Marketing Strategy and Competitive Positioning pdf ebook

scarcer resources – both in the physical environment, but also in terms of downsized, 
leaner, strategically focused corporations;
● 
increased competition , frequently from new sources, new types of competitor and new 
technologies, at home and overseas;
Figure 15.1 
Key issues in evaluating strategic alliances and network organisations
Pressure to
partner
The era of
strategic
collaboration
The drivers
of
collaboration
strategy
And don’t
forget the
pre-nup
agreement
New
challenges
make
partnering
attractive
Things to
look for in
deciding to
partner
Collaboration
is becoming
how we
compete
Network
forms
Alliances
and
partnership
Strategic
alliances as
a competitive
force
The risks in
strategic
alliances
Managing
strategic
alliances
This is a
different
way of
organising
There are
different
ways of
collaborating
Competition
is between
alliances not
companies
But alliances
often fail and
do not deliver
what we want

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CHAPTER 15 STRATEGIC ALLIANCES AND NETWORKS
● 
escalating customer expectations for higher service and quality from more sophisticated 
and better-informed customers, which demands higher levels of expertise at the market 
level;
● 
pressures from strong distributors, such as retailers in consumer goods marketing, to 
achieve ever-greater economies in supply-chain costs;
● 
high levels of customer concentration in many business-to-business markets, shifting 
power from seller to buyer;
● 
the pervasive onslaught of the internationalisation of markets and competition, driven 
by technology such as the Internet;
● 
faster rates of change in markets and technologies, demanding higher levels and more 
rapid responsiveness in organisations;
● 
a post-recession environment characterised by a lack of trust in business and an unprec-
edented emphasis on customer value; and,
● 
more turbulent, unpredictable markets, where change is greater in magnitude and very 
difficult to anticipate with any degree of certainty.
Importantly, business environment changes of this kind, and the new business models 
they demand, continue to be associated with the evolution and growth of new organisa-
tional forms. This process sees the displacement of traditional, hierarchical, free-standing 
monoliths by flexible, agile, responsive organisational forms. Over a substantial period, 
it is clear that many of these new forms will depend on inter-organisational collabora-
tions or alliances and hollow organisations with a virtual Internet-based form. Importantly, 
often these new types of organisational arrangements completely reverse historical trends 
of aggregation and integration in large conventional structures, in favour of disaggregation 
and devolution of functions:
Organisations of the future are likely to be vertically disaggregated: functions typically 
encompassed within a single organisation will instead be performed in independent organi-
sations. The functions of product design and development, manufacturing, and distribu-
tion . . . will be brought together and held in temporary alignment by a variety of market 
mechanisms.
(Miles and Snow, 1984)
The realignment of company resources with the demands of new and more challenging 
business environments – characterised by the post-recession era – has seen the widespread 
emergence of strategies of collaboration and partnership with other organisations as a key 
element of the process of going to market. While precise terminology does not exist, these 
new organisational forms and network arrangements have been variously termed ‘market-
ing partnerships’, ‘strategic alliances’ and ‘marketing networks’ (Cravens and Piercy, 2012).
For example, Prahalad and Krishnan (2008) have described a fundamental transforma-
tion of business structure taking place in numerous industries. Their argument is that this 
fundamental transformation is being driven by two main factors. First, they argue that the 
age of mass production is over and customers demand unique value: ‘value is shifting from 
products to solutions and experiences’, in such a way that relationships are taking over as 
the central element of exchange. Second, they argue the consequence is that, increasingly, 
no single business is likely to be big enough to cope with the complexity and diversity of 
customer demands that are emerging. In turn, this underlines the importance of alliances 
and networks to deliver customer value – constellations of suppliers that can be configured 
in different ways to meet different customer needs. Success will increasingly rely on aban-
doning the business models of the past and managing through new collaborative networks.
The effects may be dramatic. For instance, already more than a third of Proctor & 
Gamble’s new products come from external alliances, and more broadly P&G is a proto-
type of a multinational corporation that has transformed itself through collaboration. For 
example, P&G has a strategic relationship with Google, whereby P&G aims to enhance its 
Web capabilities and Google looks to gain a higher share of P&G’s advertising. P&G has 

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PRESSURES TO PARTNER
also taken a stake in Ocado in the UK, as a testing ground for new online concepts. With 
insights gained from its partners, P&G has already started selling its brands direct to the 
US consumer from its ‘eStore’ site (Birchall, 2010).
Some partnerships may be surprising. Apple and IBM were once fierce rivals, but have 
struck a deal to sell iPads, iPhones and apps deeper into the corporate marketplace. In col-
laboration they are developing more than 100 apps for a range of industries. Apple hopes 
that IBM’s vast network of corporate clients will win it business customers, while IBM will 
use Apple devices to sell more of its software and services (Stock, 2014). New strategies built 
around attractive business opportunities outweigh traditional rivalries.
Indeed, IBM itself has been transformed into a borderless organisation working globally 
with numerous partners to enhance the value of its offerings to customers on a worldwide 
basis. IBM is a highly internationalised business. It has over 50,000 employees in India – 
IBM’s second biggest operation outside the US. Interestingly, the company has moved its 
head of procurement from New York to Shenzhen in China (The Economist, 2007; Palm-
isano, 2007). In fact, IBM’s former chairman and CEO, Samuel Palmisano, defined a vision 
for the globally integrated enterprise (GIE), as the twenty-first century successor to the 
multinational corporation. Palmisano argued that businesses are changing in fundamental 
ways – structurally, operationally and culturally – in response to imperatives for globali-
sation and the impact of new technology. The emerging GIE is a company that shapes its 
strategy, management and operations in pursuit of a new goal: the integration of production 
and value delivery worldwide. Shared business practices and connected business activities 
make it possible for companies to transfer work from in-house operations to outside spe-
cialists. Global integration forces companies to choose where they want work performed 
geographically, and whether they want it performed in-house or by an external partner. The 
centre of the GIE is global collaboration, both with commercial partners and governments.
Along similar lines, Hagel and Seely-Brown (2005) suggest that lowered barriers to inter-
national trade and technological developments mean companies have no choice but to 
concentrate on their areas of expertise, while collaborating globally with others specialising 
in different activities. The goal is to find ways of working with suppliers not simply to cut 
costs but to collaborate on product innovation. Li & Fung is a Hong Kong-based clothing 
supplier that Hagel and Seely-Brown describe as a ‘process orchestrator’. The company 
produces goods for Western companies drawing on a network of 7,500 partners – yarn 
from Korea, dyed in Thailand, woven in Taiwan, cut in Bangladesh, assembled in Mexico, 
with a zip from Japan. Importantly, these companies are partners to Li & Fung, rather than 
simply suppliers. By operating as a network, the partners help each other innovate in both 
design and manufacture (Hagel and Seely-Brown, 2005). Nonetheless, Li & Fung’s reliance 
on alliances has unnerved investors, and what is now the world’s largest sourcing company 
is subject to drastic overhaul (Hughes and Kirk, 2013; Sevastopulo, 2014).
Working with partners to create enhanced customer value creates a need for flexible yet 
effective integration of inputs to deliver seamless value to customers. While building effec-
tive customer relationships has always depended on understanding and predicting customer 
needs, the additional role is to work with a set of providers of different parts of the value 
offering – some internal and some external to the company – to construct and deliver a 
coherent value offering to the customer.
Nonetheless, by way of balance, it should be recognised that the challenges in working 
effectively with external partners mean that this is not always the best route to superior 
customer value. Rolls-Royce runs a global service network, providing a real-time support 
and maintenance service to airlines operating planes with Rolls-Royce engines – there are 
more than 50,000 Rolls-Royce engines flying, and the support extends decades after the 
original purchase. Conventional wisdom was for aero-engine makers to license out much 
support and maintenance – that is, to collaborate with third-party suppliers – and their 
after-market business was restricted to spare parts and distress repairs. To align the interests 
of airlines with its own, Rolls-Royce runs its own operations centres, in a move that has 
revolutionised the industry. Support and maintenance grew to generate 55 per cent of Rolls 

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