alliance constellations
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Constellation Strategy:
Managing Alliance Groups
Dr. S.Balasubrahmanyam, IIM Kozhikode
PGP-II (SAJVA)
9/18/20141 Dr. S.Balasubrahmanyam, IIM Kozhikode
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Constellations >>>>> Corporations
9/18/2014Dr. S.Balasubrahmanyam, IIM Kozhikode2
Constellation: A set of firms linked through alliances andcompeting in a specific business domain
A Constellation is a group / web / coalition / network of
multilateral alliances with multiple partners competingagainst other such groups and against traditional single
firms [e.g., Airbus, Boeing, Coke, Pepsi, Visa, MasterCard]
Examples of Constellations: R & D Consortia, Joint
Bidding, Code Sharing in Airlines etc.
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Basic Motivations behind Constellations
9/18/2014Dr. S.Balasubrahmanyam, IIM Kozhikode3
Linking Markets (e.g., Star Alliance, One World etc)
Combining Skills (e.g., PDA)
Building Momentum (e.g., GM, Ford, Chrysler Web-based
Component exchange Combined Market Power);(Modis + JK + Apollo)Rs.1000 Crore Joint Venture(Technology of Continental)Radial-T
Reducing Costs (Multi-partner JVs Few Japanese Chemical
Firms, Purchasing Cooperatives); Coke-Pepsi-Aspartame;
Sharing Risks (MJVs Oil Companies, Semiconductor Mfrs,Pharmaceutical Companies, Photographic firms etc)
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Design Dimensions Modus Operandi
9/18/2014Dr. S.Balasubrahmanyam, IIM Kozhikode4
Group Size No. of Member firms = f(CSFs); Phased
Membership Mix - Combination of Multiple Skills andCapabilities = f(Diversity, B-Spanning, Complementation)
Internal Rivalry Degree to which partners competewith one another = f(Duplication / Exclusion)
Governance Structure = f [(Formal + Informal) Mix] General Assembly (e.g., UN Approach towards nations)
Core and Periphery (e.g., UA and Lufthansa in Star Alliance)
Lead Firm (e.g., GM, Boeing or IBM)
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Alliances in Cable Converters
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Alliances in Interactive TV
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Alliances in Personal Communications
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Alliances in Imaging Applications
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Managing Constellations
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Evaluate Design Trade-offs between Group Size,
Membership Mix, Internal Rivalry & Governance Structure
Map your constellation and those of your rivals (Visual Map)
Be clear about benchmarking, trail-blazing and tweaking
Adjust constellation structure to respond to new conditions
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Alliance Success: Top Ten Factors [1-5]
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Alliance Success: Top Ten Factors [6-10]
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Partner Selection:
Balance Capabilities and Goals
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