intel's manufacturing strategy
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Intel's Manufacturing Strategy. World's largest semiconductor company Two dominant products: Microprocessors Flash memories Multiple manufacturing sites for the same product Huge volumes at each site. Reasons for Semiconductor Alliances. Competitive Alliances: - PowerPoint PPT PresentationTRANSCRIPT
D. ROUACH, ESCP-EAP10.0
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Intel's Manufacturing Strategy
World's largest semiconductor company
Two dominant products:Microprocessors
Flash memories
Multiple manufacturing sites for the same product
Huge volumes at each site
D. ROUACH, ESCP-EAP10.0
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Reasons for Semiconductor Alliances
Competitive Alliances:share costs, resources and technologyreduce risk and time-to-marketraise customer confidence in successimprove customer sourcing position
Non-Competitive Alliances:diversify into new business or technologyguarantee source of supply
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Copy EXACTLY!
Transfer of new technologies in both new and existing factories accomplished in record time
Less startup problems and faster time to resolve them
Equal productivity from the start
One learning curve
Less problems, therefore more resources per problem
Source: C.J. McDonald, Intel
D. ROUACH, ESCP-EAP10.0
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The future of AT&T in Europe depends on its alliances
AT&T is building a strong network of partners in EuropeUnisource (Sweden, The Netherlands, Switzerland) in 17 countriesTelecom Italia (Europe and Latin America)Local Partners (France, Germany, Italy)
Our services development depends on our alliancesBusiness services (Communications, On-line)Consumer servicesWorld Partners for global reach
The growth of European customer base is the keystone to develop
US skills transferValue added servicesCommercial attitudes
Source : AT&T
D. ROUACH, ESCP-EAP10.0
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Map of overseas laboratories (National/Panasonic)
PERDC
AVTC
AVIRC
AMSMACRAD
R&D CenterMTV
CorporateLaboratories: Global mission Regional mission
Division Laboratory
Corporate Organization
MITT
PTI/TAD-West
STLPTI
MADC
PDCMCC
KMERLPTI
MIERLPTI PTI/Technoresearch Office
PTI/Boston OfficePTI/TAD-East
ATVLMARL PTI
MITL PTI
CSTL PTI
ATVL: Panasonic Adv. TV - Video Laboratories, Inc.AVIRC: AV/Information Research CenterCSTL: Communication Systems Technology LaboratoryMARL: Matsushita Applied Research LaboratoryMITL: Matsushita Information Technology LaboratoryMITT: Matsushita Electric Institute of Tech. (Taipei) Co.,Ltd.PERDC: Panasonic European R&D Center (Panas. Europe (HQ) Ltd.PTI: Panasonic Technologies, Inc. (parent company for 6 US-based R&D LaboratoriesSTL:Speech Technology LaboratoryTAD: Technology Administration Div.
D. ROUACH, ESCP-EAP10.0
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Knowledge Management Matrix
Source: Conference MBA, Lars Ch. Smith
Know Don't know
Know EXPLICIT Known knowledge Gaps
Don't know TACIT Unknown knowledge Gaps
D. ROUACH, ESCP-EAP10.0
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Knowledge Management MatrixKnowledge Management Matrix"Chief knowledge Managers""Chief knowledge Managers"
Knowledge thatyou know you have
Knowledge thatyou don't knowthat you have
Knowledge thatyou knowyou don’t have
Knowledge thatyou don't knowthat you don't have
Source: Conference MBA, Lars Ch. Smith
Know Don't know
Know
Don't know
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American Proverb
Prod
. by
MrJ
R (
-:
Coopetition
« If you cannot beat them »
Join them !
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- Jack Welsh Chairman of General Electric Prod
. by
MrJ
R (
-:
Coopetition
« Who is my client in the morning,
my rival in the afternoon,
and my supplier in the evening? »
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The development of alliances and partnerships is part of Gemplus’ strategy to benefit from external sources and competencies.
The co-operation agreement covers joint marketing sales and development efforts in the smart card market.The agreement brings together the card technology of Gemplus with IBM’s systems capabilities and expertise, and will involve development of multi-application cards, for use in electronic commerce and other electronic business transactions.
Gemplus, Alliances and partnership
Cooperation
D. ROUACH, ESCP-EAP10.0
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The industry is dominated by well established
players….
ChipManuf.Chip
Manuf.Terminal SuppliersTerminal Suppliers
SystemInteg.
SystemInteg. S/WareS/Ware
End UserEnd User
CardManuf.Card
Manuf.
STSiemensHitachiPhilipsMotorola
GemplusBullG & DSchlumbergerOberthur
IngenicoDassaultHypercomVerifoneIBM
IBMBulSki DataCap Gemini
SunMicrosoftInformax
D. ROUACH, ESCP-EAP10.0
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Strategic Alliances; a vital need...
Now that Gemplus has gained sufficient scope and maturity; it is replacing its original sole financial partners with investors from the manufacturing
and service industries who have a strategic interest in a link up with Gemplus.
Market penetration and development
Sharing Technology
Horizontal Integration
Finance to reach critical size
D. ROUACH, ESCP-EAP10.0
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The main difficulties in technology alliances are managerial
TYPE OF TYPE OF PROBLEMPROBLEMTYPE OF TYPE OF PROBLEMPROBLEM
FREQUENCYFREQUENCYFREQUENCYFREQUENCY
Different priorities of the involved companies 52%Difference in company culture 42%
Change in strategies / priorities 39%
Lack of technical competence on partner ’s side 25% Difficulties to adapt the cooperation to new commercial conditions 23%Difference in organizational level status of concerned staff 23%
Changes in ownership 21% Source: Hakanson & Lorange, 1988 by Francis Bidault
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Innovating all together?
Technological Alliances
Increasing technological integration:
Data-processing and telecommunicationsMicro-electronicsComposite materials and optical technologies
Increasing sectors integration:
Agriculture, chemistry and energy, telematicsand mass media
Direct or indirect covering of every potential sectorDirect or indirect covering of every potential sector
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Innovating all together?
The boomerang
effects of
technology
transfers TH
E R
ISK
S
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Key question: How to detect technologies likely to bring a competitive advantage?
Answer: The Technological and Competitive Intelligence
Key question: How to detect technologies likely to bring a competitive advantage?
Answer: The Technological and Competitive Intelligence
Innovating all together?
Innovation as a necessary Competitive instrument
The technology as an innovation support
Technology Innovation Competitiveness
D. ROUACH, ESCP-EAP10.0
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The risks: The Infeudation
In the case of an exclusive transfer, the company can progressively increase its dependance on the partner's technology, and then be assimilated by him.
The risk of loosing its independence
Innovating all together?
D. ROUACH, ESCP-EAP10.0
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The risks : "the trojan horse" :
Not transferring everything he promised to give,
Taking more than what he asked for,
Trying to weaken the company or to increase its dependance towards him.
The partner can have hidden intention
Innovating all together?
D. ROUACH, ESCP-EAP10.0
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Global alliance in Smart Cards systems will provide benefit to all
actors
By creating new markets opportunities !
But Silicon suppliers should be much more involvedat the beginning of the process :
StandardsDefinition of key productsValue added on Silicon
CardSuppliers
CardSuppliers
Terminals& Applicative
SoftwareSuppliers
Terminals& Applicative
SoftwareSuppliers
SystemDeveloppers
SystemDeveloppers
Buildand
operatenew
businesses
Buildand
operatenew
businesses
Chip SiliconSuppliers
Chip SiliconSuppliers
D. ROUACH, ESCP-EAP10.0
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The future of Smart Cards businesses depends onPartnerships
Build a new business environment : Smart Card replacing Paper Computer processing replacing manual or semi automatic processing & Information System
New era of interactive information systems: VISA, Master Card... or Microsoft, Oracle, Netscape, etc.
Card manufacturer should be able to provide complete solutions by effective alliances with terminals providers
Software companies System integrators
11
22
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Smart Cards partnership programs :
Distributors &value addedresailers (VAR)
Partnershipprograms -Terminals -Suppliers -Integrators
Direct salesto key account
Internal
SiliconSupplier Internal
JVLicense JV
Design ofnew
products
Buyingcomponents
&modules
ProductionCards
&Printing
Personalization
Commer-cialization
1
3
2
12
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General cooperation agreements : anchor point
Distributionagreements
Ways of...
Researchcontract
CommonResearch
CommonpurchaseSubcontracting
Engineeringcontract
Patentlicence
Commonproduction
Trademarklicence Consortium
(commonmarketing)
DesigningSupplying Producing Marketing Delivering
D. ROUACH, ESCP-EAP10.0
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Is it a tactic or a Marriage?
Broad
Scop
e o
f A
llia
nce
A
cti
vit
yS
cop
e o
f A
llia
nce
A
cti
vit
y
Narrow
Expected DurationExpected DurationShort Long
A Short TermTactic
A Long TermMarriage
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What do you want from your partner,after the deal is done?
All we wanted was
the cash,the nationality,the brand name,the patents rights,access toyour distribution
Just teach us To use your technology
A true partnership
Combiningbrains andresources
Nothing A One TimeTransfer
Ongoing managerialInput matched by us
D. ROUACH, ESCP-EAP10.0
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Keeping an Alliance Healthy
Monitor the state of the partner relationship, and adjust payoffs and processes as you go.
Watch for "strategic space" collisions, between alliance and parents.
Put some of your best managers in alliances and at the partner interface. "Good cop, bad cop" bard members.
Recognize and manage cultural differences.
Communicate, more than you think is reasonable.
Do not "micro" manage, from the parent level.
If the alliance has served its purpose, end it.
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What are the alternatives?
Pros
Working with familiarpeople and resourcesFast decision makingControl
Cons
May be too financiallyriskyMay be too slowMay need help
Pros
Achieve majorchange quicklyControl
Cons
ExpensiveIntegration may bedifficultIrreversible
Pros
Risk sharingEconomies of scaleQuick access toresources and skillsPolitical necesityLearning opportunity
Cons
May be difficult tomanage wellMay prove inflexible
Go it alone... Form an alliance...Make an acquisition...
D. ROUACH, ESCP-EAP10.0
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To Get Partnership and Alliances "Right"...
Should we?
What do we really need?
What arethe options?
Rewards andrisks of each?
Scope and duration
Type of alliance
Partner choice
Ownership
Payoffs
Reacting tounexpected events
Adjusting originaldesign and payoffs
Alliance Design Operating overtime
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Desired Partner Characteristics
The "Three C's"
Importance Level
Low Medium High Low Medium High
Capability
Compatibility
Commitment
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Implementing Technology Transfer strategies
AUTONOMOUS WAYAUTONOMOUS WAY COOPERATIVE WAY
COOPERATIVE WAY
DEV
ELO
PIN
GD
EV
ELO
PIN
GB
UY
ING
BU
YIN
G
Internal R&D
« Intraprenariat»
Joint R&D agreement
Common R&D subsidiary company
R&D consortiumSubcontracted R&D
Licence purchasing
Investment in an innovative company
Licence SWAP
Joint licence purchasing
Joint acquisition of an innovating company
D. ROUACH, ESCP-EAP10.0
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Definition
Alliances
Stand alone Transactions Joint venture Merger
An alliance is any formal arrangement between two or moreindependent or organisations for purposes of mutual gain
through cooperation for a limited period of time
Source : KMPG
D. ROUACH, ESCP-EAP10.0
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Forming global alliances and Network organisations
Companies try to find new competitive space and build business outside their business columnNew surprising combinations of Technology areas; more and more converging branchesChanging configurations between companies towards active networksTrans cultural collaboration becomes more rule that exception Learning organisations are better equipped to master the business dynamics
« The Company of the Future combines all these elements »
Source : KMPG
D. ROUACH, ESCP-EAP10.0
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In general strategic alliances are underperforming
Success rate of alliances is only a meagre 30 – 40 %
Alliance-formation is not a common management skill
Underestimation of ‘soft’ aspects(company culture, chemistry of persons, commitment)
Source : KMPG survey 1996/97
Nevertheless sharp increase in number of alliances is to be expected
D. ROUACH, ESCP-EAP10.0
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Alliances brings management in paradoxal situation
Challenge: Increasing the level of comfort
Source : KMPG
But……?!
Past way of thinking: Control + To be in control
is normal practice in business
Companies can’t do it all alone anymore; too much to handle
Alliances are a way out, but at the same time you loose control a low ‘Comfort level’
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The Base for alliances: Commitment
ReputationTeamworkAct, without escapesSmall stepsContract
Source : KMPG
« Think in terms of credible commitments »
CommitmentCommitment
ContractContract
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Gradually the importance of ‘soft’ issues is regocgnised
imp
ort
an
ce
t
‘soft’
‘hard’
Source : KMPG