of these strategies.

10. Strategic Alliances

What are Strategic Alliances?

Strategic alliances are agreements between two or more independent companies to cooperate
in the manufacturing, development, or sale of products and services, or other business
objectives.

For example, in a strategic alliance, Company A and Company B combine their respective
resources, capabilities, and core competencies to generate mutual interests in designing,
manufacturing, or distributing goods or services.

11. Types of strategic alliances

There are three types of strategic alliances: Joint Venture, Equity Strategic Alliance, and Non-
equity Strategic Alliance.

Joint Venture

A joint venture is established when the parent companies establish a new child company. For
example, Company A and Company B (parent companies) can form a joint venture by creating
Company C (child company).

In addition, if Company A and Company B each own 50% of the child company, it is defined as a
50-50 Joint Venture. If Company A owns 70% and Company B owns 30%, the joint venture is
classified as a Majority-owned Venture.

Equity Strategic Alliance

An equity strategic alliance is created when one company purchases a certain equity percentage
of the other company. If Company A purchases 40% of the equity in Company B, an equity
strategic alliance would be formed.

Non-equity Strategic Alliance

A non-equity strategic alliance is created when two or more companies sign a contractual
relationship to pool their resources and capabilities together.
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12. Reasons for strategic alliances

The reasons for strategic alliances are:
● Critical to the success of a core business goal or objective.
● Critical to the development or maintenance of a core competency or other source of
competitive advantage.
● Blocks a competitive threat.
● Creates or maintains strategic choices for the firm.
● Mitigates a significant risk to the business.
●
Critical to a business objective
While the most common type of alliance generates revenue through a joint go-to-market approach, not
every alliance that produces revenue is strategic. For example, consider the impact on revenue
objectives if the relationship were terminated? Clearly, a truly strategic relationship would have a great
bearing on the prospects for achieving revenue growth targets.

In addition to a single strategic alliance, related groupings of alliances—networks or constellations—may

also be critical to a business objective. Sun Microsystems has established a group of integrator alliances
that function as an effective marketing channel and drive significant revenues for the company each
quarter. This category also includes alliances with high potential, such as alliances that have large but
unrealized revenue opportunity. Consider the impact of new industry standards that make it possible for
products from different manufacturers to work together. This can unlock customer value and boost the
revenue potential of new, technology-based products. From writable DVD formats to next-generation
wireless technologies, technical standards are democratically determined in consortiums of interested
industry participants. With product development racing in parallel, the first mover’s advantage can be
substantial, and hence alliance development and lobbying within an industry become paramount to
financial success. Cost reduction may also be a core business objective of the alliance, particularly
among supply-side partners. By investing together in new processes, technologies and standards,
alliance partners can obtain substantial cost savings in their internal operations. Again, however, a cost-
saving alliance is not truly strategic unless it has an underlying business objective, such as “to achieve an
industry-leading cost structure.”

Competitive advantage and core competency

Another way in which an alliance can prove to be strategic is to play a key role in developing or
protecting a firm’s competitive advantage or core competency. Learning alliances are the most common
form of competitive/competency strategic alliances. An organization’s need to build incremental skills in
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an area of importance is often accelerated with the help of an experienced partner. In some cases, the
learning objective of the relationship is openly agreed between the partners; however, this is not always
the case. Learning alliances work best when:

There is little chance of future competition (such as when the partners are in adjacent industries)

The cultures of the organizations are similar enough to enable process and methods to be leveraged,
and the governance structure of the alliances is established to promote learning at the executive,
managerial and operational levels.

Blocking a competitive threat

An alliance can be strategic even when it falls short of establishing a competitive advantage. Consider
the case of an alliance that blocks a competitive threat. It is strategic to bring competitive parity to a
secondary segment of a market in which the firm competes, when the absence of parity creates a
competitive disadvantage in the related primary segments of that market. For example, competing in
the high and medium price range of a market with a premium product may leave the firm vulnerable to
a low-priced entry. If the firm’s manufacturing processes do not permit the creation of a low-priced
product entry, a strategic alliance with a volume partner in an adjacent market can successfully block
the competitive threat.

Another example of strategic alliances that block competitive threats are the airline alliances that permit
route-sharing among carriers. The two primary determinants of customer flight selection are routing
and cost. Therefore, the adoption of route-sharing alliances by the airlines blocks the competitive threat
of preferential routing in the specific markets in which the airline chooses to compete. In essence,
strategic alliances within the airline industry ensure competitive parity with respect to routing and force
other factors such as on-time departures and customer service to become the bases for competitive
differentiation.

Future strategic options

From a longer-term perspective, an alliance that is not fundamental to achieving a business objective
today could become critical in the future. For example, in 1984, a U.S. consumer products company
needed to expand distribution beyond the Midwestern states. Faced with the prospect of European
competition at some point in the future, the firm made a strategic decision to invest in an alliance with a
distribution and support services company that had incremental distribution capacity in the U.S. and a
similar presence in Europe, rather than invest in expanding its own local distribution capabilities. With
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the option to expand into European distribution at any point, the firm could work to sew up the U.S.
market before expanding too quickly internationally.

Risk mitigation
When an alliance is driven by intent to mitigate significant risk to an underlying business objective, the
nature of the risk and its potential impact on the underlying business objective are the key determinants
of whether or not it is truly strategic. Dual sourcing strategies for critical production components or
processes are excellent examples of how risk mitigation can become the context for supply-side
strategic alliances.

As process manufacturing companies advance the yield of their operations, suppliers often collaborate
with the manufacturer to ensure their new products fit within its new operations. The benefits of such
an alliance are cost savings to the manufacturer and accelerated product development for the supplier.
In situations where the supplier’s product is critical to the manufacturer’s operation, it may be
necessary for the manufacturer to have strategic alliances with two competing suppliers in order to
mitigate such risks as unilateral cost increases or degradation in quality of service.

Fig 6: Reasons for Strategic Alliance

Fig 7: Effective Strategic Alliance

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13. Value creation

What is value creation in business?
Value creation identifies the intersection between the overlapping interests of customers,
stakeholders, and the organization itself. A successful business model leverages all of these
values within company initiatives.

Value creation is offering products that meet and exceed customers’ expectations. When a
company inspires customer loyalty, profits increase. When stakeholders receive high returns on
their investments, they’re willing to contribute more capital. This capital sustains the company’s
future initiatives, such as increased employee benefits and training. When employees are
valued, productivity and product innovation increase.
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Why is value creation important?

1. Sustainable business success

Targeted value creation ensures long-term value for this quarter and for years to come. Without
a clear vision of the company’s objectives, initiatives are unfocused. When resources aren’t
sustainably allocated, cash flow halts, the bottom line decreases, and future endeavors are at a
disadvantage.

2. Customer satisfaction

The customer relationship doesn’t end at the buying decision. In fact, it begins with the creation
of value. Sustained customer satisfaction results in continued business with supportive
consumers. These long-term customers inspire new purchases through word-of-mouth product
recommendations to their friends and family.

3. Competitive advantage

When value creation informs your company’s initiatives, it keeps your offerings top-of-mind and
your name at the top of the food chain. The shutdown of many businesses during the COVID-19
pandemic proves that having a competitive advantage does more than increase profits – it can
keep your company alive during times of strained financial returns.

4. Stakeholder engagement

Within a company’s practices, value creation can take the form of transparent communication
regarding goals, performance, and assets with stakeholders. This clarity sustains the balance
between internal initiatives and stakeholder engagement. The decision-making process
strengthens when these perspectives align.

5. Financial performance

Understanding the values and needs of customers, stakeholders, and the organization results in
the most competitive pricing that both appeals to customers and optimizes profits. When the
creation of value takes center stage in the decision-making process, financial returns are fully
realized because of the precision of company initiatives.
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6. Innovation and adaptability

Change is the only constant, and customer needs are no exception. Without refocusing efforts
and innovating your offerings, your customers will find another company that can meet their
evolving expectations. Innovating your products and services retains old customers and attracts
new ones.

14. Understanding the challenges faced by firms in their strategic alliances

Alignment of goals

One of the first challenges in strategic partnerships is to ensure that both parties have a clear
and shared understanding of the objectives, expectations, and roles of the partnership. Without
alignment, the partnership can suffer from miscommunication, conflict, and inefficiency. To
avoid this, you should establish a clear value proposition for the partnership, define the key
performance indicators and milestones, and communicate regularly and transparently with your
partner.

Cultural fit

Another challenge in strategic partnerships is to bridge the gap between the different cultures,
values, and norms of the partners. This can affect the trust, collaboration, and innovation of the
partnership. To overcome this, you should conduct a thorough due diligence of your partner's
culture, identify and respect the differences, and foster a common culture that embraces
diversity and inclusion.

Operational integration

A third challenge in strategic partnerships is to integrate the operational processes, systems,

and resources of the partners. This can involve technical, legal, financial, and organizational
issues that can hamper the efficiency and effectiveness of the partnership. To overcome this,
you should map out the operational workflows, identify and resolve the potential bottlenecks
and risks, and leverage the best practices and tools of each partner.
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Competitive dynamics

A fourth challenge in strategic partnerships is to manage the competitive dynamics between the
partners and the external environment. This can involve balancing the cooperation and
competition, protecting the intellectual property and confidential information, and adapting to
the changing market conditions and customer needs. To overcome this, you should establish a
clear governance structure, define the boundaries and scope of the partnership, and monitor
and evaluate the performance and impact of the partnership.

Innovation and learning

A fifth challenge in strategic partnerships is to foster a culture of innovation and learning that
can generate value and growth for both partners. This can involve creating a shared vision,
encouraging experimentation and feedback, and leveraging the diverse skills and knowledge of
each partner. To overcome this, you should set clear and ambitious goals, allocate resources and
incentives, and celebrate the successes and failures of the partnership.

Exit strategy

A sixth challenge in strategic partnerships is to plan for the exit or termination of the
partnership. This can involve determining the criteria and triggers for ending the partnership,
negotiating the terms and conditions, and ensuring a smooth transition and handover. To
overcome this, you should prepare a contingency plan, communicate openly and respectfully
with your partner, and maintain a positive relationship after the exit.
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References
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https://pressbooks.lib.vt.edu/strategicmanagement/chapter/8-3-diversification/
https://efinancemanagement.com/mergers-and-acquisitions/diversification
https://firmroom.com/blog/reasons-for-mergers-acquisitions
https://iveybusinessjournal.com/publication/the-five-factors-of-a-strategic-alliance/
https://www.imd.org/blog/marketing/value-creation-in-business/
https://www.mbacrystalball.com/blog/strategy/vertical-horizontal-integration-strategy/
https://us.harappa.education/integration-strategy/