chapter 11 managing strategic alliances. copyright © 2006 by thomson delmar learning. all rights...

Chapter 11

Managing StrategicAlliances

2Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Purpose and Overview

• Purpose– To understand various interorganizational

relationships• Non-coercive • Strategic


Purpose and Overview

• Overview– Alliances in Health Care – Types and Forms of Alliances – What Are Alliances Meant to Do? – The Alliance Process: A Multistage Analysis – Frameworks for Analyzing Alliance Problems


Alliances in Health Care

• High failure rates

• Must balance rewards and returns with prospective risks


Alliances in Health Care

• Pros– New way of doing

business– Allows for complexity

and interdependence while maintaining autonomy

– Transcends existing organizational inertia

– Successful in other sectors

• Cons– Distracts organizations

from basic goal– Exaggerated benefits – Can lead to collusion– Process problems and

cost-intensive– Ineffective committee

governance – Ineffective for markets

with limited research and development needs


Types and Forms of Alliances

• Ownership versus Control– Alliances vary in regard to

• Ownership• Control• Size• Governance• Nature of participation



• Number of Members– Larger alliances are harder to govern – Larger alliances tend to be more powerful



• Governance Structure– Members are equal and autonomous– Organization commitment and diverse

representation



• Mandated versus Voluntary Participation– Mandated forms of organization can be

superficial and short-lived



• What are the intentions of alliances? – Strategic intentions may vary – Alliance is not a good predictor of what

alliance can achieve


What Are Alliances Meant to Do?

• Pooling vs.Trading Alliances– Pooling alliances – Trading alliances



• Cost Reduction vs. Revenue Enhancement– Differences in how success is gauged and how

alliance is organized



• Quality, Innovation, and Learning– Revenue enhancement or cost reduction

• Link with financial performance difficult to discern

– Many organizations underestimate involvement to realize benefits • Personnel flow between partners can

accelerate learning and innovation



• Power Enhancement– Alliances motivated by organization's desire to

gain influence

• Uncertainty Reduction – Highlights one organization's attempts to

reduce its own uncertainty

• Risk Sharing – Emphasizes uncertainty for all partners



• Intentions are not mutually exclusive• Understanding strategic intent can be

critical success factor



• Keys to Success: – Understand your motivation– Express this to alliance partner– Elicit and listen carefully to partners’

expression of strategic intentions– Examine compatibility of all intentions



• Physician-Hospital Trading Alliances– Aimed at reduction of uncertainty– Serves many purposes:

• Revenue enhancement • Quality improvement• Cost containment


The Alliance Process: A Multistage Analysis

• The Life Cycle Model


Frameworks for Analyzing Alliance Problems

• Locating the Problem– Alliance problems:

• Environmental • Strategy • Structure • Behavioral



• Separating the root from the symptom– Categories of deeper problems:

• Parochial self-interest• Misunderstanding and lack of trust• Different assessments• Low tolerance for ambiguity



• Treating Alliance Problems – Categories of deeper problems– Participation– Facilitation– Negotiation– Cooptation– Coercion



• Know Thy Partner– Partner can be useful in addressing problems

• The Cooperative Partner• The Quasi-Cooperative Partner• The Indifferent Partner• The Competitive Partner• The Vengeful Partner

chapter 11 managing strategic alliances. copyright © 2006 by thomson delmar learning. all rights...

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