Strategic Marketing: Planning and Control, Third Edition

232 Strategic Marketing: Planning and Control

products. While the concept of alliances is now more common, it is hardly

new. The history of business is littered with good, and bad, examples of

collaborative ventures.

What motivates an alliance? There is no single answer to this question.

Any number of factors can initiate such action. Common factors include:

● Globalisation: Businesses are increasingly able, or indeed compelled, to

competing on a world scale. Alliances and joint ventures are a means of

responding to this challenge. Shortening product life cycles, the global-

isation of technology, and political change means the world is becom-

ing a smaller place with more opportunity/necessity for collaboration.

For example, parts and components can be sourced worldwide, or

organisations can now more readily seek partners to distribute their

products in previously inaccessible markets. Joint initiatives give

access to expertise and contacts in local markets and greatly help the

process of market entry. It should be noted that while world markets

are increasingly open, some less-developed economies (e.g. China, etc.)

may insist on joint venture agreements as a condition of market entry,

thus ensuring inward investment.

● Assets and competencies: As previously stated, there is a recognition that

organisations can not be truly effective at all activities. The move

towards ‘down-sizing’ has seen organisations concentrate on core activ-

ities and contract out non-essential activity. Additionally, the cost (plus

shortages of skills) associated with product development may facilitate

joint activity. This allows market opportunities and new technologies to

be developed at a relatively lower cost. Complementary activities

and/or management skills can lead to inter-organisational synergy – the

combined effect of two, or more, organisations working together is

greater than their individual effect. To illustrate synergy, consider the

following example. ‘In-House Cuisine’, provides a restaurant delivery

Illustrative Example 11.1

McKean Foods: Haggis maker needs US alliance

The Internet has opened up global opportunities to Glasgow-based food manufacture
McKean Foods. Their website attracts interest from all over the world, with a 40 per cent
increase in sales of haggis through online operations. Popular products include the 500 grams
‘Warrior’ haggis and the larger ‘Chieftain’ haggis – A big favourite on Burns’s night. Around
80 per cent of website hits originate from North America. Such interest is pleasing, but also
frustrating as United States Department of Agriculture restrictions mean the company is
unable to export its product to the US. Despite the UK having some of the world’s most strin-
gent hygiene regulations and the company achieving the highest level of European food safety
accreditation. They are unable to service this growing demand due to US import regulations.
McKean is looking at the possibility of a partnership with a US-based manufacturer. Thus
enabling the company to meet demand in North America.