Samsung in Asia, or try to get in a dialog with Bauknecht in Europe. The two possible partners would give access to different geographies( and that would have to line up with the Philips strategy), but also a collaboration with Samsung would be affected by the fact that Samsung and Philips are competitors in the field of televisions. The latter would make collaboration less natural and less easy, perhaps.
In the third phase the long list is tested against a large set of criteria. This results in a shortlist of three to four most preferred potential alliance partners. Next, a“ needs and contribution analysis” is performed for each of the potential partners: what does this company need from Philips, and what does Philips have to offer, and vice versa? This assessment determines how a partner can be approached, with what kind of proposal, and is in fact also a first step towards preparing the negotiations of phase four.
In most cases one company emerges as the preferred partner. This company is then contacted at the appropriate level, and after a number of meetings the process is formalised to a certain extent. A nondisclosure agreement is signed, a temporary exclusivity is agreed upon, and sometimes some consumer research, or other work to test the idea we jointly like to bring to market, is conducted.
The letter of intent covering these items is signed by senior representatives of both companies, and a governance structure is created. In most cases there is contact at CEO level, there is a steering committee consisting of business managers and some staff functions such as marketing, and both sides appoint an alliance manager.
The fourth phase is all about forging the actual alliance. This involves checking the situation around intellectual property rights and agreeing on how to deal with these( note that sometimes as a result of the alliance new inventions can be made that may be owned by one or both companies). Development plans and implementation plans are drawn up, and most importantly: a structure of the collaboration is designed: what form does the business of the alliance take? Who does what, how does the money flow?
Ivo Rutten:“ A contractual alliance tends to be more difficult to arrange than a joint venture. With a joint venture you create a legal entity with a governance structure, you value and bring in the assets, you appoint the management and the management has to do the implementation and cope with changing circumstances. The JV structure in itself allows for solving problems when they occur, because the JV management has a focused incentive to solve them optimally, and the results of the solution in terms of profit and loss are automatically divided between the parents via the ownership structure. In an alliance this is different: all important problems need to be foreseen at inception of the alliance, and either solutions need to be pre-designed, or some sort of reliable resolution process needs to be installed. That makes setting up a JV easier and faster. On the other hand: a JV tends to require a higher up-front investment, and an exit is more complicated.
Take our alliance with Future Lighting Solutions. They are our exclusive distributor of high-power LEDs, and we recently expanded that collaboration to enable them to also sell higher-level products( such as modules incorporating LEDs and other electronics). We made certain tools and IP available to FLS, and gave them other means to be more successful in this venture. We did this because the lighting market is very localized and fragmented, and working with FLS builds on using their widespread infrastructure. Future Lighting Solutions addresses the spread out smaller customers in this partnership, the ones that would be hard to serve for Philips. FLS benefits from the collaboration by becoming able to serve their target
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