Corporate Alliances Are Mostly a 50/50 Bet Essay

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Corporate alliances are mostly a 50/50 bet since only about half of these ventures give returns to partners above the cost of capital. This is very worrying since alliances and partnerships are what many business models are based on. The article points out the reason as to why these alliances fail is the fact that they are traditionally managed and organized. Most alliances are normally defined by service level agreements which mainly identify what is committed to be delivered by each side rather than what they hope to attain from this partnerships. The SLAs put emphasis on the operational performance metrics and not the strategic objectives .the managers of the alliances are not sure whether they stick to the agreement made initially or renegotiate afresh.

The article focusses on Solvay which is ranked among top 40 pharmaceutical companies that develops neuroscience, influenza vaccine, cardio-metabolic and pancreatic enzyme products. Since the cost of bringing new drug discovery has gone up it has become hard for the organization to capitalize of their research skills. They therefore began their transition by choosing their suppliers Quintiles to perform the initial stages of the trial process. These two companies therefore formed a joint clinical team for every compound so that they can manage strategic and operational aspects when it comes to carrying out the clinical trials.

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The initial five-year contract set up went well. However, there were concerns by Solvay about loss of control since the in house activities were outsourced .therefore, the senior executives of the two companies were to endorse and commit to the alliance strategy that included the sharing of risks and profits (Kaplan, Norton, & Rugelsojen, 2013).

Critical evaluation

From the article there are some likely shortfalls within alliance outcomes which were identified. These include putting more focus on the terms in a contract of the alliance as opposed to a joint venture, spending a lot of time in selling the alliance within the organization and not managing the strategy, concentrating on controlling the alliance and getting returns as opposed to the removal of barriers that hinder successfully executing the strategy. These issues as identified by the executives could be addressed through management systems that are based on the balanced scorecard tools. Therefore a scorecard and strategy map is to be used as a framework for the governance system when it comes to monitoring the progress towards goals and creation of incentives for the tow parties in order for them to achieve them (Zaman, & Mavondo, 2010).

It also points out the need to create a committee which will oversee the creation of the map and eventually lead to the governance.....

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