Today, contemporary organizations emphasize upon building and maintaining strong relationships not only in the consumer markets but also business markets. Cooperative strategies such as strategic alliances and joint ventures are gaining immense significance in order to achieve sustainable growth and success in the competitive ad uncertain global environment. Business-level and cooperate level cooperative strategies are aimed at achieving short term or strategic objectives of the organization.
Samsung has entered into several successful strategic alliances to gain sustainable competitive advantage and strengthen its market position. Samsung has assessed its core competencies as well as the core competencies of rival firms and other technology driven firms. It aims towards capitalizing through collaborating with large organizations to acquire enhanced competitive advantage. Today, it is highly challenging for organizations to maintain responsiveness, efficiency, quality and dynamism together. For technology driven organizations, it is more challenging to achieve sustainable strategic position in the competitive markets. Therefore, the strategic alliance with Kodak shows horizontal cross-border alliance for increasing innovation excellence through cooperative strategy. The strategic alliance with Sony shows vertical strategic alliance where Samsung only provide LCD panels to Sony, which takes the responsibility for final products.
Samsung and Kodak Alliance
The strategic alliance between Samsung and Kodak is a business level cooperative strategy. Samsung has enhanced its performance and competencies through technology management strategy which is based on business to business collaborations. The alliance has been developed for meeting the demand in the consumer inkjet printing. The alliance between Samsung and Kodak is horizontal alliance as both organizations are delivering final products to customers in the retail industry. Both Kodak and Samsung are highly dynamic and technology driven organizations, which aim towards gaining larger market share. Reaching customers has been the main target of both the organizations through innovative and responsive strategies. The tactical alliance between Samsung and Kodak is based on cross-border alliance to sell printers in Europe. It is important to note that this cooperative strategy of Samsung enhanced its competiveness and performance by partnering with Kodak. The core competency of Kodak has been identified by Samsung and it aimed to utilize it through this strategic alliance. The knowledge and expertise sharing of both organizations plays a major role in influencing the consumer buying behaviour (Lee, 2014).
This strategic alliance is a collaborative effort between two successful brands in Europe. Samsung has been successful in leveraging the technological capabilities and imaging science for launching the inkjet printers. On the other hand, Kodak has been able to enhance its strategic position in the competitive markets through this cooperative strategy. Samsung believes what it can expand its operations through this diversification and enhance its innovation excellence for meeting the strategic objectives.
There are also some risks from such type of alliance. The risks of such strategic alliance are to ensure that win- win situation continues through providing competitive advantage to both the partners. Moreover, one of the most critical risk or challenge in strategic alliance is the protection of intellectual rights. Both Samsung and Kodak gain their competitive advantage through core competencies which are intellectual property. Often these are exploited in the alliance an if not immediately then in the long run, the risk still remains. More importantly, strategic alliance can end up in a serious issues and conflicts between the management of both organizations. The lack of effective communication and coordination can lead towards conflicts which affect the performance. If the conflicts and arising issues are not resolved, it would result in negative publicity and reputation of both the organizations. For Samsung, strategic alliances require not only strategic planning but also contingency planning to ensure positive and sustainable outcomes to strengthen the market position in the dynamic market (Nevin, 2014).
Samsung and Sony Alliance
Samsung Corporation entered into a strategic alliance with Sony for meeting the global demand for LCD TV line. This strategic alliance has been highly significant as it has facilitated both the organizations in gaining long term competitive advantage. The core technological capabilities of Samsung and Sony were used to achieve innovation excellence. The LCD panels were supplied by Samsung and in return Samsung acquired shares from Sony. This strategic alliance has been successful due to the sharing of expertise between Samsung and Sony Corporation. Samsung did not face the responsibility of operating a manufacturing facility, which was under the domain of Sony. The strategic alliance between Samsung and Sony led towards increased flexibility, efficiency and responsiveness in manufacturing as well as business operations. It is important to note that vertical strategic alliances play a critical role in achieving long term sustainable competitive advantage.
It is worthy to note that this type of strategic alliance takes shape through cooperative strategy of the organization. Cooperative strategy of Samsung aims towards innovation excellence and quality assurance. These are believed to be the two most important criteria for maintaining its stearic position in the global markets. Samsung has its increased focus on strategy formulation and development based on strategic vision and objectives. From this alliance, Samsung has been able to enhance its brand image. Sony, which is one of the largest organizations in the world known for its innovative designs, quality and technology, became a strategic partner of Samsung in achieving the common shared objectives. To strengthen the strategic position in the global markets, Samsung emphasized upon knowledge sharing and technology sharing so that more innovative products can be delivered to the customers. Samsung has outsourced its manufacturing activates to Sony which in collaboration has taken the task of delivering the final product. The risks are shared by both the organizations in this strategic alliance based on strategic vision (Schoemaker, 2012).
In today’s highly dynamic and competitive global environment, there are risks that arise from such strategic alliances as well. The risk from such strategic alliance can be product failure risk or supply chain inefficiency risk which can be costly. If conflict of interest arises during such an alliance between two large known organizations, it affects the brand image in the global markets. The conflict escalation and withdrawal from the alliance can be damaging for the organization’s long term branding and relationship building strategies. Moreover, the risk of supply chain failure can arise because of supplying the panels to Sony on time and enduring that smooth supply chain activities take place on both ends. It requires integration of supply chain activities during such strategic alliance which often fails and results in inefficiency (Hitt, Ireland & Hoskisson, 2014).
It can be found from the above analysis that there are advantages as well as risks of cooperative strategies such as strategic alliances of Samsung with Kodak and Sony. Cooperative strategies aim towards sharing, collaborating and integrating the skills, competencies and knowledge to achieve sustainable competitive advantage based on common shared objectives. To minimize the risks associated with strategic alliances and joint ventures which are part of cooperative strategies; organizations like Samsung can enhance integration and collaboration activities. This would help in reducing the conflict of interests and create a positive sustainable strategic alliance.
Hitt, M., Ireland, R. D., & Hoskisson, R. (2014). Strategic Management: Concepts: Competitiveness and Globalization. Cengage Learning.
Lee, W. I. (2014). Technology Management Strategy for Activating the Industry-Academia Cooperation. Technology Management, 15(1), 211-219.
Nevin, M. M. (2014). The Strategic Alliance Handbook: A Practitioners Guide to Business-to-Business Collaborations. Ashgate Publishing, Ltd..
Schoemaker, P. J. (2012). How to link strategic vision to core capabilities.Sloan Management.