Strategic collaboration among businesses
Friday, 11 June 2010
M S Siddiqui
This is era of global village where people live together with active cooperation of each other. People collaborate with each other in order to survive and live a better life. All the aspects of the human society, the science, art, education, and business are being developed through cooperation.
In the business world, collaboration means sharing and questioning, opposing viewpoints and develop the common understanding that enables the components to operate in a unified manner.
Businesses can join together for bigger investments and face regulatory compliances. In recent time two Bangladesh big rival companies joined hand to start a housing company and other two competitors start joint company in transport sector for big investment and strategically face the regulatory compliance.
The recent wave of mergers and acquisitions in the global market for integration both horizontally and vertically and to rapid change in war of cost reduction and acquiring new technology are forcing the conservative markets to open up for co-operation integration to global market. Amid these pressures, businesses must continuously improve operating efficiencies to deliver better, faster results at a lower cost. They are handing over non core activities like IT, finance and accounting, customer service, and supply chain to third parties that can guarantee reliable service with a variable cost structure. Outsourcing of these services allows these companies to concentrate on their core business and redirect capital and resources toward optimizing key areas such as research and development (R&D), production and delivery services to customers and networks. The businesses achieving collaborative solutions to gain shorter project cycle times, has enabled the creation of new products and services that provide potential access to a wide variety of markets
Businesses need cost effective resources and capabilities that extend across their enterprise and beyond, and find new ways to be productive and to connect with customers in a more deeply connected, transparent market place.
Corporate collaboration brings people, processes, knowledge, resources and technology together for cost optimization and agility. Collaboration changes the way we approach and meet the changing needs of the business - providing the basis for working smarter in relation to best practices, resources, capabilities, business processes and overall business model.
Today's organizations are faced with pressures to control costs while improving their ability to create value and serve their customers. To do so, more and more is demanded from our most valuable resource: our people. Collaboration allows people to start working smarter by working together more effectively.
In a fast moving business world, many companies are tied to or overly dependent on past experience. Many organizations conduct business the same way they have always done, primarily due to fear of change and an unclear understanding of the consequences of change, either positive or negative. Industry best practices, innovations, new processes and large amounts of readily available data are often misunderstood, ignored, mismanaged or underutilized.
Advantages of
collaboration
The ability to create innovation leading to value, lowered operating costs and increased profitability, More profitable and more comprehensive products and services lines, higher customer retention, improved capability in new customer acquisition, industry best marketing & lead generation capabilities, a flattened organization allowing a more empowered and motivated work force, more rapid decision making enabled by an experienced knowledge base, less risk in making key strategic decisions and a faster ability to grow the organization.
Collaboration is becoming an important element in business competitive advantage. The ability to innovate and to be able to pursue, develop, and sell sophisticated products and services, is no longer is the sole realm of large, central R&D departments within vertically integrated organizations. Instead, innovations, world-class brand and marketing, and well developed product lines are increasingly brought to the market by networks of firms, selected according to their comparative advantages, and operating all or in part in a collaborative manner.
Managing collaboration the same way a firm handles the outsourcing of production is a flawed approach. Production and innovation are fundamentally different activities and have different objectives.
Many recent studies highlighted the need to rethink the way we manage innovation. Traditional approaches, based on the assumption that the creation and pursuit of new ideas is best accomplished by a centralized and collocated R&D team, are rapidly becoming outdated. Instead, innovations are increasingly brought to the market by networks of firms, selected for their unique capabilities, and operating in a coordinated manner. This new model demands that firms develop different skills, in particular, the ability to collaborate with partners to achieve superior innovation performance - often resulting in improved financial performance. The study found many firms mistakenly applied an "outsourcing" mindset to collaboration efforts which, in turn, led to three critical errors. They are: (i) They focused solely on lower costs, failing to consider the broader strategic role of collaboration. (ii) They didn't organize effectively for collaboration, believing that innovation could be managed much like production and partners treated like "suppliers." And
(iii), they didn't invest in building collaborative capabilities, assuming that their existing people and processes were already equipped for the challenge.
Successful firms, by contrast, developed an explicit strategy for collaboration and made organizational changes to aid performance in these efforts. Ultimately, these actions allowed them to identify and exploit new business opportunities. Now, collaboration is becoming a new and important source of competitive advantage.
Types of alliances
There are few types of strategic alliances: joint venture, equity strategic alliance, non-equity strategic alliance, and global strategic alliances.
Joint venture is a strategic alliance in which two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage.
Equity strategic alliance is an alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities to create a competitive advantage. Nonequity strategic alliance is an alliance in which two or more firms develop a contractual-relationship to share some of their unique resources and capabilities to create a competitive advantage.
Global Strategic Alliance is working partnerships between companies (often more than 2) across national boundaries and increasingly across industries. Sometimes it is formed between company and a foreign government, or among companies and governments. Merger or acquisition is another form of Joint venture by merging different companies to rename into one of the old name or some time changes the name to enjoy goodwill and expertise and market strength.
Joining hand with NGO or social venture are another form of alliance with NGOs and other social not for profit organization for excess to certain market and overcome the regulatory barriers and easy acceptability to a market with loyal and dedicated manpower and also ready market.
Sub-contracting or marketing alliance is a mostly government sponsored alliance of business of marketing products of small manufacturers who use to produce a part of a finished products or small quantity of an order. They alliance fabricate or assemble the products and market it with some other protection like guaranteed sale at confirm price and easy financial transaction.
Technical collaboration
One of the much talked collaboration is technical collaboration among the business. They collaborate through physical acts (e.g., participating in task forces, sending details, hand-delivering information) and, to a limited degree, through virtual acts (e.g., through online, interactive collaborative tools). Even after roles and responsibilities are better defined, participants will still need to work together, analytically and operationally, to provide context and produce improved results improvement of management, marketing, sales and improvement of products and services Collaboration tools and environments in use today often are not interoperable, making it difficult or impossible for users separated by geography or network topology to effectively reach one another and communicate. Processes, procedures, and technology must be introduced to enable efficient work across organizations, geography, jurisdictions(i.e., foreign and domestic), and domains.
Outsourcing of Services is for buying utilities other services like IT, accounting, Training of employees, supply chain etc.
One of the best collaboration is outsourcing to be competitive having expertise cooperation from specialized service providers. Outsourcing is necessary to the business but that's not where our competencies are so we contracted with a service provider who had the structural advantage in those areas with the technology and platforms to achieve economies of scale. Outsourcing allows for the re-distribution of time and resources to core business areas that directly impact shareholder value. This scalable sourcing model flexes with market demands without negative impacts to a company's business or its customers. Bangladesh, China, India, Philippine are good destinations of outsourcing of IT based outsourcing for USA and Europe.
When choosing an outsourcing service provider, business should assess the service provider's ability to offer choice in terms of process selection, approach (conventional, problem solving, or transformational), commercial models (joint venture or project-based), and location of services (onsite, virtual, or a combination of both). Look for a provider with the flexibility to do as much, or as little, as needed. This may include the transfer of one or more complete business processes, such as finance and accounting, or an enterprise-wide transformation, where more processes are outsourced.
The regulatory compliance is a serious issue for business in Bangladesh and the business regulated by old aged law & rules. The standard of regulatory function is poorly managed. Businesses are facing odds to comply with the law like Factories Act, Industrials relations Act, Shop and establishment act, Environment Act etc.
Business can join hands to follow the environment issue to set up effluent treatment plants for waste water treatment, setting up hospital etc, Social security funds like Provident fund, gratuity etc in a cluster of industries.
Bangladesh is going through acute power shortage and have poor infrastructure base. Business can have partnership to set up power plant to share the electricity. They can even trade on surplus power with others.
The government can encourage parties to make joint investment in certain sectors so that the risk may be shared by many businesses.
The writer is a part-time teacher of Leading University. He can be reached at e-mail : shah@banglachemical.com
This is era of global village where people live together with active cooperation of each other. People collaborate with each other in order to survive and live a better life. All the aspects of the human society, the science, art, education, and business are being developed through cooperation.
In the business world, collaboration means sharing and questioning, opposing viewpoints and develop the common understanding that enables the components to operate in a unified manner.
Businesses can join together for bigger investments and face regulatory compliances. In recent time two Bangladesh big rival companies joined hand to start a housing company and other two competitors start joint company in transport sector for big investment and strategically face the regulatory compliance.
The recent wave of mergers and acquisitions in the global market for integration both horizontally and vertically and to rapid change in war of cost reduction and acquiring new technology are forcing the conservative markets to open up for co-operation integration to global market. Amid these pressures, businesses must continuously improve operating efficiencies to deliver better, faster results at a lower cost. They are handing over non core activities like IT, finance and accounting, customer service, and supply chain to third parties that can guarantee reliable service with a variable cost structure. Outsourcing of these services allows these companies to concentrate on their core business and redirect capital and resources toward optimizing key areas such as research and development (R&D), production and delivery services to customers and networks. The businesses achieving collaborative solutions to gain shorter project cycle times, has enabled the creation of new products and services that provide potential access to a wide variety of markets
Businesses need cost effective resources and capabilities that extend across their enterprise and beyond, and find new ways to be productive and to connect with customers in a more deeply connected, transparent market place.
Corporate collaboration brings people, processes, knowledge, resources and technology together for cost optimization and agility. Collaboration changes the way we approach and meet the changing needs of the business - providing the basis for working smarter in relation to best practices, resources, capabilities, business processes and overall business model.
Today's organizations are faced with pressures to control costs while improving their ability to create value and serve their customers. To do so, more and more is demanded from our most valuable resource: our people. Collaboration allows people to start working smarter by working together more effectively.
In a fast moving business world, many companies are tied to or overly dependent on past experience. Many organizations conduct business the same way they have always done, primarily due to fear of change and an unclear understanding of the consequences of change, either positive or negative. Industry best practices, innovations, new processes and large amounts of readily available data are often misunderstood, ignored, mismanaged or underutilized.
Advantages of
collaboration
The ability to create innovation leading to value, lowered operating costs and increased profitability, More profitable and more comprehensive products and services lines, higher customer retention, improved capability in new customer acquisition, industry best marketing & lead generation capabilities, a flattened organization allowing a more empowered and motivated work force, more rapid decision making enabled by an experienced knowledge base, less risk in making key strategic decisions and a faster ability to grow the organization.
Collaboration is becoming an important element in business competitive advantage. The ability to innovate and to be able to pursue, develop, and sell sophisticated products and services, is no longer is the sole realm of large, central R&D departments within vertically integrated organizations. Instead, innovations, world-class brand and marketing, and well developed product lines are increasingly brought to the market by networks of firms, selected according to their comparative advantages, and operating all or in part in a collaborative manner.
Managing collaboration the same way a firm handles the outsourcing of production is a flawed approach. Production and innovation are fundamentally different activities and have different objectives.
Many recent studies highlighted the need to rethink the way we manage innovation. Traditional approaches, based on the assumption that the creation and pursuit of new ideas is best accomplished by a centralized and collocated R&D team, are rapidly becoming outdated. Instead, innovations are increasingly brought to the market by networks of firms, selected for their unique capabilities, and operating in a coordinated manner. This new model demands that firms develop different skills, in particular, the ability to collaborate with partners to achieve superior innovation performance - often resulting in improved financial performance. The study found many firms mistakenly applied an "outsourcing" mindset to collaboration efforts which, in turn, led to three critical errors. They are: (i) They focused solely on lower costs, failing to consider the broader strategic role of collaboration. (ii) They didn't organize effectively for collaboration, believing that innovation could be managed much like production and partners treated like "suppliers." And
(iii), they didn't invest in building collaborative capabilities, assuming that their existing people and processes were already equipped for the challenge.
Successful firms, by contrast, developed an explicit strategy for collaboration and made organizational changes to aid performance in these efforts. Ultimately, these actions allowed them to identify and exploit new business opportunities. Now, collaboration is becoming a new and important source of competitive advantage.
Types of alliances
There are few types of strategic alliances: joint venture, equity strategic alliance, non-equity strategic alliance, and global strategic alliances.
Joint venture is a strategic alliance in which two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage.
Equity strategic alliance is an alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities to create a competitive advantage. Nonequity strategic alliance is an alliance in which two or more firms develop a contractual-relationship to share some of their unique resources and capabilities to create a competitive advantage.
Global Strategic Alliance is working partnerships between companies (often more than 2) across national boundaries and increasingly across industries. Sometimes it is formed between company and a foreign government, or among companies and governments. Merger or acquisition is another form of Joint venture by merging different companies to rename into one of the old name or some time changes the name to enjoy goodwill and expertise and market strength.
Joining hand with NGO or social venture are another form of alliance with NGOs and other social not for profit organization for excess to certain market and overcome the regulatory barriers and easy acceptability to a market with loyal and dedicated manpower and also ready market.
Sub-contracting or marketing alliance is a mostly government sponsored alliance of business of marketing products of small manufacturers who use to produce a part of a finished products or small quantity of an order. They alliance fabricate or assemble the products and market it with some other protection like guaranteed sale at confirm price and easy financial transaction.
Technical collaboration
One of the much talked collaboration is technical collaboration among the business. They collaborate through physical acts (e.g., participating in task forces, sending details, hand-delivering information) and, to a limited degree, through virtual acts (e.g., through online, interactive collaborative tools). Even after roles and responsibilities are better defined, participants will still need to work together, analytically and operationally, to provide context and produce improved results improvement of management, marketing, sales and improvement of products and services Collaboration tools and environments in use today often are not interoperable, making it difficult or impossible for users separated by geography or network topology to effectively reach one another and communicate. Processes, procedures, and technology must be introduced to enable efficient work across organizations, geography, jurisdictions(i.e., foreign and domestic), and domains.
Outsourcing of Services is for buying utilities other services like IT, accounting, Training of employees, supply chain etc.
One of the best collaboration is outsourcing to be competitive having expertise cooperation from specialized service providers. Outsourcing is necessary to the business but that's not where our competencies are so we contracted with a service provider who had the structural advantage in those areas with the technology and platforms to achieve economies of scale. Outsourcing allows for the re-distribution of time and resources to core business areas that directly impact shareholder value. This scalable sourcing model flexes with market demands without negative impacts to a company's business or its customers. Bangladesh, China, India, Philippine are good destinations of outsourcing of IT based outsourcing for USA and Europe.
When choosing an outsourcing service provider, business should assess the service provider's ability to offer choice in terms of process selection, approach (conventional, problem solving, or transformational), commercial models (joint venture or project-based), and location of services (onsite, virtual, or a combination of both). Look for a provider with the flexibility to do as much, or as little, as needed. This may include the transfer of one or more complete business processes, such as finance and accounting, or an enterprise-wide transformation, where more processes are outsourced.
The regulatory compliance is a serious issue for business in Bangladesh and the business regulated by old aged law & rules. The standard of regulatory function is poorly managed. Businesses are facing odds to comply with the law like Factories Act, Industrials relations Act, Shop and establishment act, Environment Act etc.
Business can join hands to follow the environment issue to set up effluent treatment plants for waste water treatment, setting up hospital etc, Social security funds like Provident fund, gratuity etc in a cluster of industries.
Bangladesh is going through acute power shortage and have poor infrastructure base. Business can have partnership to set up power plant to share the electricity. They can even trade on surplus power with others.
The government can encourage parties to make joint investment in certain sectors so that the risk may be shared by many businesses.
The writer is a part-time teacher of Leading University. He can be reached at e-mail : shah@banglachemical.com