CORPORATE SELF-ANALYSIS

1. CORPORATE SELF-ANALYSIS

2. INTRODUCTION Corporate Self-Analysis is the task of examining your own company This should be undertaken at the beginning of the alliance-planning process to avoid mistakes on inadequate understanding of your company’s motives and goals. Cross-functional team of people from various parts of the company should together develop the self-analysis to ensure that all perspectives are examined.

3. INTRODUCTION • The Corporate Self Analysis process consists of six steps: • I. The Culture Cluster • II. The Financial Picture • III. The Business Definition and SWOT Analysis • IV. The Possible Strategic Direction • V. The Senior Executive Input • VI. Selection of Alliance Strategy

4. I. THE CULTURE CLUSTER A corporate culture is a set of coping mechanisms, or adaption skills, that members of the culture use both within and outside their corporate environment. The Culture Cluster can be divided into ten separate areas and the analysis is acceptable exercise for most potential partners.

5. I. THE CULTURE CLUSTER • 1. Styles of decision making and problem solving • This covers all the ways decisions are made in a company, which one of the most common areas for culture clash in alliance. • The decision making analysis should involve the individuals who will most likely be involved in an alliance. • An important aspect of decision making is conflict resolution: the facilitation and solution-finding process, which generally involved in finding compromises.

6. I. THE CULTURE CLUSTER • 2. Authority- Delegation and Control; Reporting Methods • “How is authority delegated and what management controls are in place, including reporting responsibilities?” is the question you must ask. • The focus should be on the functional areas that would be involved in or affected by the alliance.

7. I. THE CULTURE CLUSTER • 3. Work Behavior • The topic of work behavior comprises dress, management of work space, arrival and departure norms, and whether a company is task- or process-oriented. • Companies in the early stages of the life-cycle will evidence longer work hours, more flexibility, and more casual dress while companies in the later stages will generally be more formal.

8. I. THE CULTURE CLUSTER • 4. Compensation and Incentives • The problems occur when an alliance might call for a different way of looking at compensation. • For example, problems may arise if sales representatives of companies within the same alliance are offered different incentives. • 5. Leadership and Mentoring Styles • Leadership styles are often related to stages in the corporate life cycle. • For example, an American leader would encourage employees to give ideas to create involvement while this kind of leader is perceived to be weak and indecisive in an Indian culture.

9. I. THE CULTURE CLUSTER • 6. Communication- Oral; Written; Nonverbal • Miscommunications can occur on many levels when you combine country cultures and beliefs. • Leadership sryles vary in close relationship to the degree of openness in discussions. • When managing an alliance, understanding the differences in communication styles helps to lessen the tension. • 7. Levels of Secrecy • The level of secrecy is also related to stages in the life cycle, with start-up companies being most open. • It is critical to understand how the secrecy issue is handled in your company in order to develop a process that will be compatible with your potential partner.

10. I. THE CULTURE CLUSTER • 8. Attitude Toward Time and Milestones • Individuals, companies, and countries differ enormously in their conception of time. • Milestones have to do with the time-related expectations that re placed around alliance projects. • 9. Ethics and Values • In a corporate environment, ethical codes are mostly unwritten. Ethical attitudes permeate the entire culture. • Your ethical position should be leveled with your potential partner’s. • The topic of ethics is important has it is frequently the cause of an alliance deal breaker in the recent years

11. I. THE CULTURE CLUSTER • 10. Personal Versus Corporate Goals • To what extent do personal and company goals overlap? This is of particular importance in family-owned companies. • The goals maybe unclear to anyone except for the family members. • The analysis can be done on a “need-to-know basis; one on one discussions with the key family members can elucidate corporate actions and direction.

12. II. THE FINANCIAL PICTURE We must look at the financial history and past plans for the company, examining in particular those areas in which financial projections were not attained and performance fell short of goals. The financial picture will depend once more on your corporate personality and desire for detail, but many organizations look at the past year or two, and especially, if appropriate, at the financial results of particular divisions of the company that may be involved in the planned alliances.

13. III. THE BUSINESS DEFINITION AND SWOT ANALYSIS • It is time to refresh SWOT definition, updating it with your knowledge of the present status of the business in order to achieve two goals. • 1. To define the existing business in the light of today’s reality. • 2. To assess your future potential in the same light. • The approach of doing SWOT analysis is to list the major characteristics of a company in a corporate profile on one page.

14. III. THE BUSINESS DEFINITION AND SWOT ANALYSIS • Product, Service, and Market Evaluation • All the information above should be included in the company SWOT analysis. • Ask and answer questions such as “Has the product been tested and proved in the home market?” • The Impetuous Texans • A privately held company in Germany emerged as the potential partner for a mid-sized Texas in the laser instrumentation business. • Looking for a partner, they discovered a German company with Europe wide sales and distribution. • The problem for the Texas company was that they wanted to sell their invention in a market with which they were not familiar.

15. III. THE BUSINESS DEFINITION AND SWOT ANALYSIS • What the U.S. company did was they went immediately into the analysis of important markets and focused their attention on obtaining the broadest distribution network rather than on the appropriate alliance goals, strategies, and structure to achieve the desired results. • They let the company representatives traveled from Texas to Germany with a prototype of the product. The product was left there for the German company to examine, and the U.S. team returned home. They did not hear from the German company for many weeks. • Finally they faxed the company and received a reply, indicating that the product was not accepatable and that the German company declined the distribution opportunity.

16. III. THE BUSINESS DEFINITION AND SWOT ANALYSIS • The major failure factors in this alliance opportunity: • 1. The product launch was premature. Poor quality control and inadequate testing had made the product “an orphan” in the parent company. • 2. Cultural understanding was lacking on both the corporate and country levels. The U.S. company was in the Hockeystick stage. • 3. Overconfidence. The Hockeystick company ignored the possibility of a hostile technical evaluation. • 4. Too few resources, both human and capital, had been allocated to the project.

17. III. THE BUSINESS DEFINITION AND SWOT ANALYSIS • Some damage control was subsequently instituted. The CEO of the U.S. company visited Germany and recommenced discussions, promising a number of actions. • 1. The U.S. techinicians would accompany the product to Germany after it had been subjected to further R&D in the United States. • 2. The U.S. management would rework their long term goals. • In the end, the U.S. company sold the technology for far less than they had invested in developing it, and the German company, after further development, integrated it into one of their smaller product lines.

18. III. THE BUSINESS DEFINITION AND SWOT ANALYSIS • Organization Responsibility • SWOT analysis should include a process of pinpointing sources of strength for membership on the alliance team. • Human resources issues should also be discussed in the planning stage when the issue is addressed of who in the organization has responsibility for the alliance. • A final point must be made concerning the human side of the capital investment associated with these relationships.

19. IV. THE POSSIBLE STRATEGIC DIRECTION After the company put together all the relevant information, participants in this process will need to discuss the strategic direction. The company then has to direct its alliance activity in order to reach the strategic direction. In many large companies, the strategic information gathering and the SWOT analysis is done repeatedly by each division. For example, in the departments of business development, corporate alliances, or strategic planning, there should be the same information of competitive analysis in these departments.

20. V. THE SENIOR EXECUTIVE INPUT “Golf Course alliance” arises when two chief executives meet on the golf course and agree that they should do something together. “The Designer alliance” is similar to the previous one in which the alliance between big companies is announced, and this alliance is expected to affect the entire industry. “A Glass of wine alliance” is an alliance that had begun with a series of conversation, the result of a strategic vision and teamwork at lower company levels decide to enter into a relationship between the two companies.

21. VI. SELECTION OF ALLIANCE STRATEGY • You now should be in a position to develop a mission statement for you alliance activity. • The mission statement should have both qualitative and quantitative elements. • There are four good reasons to develop a formal, explicit, written statement of your objectives and your success criteria for the alliances. • 1. Developing a mission statement helps your company to evaluate the success in the alliance. • 2. Success is a moving target. The industry changes and the partners’ goals, personality characteristics, and life cycle stages change can affect the goals and success criteria for the partnership.

22. VI. SELECTION OF ALLIANCE STRATEGY • 3. If you do not clearly state your success criteria in the planning stages, it will be difficult to make strategically correct decisions during the criteria-development and partner-selection stages. • 4. Memory is short. New team members in both planning and implementation may not remember the starting position in relationship development and may undervalue some of the concessions and compromises that have already been made, as well as the achievements already enjoyed.

23. SUMMARY • The Corporate Self Analysis process consists of six steps: • I. The Culture Cluster • II. The Financial Picture • III. The Business Definition and SWOT Analysis • IV. The Possible Strategic Direction • V. The Senior Executive Input • VI. Selection of Alliance Strategy • If all the steps above have been taken, you are now in the right way to avoid common pitfalls in poorly planned and executed alliances.

24. SUMMARY The Corporate Self-Analysis process can be covered in not less than three months in large companies, usually longer, and smaller companies can generally accelerate the process to a couple of weeks. After the Corporate Self-Analysis, the next major task is developing alliances partner criteria, which can take from a few weeks to several months, depending on the corporate personality.