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Describe the basic concept behind strategic alliances
Strategic alliance occurs when two companies decide to share resources. These companies are usually at the same level of technological advancement and would want to share the non-consumable resources. Strategic alliance resources usually aim at transferring knowledge between employees of the two companies (Zoogah, Vora, Richard & Peng 2010). During this partnership, each company remains independent, while acquiring a mutual opportunity from the other company. The importance of this strategy is to assist the members to benefit from each other and find new markets. Growth opportunities will arise from comparative advantage when trying to outsmart competitors. Usually, companies forming these alliances are in the same industry. This type of alliance is called horizontal strategic alliance (Zoogah, Vora, Richard & Peng 2010).
The advantages of strategic alliances include shared risks, opportunities for new markets, sharing intellectual property, increasing access to capital resources, and enhanced economies of scale. The need for strategic alliances is not limited to capitalizing on already existing opportunities, but also includes opportunities for research and development in order to innovate products and services.
In what ways can strategic alliances facilitate a firm’s quest for quality?
In the terms of customer focus, strategic alliances improve customer services in the following ways (Zoogah, Vora, Richard & Peng 2010):
- Long term positive relationship guarantees customers continuous production. When the supply chain makes a long-term commitment with its stakeholders, buyers also make a long-term commitment to obtain goods and services from the company;
- Strategic alliances improve customer loyalty, because related commodities are being processed, packaged, and marketed together, so that customers can buy them from one point of sale;
- Strategic alliances form co-operative buying strength, hence increasing product varieties that are complimentary, but not supplementary. Co-operative buying strength is also a factor of reduced product pricing because of cheaper raw materials;
This collaboration, among other functions, seeks to improve production. Improved production utilizes competitive technologies, intelligence production methods, green manufacturing technologies, effective communication strategies with reduced paperwork, and modern working culture (Zoogah, Vora, Richard & Peng 2010).
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What is a benchmark firm?
Benchmarking is described as a way for the business to find a point of reference from other firms in the similar business. In the business world, benchmarking tries to compare key success metrics of companies in the same industry. This business survey strategy assists the company to collect critical information that will assist it in planning and avoiding costly mistakes. Managers use this method as an educative tool in making decisions about marketing, manufacturing and supply in their industry (Moriarty 2011). Quality and useful benchmarking will involve a high performing firm and firms, which are closely related in terms of product or services delivery. For example, benchmarking is useful if it occurs between Southeast Airlines and American Airlines.
Why is it good practice for a benchmark firm to open its doors and allow others to view its operations and tour its facilities?
Benchmarking typically measures quality, cost, and time metrics. If a firm opens its doors for this exercise, it will benefit from recommendations and reports that will come from the teams conducting the practice. Firms assume that this is an audit exercise, which seeks to evaluate the strengths and weaknesses of the company’s evaluation. The company might not be able to see its default areas. Benchmarking will help identify these defaulting areas and assist the company to find ready solutions. The company will also benefit from free technical and expert recommendations on how to improve these areas.
What are the pros and cons of becoming a benchmark firm?
Pros are the following:
- Assists the companies to know the competitor’s output and the process used to reach this output;
- Empower organizations to perform better than competitors, if they implement their competitors’ winning strategies;
- Benchmarking is an avenue to new innovative ideas;
- Benchmarking is the way to complete processes faster, better and cheaper, while maximizing the means of profitability and minimizing expenses;
- It sets the foundation for enhancing competitiveness and business survival in a given industry through the performance improvement (Yasin 2002).
Cons of benchmarking include:
- Benchmarking is another operational expense for the firm, because the staff doing the activity is compensated, the process is time-consuming, and the metric statistics from the process have not been absolutely effective;
- The cost-effectiveness of benchmarking is unknown;
- Benchmarking is more likely to look at past circumstances that led to the success of the firm, while these circumstances are not the same as future requirements for production;
- Benchmarking causes complacency, especially when a company discovers that it is the market leader. This leads to arrogance and attempting to stay in the comfort zone (Yasin 2002).
Discuss the advantages of concurrent engineering
Another name for concurrent engineering is simultaneous engineering. This method assists with processing of commodities at different stages, simultaneously and concurrently. The purpose of concurrent engineering is to reduce the time it takes to produce a product, hence leading to the quality final product without compromising on the used resources. The method is also cost-effective, meaning that it reduces product manufacturing expenses (Koufteros, Vonderembse & Doll 2001). It is an advantage for both the company and consumers, because the company will reduce the cost of production, and eventually lower the product price for the benefit of consumers. Concurrent engineering can be thought of as a modern product manufacturing technique with notable benefits. The main advantages of this strategy include:
- It enhances competitive advantage. Concurrent engineering is responsible for fast product manufacturing. The supply chain, and especially product creation, need minimal time, hence availing the product in the market in the shortest time possible.
- Concurrent engineering enhances productivity. Discovering new methods of production is a rationale for increasing the production power for manufacturing firms.
- This strategy enhances decreased design and development time. Concurrent engineering allow firms to produce products that suit the market at a particular time. Market’s tastes change with time, and older production methods are not only becoming obsolete, but also of low quality as compared to the previous production methods.
- Concurrent engineering is beneficial as a long-term strategy. This product processing strategy provides manufacturing managers with a successful long-term investment. The fact that the process is dynamic in terms of accommodating a wide range of products promises the firm a wide use (Sharman 2007).