service – customers’ order, through ‘In-House Cuisine’, from a directory
of top restaurants and In-House’s uniformed waiters collect the meal
and deliver it to the customer. The scheme has now been extended to
hotels, with the Scottish Tourist Board allowing hotels, with limited
restaurant services, to retain their three star status by using ‘In-House
Cuisine’ as a form of room service.
● Risk: Collaboration is often born from the need to reduce risk. The sheer
financial commitment may be so great that a consortium approach is
required to spread the financial risk across a number of participants. A
‘go-it-alone’ strategy may incur other risks. Co-operative ventures can
promote industry standards and common practice. For example, JVC’s
alliance with Sharp and Toshiba helped to establish VHS as the indus-
try standard for video recorders. Thus, ‘go-it-alone’ firms risk being
isolated from accepted industry practice and technical standards.
Additionally, joint activity can reduce the time taken to develop prod-
ucts, thereby reducing the risk associated with launching products.
● Learning and innovation: Collaborative ventures are great opportunities
to learn and innovate. Technology and skills transfer are often essen-
tial in generating meaningful commercial benefits. Indeed, Morrison
and Mezentseff (1997) attribute sustainable competitive advantage
(generated through collaborative ventures) directly to learning and
knowledge transfer. Consider the alliance between Rover and Honda.
When active, this collaboration enhanced Rover’s expertise in total
quality management. The expertise and skills gained during the ven-
ture proved more durable than the alliance.
When examining the concept of alliances, it is important to consider the
various forms such ventures may take. The scope of alliance ranges from
highly formalised agreements involving ownership, to informal co-operation
based on little more than a handshake. Johnson and Scholes (1999) sum-
marise alliances in terms of four main categories. Firstly, acquisition and
mergersinvolve taking formalised ownership. This includes co-operative
or hostile takeovers. Commonly, this is driven by: (i) possible efficiency
gains which lead to lower operating costing in areas of activity: procure-
ment, transaction processing and operational scale and (ii) synergy effects,
where combined activity leads to greater ‘added value’ than the two
organisations could hope to generate separately. Acquisition strategies
normally look to benefit from eliminating duplicated activities. For example,
the merger of the Leeds and Halifax Building Society (subsequently con-
verted into a Bank) has seen the rationalisation of the branch network.
Secondly, consortia and joint ventureactivities involve independent organisa-
tions entering into specific project agreements or setting up jointly owned
ventures. Consortia are groups of companies in partnership, normally to
develop large-scale projects. For example, the ‘Euro-fighter’ project brings
together a European-wide consortium of defence, electronic and aerospace
companies developing the next generation of military aircraft. Thirdly,
Contract and licensingagreement are legal, contractual agreements whereby
the right to a product/activity is assigned to an independent operator.
Alliances and relationships 233