Selection Criteria and Characteristics of a Good Collaborative Partner - Research Paper Example

Name: Narinkar Singh Deogon Tutor: Dr Patrick Reid Module: International Joint Ventures Course: MSc Management for Business Excellence Date: Table of Contents Table of Contents 2 List of Tables and Diagrams 3 Selection criteria and characteristics of a good collaborative Partner 4 Selection Criteria 4 Partnership selection flow chart 4 Group of priorities during selection 5 High Level Implementation Flowchart 7 Characteristics of a Good Partner 8 Factors that Determine Whether a Partner is a Good Match. 10 Group of priorities in the selection criteria 10 Strategies and Policies of the partner 10 Communication methods used by the partner 11 Communication Management Model 12 Mutual Dependency 13 Skills of the Partner 13 Direct and Indirect Impacts of a Good Match 14 Measures to create a good partnership 15 Creating good working strategies 16 Creating a good information flow mechanism. 17 Information sharing diagram 18 Establishing close working relationship structures 18 Working together flow chart 19 Creating a change Management strategies 21 Creating a dispute Resolution mechanism 22 Establishing risk Mitigations measures 22 Bibliography 23 List of Tables and Diagrams Table of Contents 2 List of Tables and Diagrams 3 Selection criteria and characteristics of a good collaborative Partner 4 Selection Criteria 4 Partnership selection flow chart 5 Group of priorities during selection 5 High Level Implementation Flowchart 7 Characteristics of a Good Partner 8 Factors that Determine Whether a Partner is a Good Match. 10 Group of priorities in the selection criteria 10 Strategies and Policies of the partner 10 Communication methods used by the partner 11 Communication Management Model 12 Mutual Dependency 13 Skills of the Partner 13 Direct and Indirect Impacts of a Good Match 14 Measures to create a good partnership 15 Creating good working strategies 16 Creating a good information flow mechanism. 17 Information sharing diagram 18 Establishing close working relationship structures 18 Working together flow chart 19 Creating a change Management strategies 21 Creating a dispute Resolution mechanism 22 Establishing risk Mitigations measures 22 Bibliography 23 Selection criteria and characteristics of a good collaborative Partner Selection Criteria The process of selecting the right partner to work with may be quite complicated. This is mainly because it requires some procedures aimed at identifying the right partner. A list of potential partners will be required for the purpose of scrutinizing each of them so as to choose the right partner. The partners should then be evaluated depending on their characteristics. The characteristics of the partner will determine whether the partner is the right one or not. The characteristics includes factors like financial capabilities, ethics, professionalism and communication means. A reliable partner should then be selected based on the characteristics. This process should be done after thorough scrutiny of all the potential partners. For the purpose of establishing the working relations, a contract should be put in place and rules and regulations concerning the operations are made. The rules should be agreed on with the partner to avoid any future misunderstandings. Partnership selection flow chart Group of priorities during selection The relative size of a company also determines the success rate of an international joint venture. A good partner should be of the same size as the company in terms of financial capabilities and infrastructure. A manager should consider the size of a firm before making any decision (Stahlhut, 2010).Entering into a joint venture with a smaller firm will not yield much fruits. Entering into a partnership with a small firm will mean that the larger company will have to make most of the decisions and provision of financial support towards the venture. Small firms and large firms have a lot of differences when it comes to dealing with financial situations and other strategies of operations. If two small companies enter into a partnership, the venture may also fail since the chances of magnifying the weaknesses of both companies are very high. This will lead to the two companies failing to achieve the goals of the venture and worse fail to realize any profits. However, in some circumstances small firms have been able to succeed in joint ventures. It is therefore important for a manager to consider the size of the company he or she may want to venture with. It is advisable for the company to partner with an equally large company as compared to a small company. This will ensure that the issues of finances can be easily solved and the policies of large companies may be the same. An example being the international joint venture between coca cola company and Heineken which are both large beverage firms that have succeeded in their objectives. It is also important to put into consideration the operating policies of the intended partner before making a decision. Companies do not have the same operating policies based on their locations, government regulations, market environment and the objectives of the company. It is thus crucial for a company to put into consideration the similarity of operating policies. A company should ensure that it first negotiates with the partner before regarding the policies before making any decision (Gupta, 2000). Communication barrier is also a common problem for international joint ventures. It is important for the manager to take note of the cultural and language barrier that exists in different countries. Communication barriers may lead to inaccuracy in the flow of information and thus affecting the joint venture. The main reason for taking note of communication is that it has effects on company. Extra expenses are usually incurred during the process of training the employees so as to enable effective communication (British standards, 2011). The political issues should also be put into consideration before choosing a partner in a certain country. The political environment of the nation may have general effects on the venture. In countries with political instabilities, the venture may not succeed due to civil war or armed conflicts. An example of a country that a venture face challenges is Somalia in the horn of Africa. Entering in a joint venture in such country is very risky. This may lead to massive losses for the venture as it may end up being looted or its assets may become damaged. The political situation is thus closely linked peace and tranquility in the area. On the other hand, some organizations have a long history of associating with the politicians or the people in power. This is aimed at winning tenders or other financial benefits. Such companies are not safe to trade with. This is mainly because the venture will not be independent but instead be manipulated. This may lead to its collapse or it may attract unethical issues which will end up affecting the company. High Level Implementation Flowchart Characteristics of a Good Partner A good partner should be trustworthy and ethical; this will Play a big role in averting any future crisis. The partner may end up becoming a competitor after the venture has been dissolved. Sharing of crucial secrets is a must during the operations of the international joint venture. If the partner is not trustworthy they may take advantage of the situation and refuse to join any venture with the company in future after mastering the secrets of the company. Other companies that are not trustworthy may also misuse the patent of the company and hence deny the company an opportunity for revenue. The manager should thus put a lot of emphasis on the matter of trust and ethics. An example of a venture that worked through trust from the partners includes that of Apple and AT&T. The two companies worked together but made an agreement not to use each others information in their operations. The venture was very successful and good relationship has always been maintained even after dissolving the venture. A good partner should always have the capacity of providing technical skills and knowledge that will be required during the operations of the venture. This will form the basis of assurance that the partner will be able to play their role in the joint venture. This is important, as it will determine the commitments of the partner. If a partner cannot meet the expected requirements then the whole deal is questionable and it may easily fail (Schneider, 2002). The technical capabilities of a company are mainly determined by the success factors of the company. It is a very important factor considering that the two collaborating companies may not have equal strength in some areas. The manager venturing into international joint venture should put into consideration the weaknesses that may exist. This will determine whether it will be possible to work with the partner or not (British standards, 2010). The partner should be able to complement the weaknesses of the company. If a partner has similar weaknesses, it will be quite tough for the venture during the problem solving process. if it concerns the areas of weaknesses of the partners. The dependency level should be equal in when making decisions and solving problems. Ventures require that all the partners participate equally in the process to increase the chances of the venture surviving during difficult times. On the other hand the stability of the company may be affected if the company is small and has many weaknesses. The small company may end up collapsing once the venture is dissolved if it depended too much on the large company. The international joint venture may fail if necessary actions are not taken to identify the abilities of the partner to collaborate with. The managers should also take note of the financial situations of the companies they want to partners with. Some of the companies may be quite dependant on the other in terms of finances. This slows down the development and the undertaking may not thrive according to the expectations. The partnership is not supposed to benefit only one organization but all the partners should benefit equally (Wilmerding, 2005). A good partner should also be willing to enter into negotiations incase of any contract ( Schaan, 2011). The negotiations should be aimed at strengthening the bond between the partners and not for the sake of benefiting one of the partners. The negotiation skills should mainly be aimed at ensuring that the venture is successful. The manager should also ensure that the negotiation skills of the partner are robust and focused on the commercial aspects of the venture. The negotiation should also include all the paperwork which the partner should be able to fully adopt. A good partner will always abide by the terms of the partnership and the contracts. This will have a direct impact on the venture since the collapse of the venture may result from poor negotiation and partnership. The indirect impact may include the loss of reputation by the company incase of constant disagreements and failure of the venture. Flexibility is also an important aspect that a manager should look for in order to end up with a good partner. A flexible partner will be able to cope with any issue whenever it arises. Situations may turn out to be complicated for the venture due to various reasons which cannot be avoided. The global economic crisis is an example that has a lot of negative impacts to businesses. This may lead to collapse of the venture if the partner is not flexible enough in terms of adjusting to situations and priorities. Flexibility of partners always plays an important role when dealing with risks and uncertainties. This is because risks and uncertainties will always surround any business venture. A flexible partner should thus be ready to take any risk that may come along the way. A partner who is not flexible may not have the ability to take risks and will depend on the other partner to act in times of risks. This may impact the company in terms of profitability and other financial aspects of the joint venture. Factors that Determine Whether a Partner is a Good Match. Group of priorities in the selection criteria Strategies and Policies of the partner It is quite demanding to find a good match in an international joint venture. This is considering the diversity that exists between different companies that operates in different countries. The most important consideration is the compatibility of cultures for the partners. A good match will always have the same operating policies as well as strategies similar to those of the company. If the companies have the same policies and methods of operations then it will be easy to operate together. A good partner is thus the one who has the same targets and operational procedures as the company (Wolf, 2000). A right partner should also shares the same vision as the company in terms of achieving the goals and objectives. The manager should put this into consideration when assessing the partner to know whether that partner is a good match or not. A right business partner should also be responsible and play the roles that they are supposed to play. This is mainly for the success of the joint venture. Communication methods used by the partner A good partner will always have compatible communication methods and styles. Communication is the most vital aspect of a joint venture and it determines whether the partnership can work. A good communication mechanism makes the communication with the employees and the partners easier and thus beating the barriers of communication. It may prove quite challenging for companies with totally different communication skills and styles to operate. An example is a Chinese firm seeking partnership with Arabic countries. These two are quite diverse and yet they have to work together for the purpose of achieving a common goal. If the communication method is not similar, then there is no way the companies will be successful. Basing on the fact that the two have different methods of writing and the language differences, it may be quite complicated. Communication Management Model It will be reasonable for the company to work with the company that has the same communication style despite the diversity in language and communication methods. The good match in this case will be a company that communicates using a different language or style. If both companies have the capacity to use English or French both in writing and speaking, then it will be easy for the companies to enter into a venture. Compatibility is thus the most important factor that determines the suitability of a partner. Without the compatibility, then it will be difficult for the business firms to work together. Mutual Dependency A good match will always ensure that the goals of the venture are met and will always be fully committed to the process of ensuring its success. The rate of dependency is always equal among the partners with no partner depending on the other. A good match is therefore committed, independent and plays their role equally. A situation where one of the partners is dependent on the other shows that the partnership may not last for long but it may instead collapse once there are any problems facing one of the partners. A good match will also take the process very seriously during the formation stage and would always make sure that all the mechanisms and the machinery are in place. This includes all the laws that govern the process and all the terms of agreement. Most of the ventures that fail to succeed are mainly involved with the wrong partners. Thus in most cases results to conflicts and disagreements, which lead to the collapse of the venture. Skills of the Partner A good match ensures that the profits are shared according to the agreements and also all the other procedures are carried out strictly abiding to the terms of agreements. A good match is able to fully adapt to the policies and objectives of the venture. The compatibility of skills is also a factor that defines the type of partner that the business enterprise has entered into. When a company has compatible skills then the partner is a good match and the chances of success are high. In the technological sector, a good match will always have the same skills when it comes to innovations. This promotes innovations as both companies have the capacity to discover new ideas. With the combination of both companies, then it can be taken as a good match. A good match will also have compatible management skills used in the operations of the venture. The partners may be a good match in some aspects and may have the same abilities to perform the technical aspects of the venture but the diversity in the management styles may cause the venture to collapse. The diversity of the management has the biggest impact on the venture (Cavusgil, 2008). The compatibility in the management system will thus be quite useful in supporting the technical aspects which are mainly practical and innovative parts. A good match should thus poses the same managerial styles similar to the company. Direct and Indirect Impacts of a Good Match A good match will ensure that the venture is successful and it accomplishes all its objectives. The company will greatly benefit from a good partner. Both partners will also have direct and indirect impacts if they are a perfect match. The process of solving conflicts will be well established and the partners will understand each other better (Roos, 2005). The profits will be realized by the partners due to the proper working relationships. The good partnership will create an atmosphere of growth for both organizations. This will also see the two partners working together closely for the sake of ensuring that the venture is able to bring in more profits. The indirect impacts of a good match will also be realized by both partners. The indirect impacts will include the trust that will exist between the two partners. The partners will have faith on each other and thus encouraging the growth of the venture. This will also lead to a close working relationship which will be important in promoting innovations. Respect for each other will be built based on the god partnership. This will reduce the chances of boardroom wars and accusations between the two partners. A good match will also have the same vision with the partner and thus more energy will be focused on the development of the venture. This will automatically lead to the success of the international joint venture Measures to create a good partnership Creating good working strategies Most of the joint ventures that have not been successful did not put in place enough measures to ensure that the venture is successful. The starting point is very crucial and will determine whether the venture will succeed or not (Beamish, 2003). The inputs in the initial stage will form the foundation and the principle of the success of the venture. It is good to start by putting in place measures that will establish a good working relationship. It is important to start well with projects that will succeed. This will form the basis of the success of the venture as there will be an increase in morale. It will also create a lot of faith with the partner and working together will be successful. Once the initial project has been successful, then it will be easy to work together with the partner. However, starting with complex processes may have negative impacts for the venture. This is because failures may occur and the partner may start becoming suspicious of the venture. This may result into the collapse of the venture even before it grows. It has been quite challenging for most international joint ventures when it comes to communication. Communication process is also very crucial when it comes to determining the success of the venture. A good communication system with the partner is a requirement. This is considering that the international joint venture partner could be diverse. A strong communication network is therefore important. Face to face communication will be encouraged between the members. Meetings will also be arranged frequently with the partner. This will play an important role in ensuring that the members know each other better and communication is improved. Communication is also a strong factor that improves working relationships (Bamford, 2002). If the communication process is good, then the venture will be strong enough. However, when the communication process is poor, the partners will not enjoy the benefits of the venture and it may end up collapsing. Creating a good information flow mechanism. Information is power in the international joint venture. It is important to share information freely in the venture. The information required to run the venture must flow freely and in an orderly manner. This will play a big role in making the venture successful as well as making the relationship with the partner better. The free flow of information enhances confidence with the partner. This will increase the chances of success of the venture. Information regarding the finances of the venture should flow freely in the venture between the members. This will ensure that the suspicion among the partners is completely eliminated. The suspicions caused by the issues relating to finances can easily break the trust of the partner. The collapse of most of the international joint ventures has been caused by lack of transparency when it comes to handling of the financial matters. However the level of sharing information regarding the operations of the partners in their companies should be limited. This is because the partner may become a competitor at one point. However any information regarding the operations of the venture should flow freely to create more trust with the partner. Information sharing diagram Establishing close working relationship structures It is important to work together with the partner towards achieving the same goals and objectives. This can be done by clearly setting out the goals that the venture should achieve. This will enable the partner to work for the sake of attaining the set goals. This will also play a big role in uniting the partners as the partner will try to be dependant. It will also reduce the chances of the partner becoming over ambitious, which may easily translate, to disagreements that may threaten the existence of the venture. It is also important to devise means of measuring the set goals and objectives to determine if the target is being achieved. Performance indicators will also be put in place to guide the venture as well as ensure that the partner is working towards achieving the goals. However the performance indicators should be agreed after extensive consultations (Beamish, 2004). The indicators should be drafted in consultations with the partner. During the assessment, both parties should be actively involved and the performance be measured against the set indicators. The report should be accurate enough so as highlight all the areas that needs to be improved. This will promote a close working relationship with the partner and thus ensuring the growth of the venture. Working together flow chart It is essential for the partner to be flexible in the operation means. The partner should agree on how they can be flexible in their working relationship as well as ensuring that the goals and objectives can be changed depending on the prevailing situation (Vaidya, 2009). This should be done with close consultations between the partners. It should not reach a point where the partner feels that changes should be made while the other one is not in agreement with the changes since they had not agreed upon. It is also reasonable to expect a lot of changes in the operations of the business considering the current changing global situation. Flexibility will thus enable the partners to work together regardless of the situation. This will be important for the partnership during tough times whereby decisions have to be made for the purpose of arresting the situation. However, despite the flexibility, no partner should make any changes without consulting the other partner. Consultations should be the order of the day regardless of whatever circumstance (British standards, 2011). Creating a change Management strategies Any business venture will have to undergo changes in the course of operations. The changes could be either negative or positive. The changes will greatly affect the operations of the organization. If proper mechanisms are not put in place to combat the changes, then the employees and the management may be caught off guard which may easily plat a role in the collapse of the venture (Talat, 2010). The measures that will ensure that a good relationship is in place between the employees will include the areas of training the members of staff regarding the issues that may face the venture in times of change. Training prepares the employees and equips them with the necessary knowledge that s required to deal with changes. Employees at all levels from both companies should be trained. The change management will however be possible if the top management is determined to tackle it (Kotter, 2006). A succession plan should be put in place to ensure that any member of the staff within the venture is replaced immediately they leave or retire from either of the companies. This will pay an important role in eliminating the chances of the venture being in a dilemma since it cannot replace a member of staff. It is also important to agree on how to act incase the partnership is faced with challenges or changes that may hinder operations. Flexibility of the partner will also be an important tool for the purpose of combating any changes. Creating a dispute Resolution mechanism International joint ventures will always have disputes along the way. This is considering that even the best of relationships will always have disputes. However the extent of the dispute will always vary. Regardless of the degree of dispute, it is important to note that any dispute can be potentially damaging depending on how it will be dealt with (Rosenbloom, 2002). It is thus important to approach any disagreements in an amicable manner. The approach with the aim of blaming each other should not be used at all. The pointing of fingers will not solve any problem since it has the potential of magnifying even a small dispute to potentially damaging one. It will be important to approach the situation with a positive spirit ad expect a win–win situation. This will alleviate problems that may damage the relationship between the international joint venture partners. If the disagreements are handled in an amicable manner, then the venture will be able to achieve its objectives. In ventures were disagreements are not properly solved, it is common to witness court battles which damage the relationship between the partners and a subsequent fall of the venture. Establishing risk Mitigations measures The relationship with the partner can also be improved by ensuring that both parties know about the risks that may occur in the process of operating the joint venture. This is considering that risks wills always be there no matter how careful the partnership is. Understanding the risks will ensure that the partnership is able to device the means of mitigating it. The partner should also be able to understand that the risk management is a joint exercise that needs to be addressed together. The partnership should ensure that it work thoroughly on the mitigation process of the risk rather than transferring them (Glaister, 2010). The risks from the collaborative working should be identified so as to ensure that measures are put place. Once the partner is able to understand these concepts, then it will be easy to work together and face any risk that may occur during the partnership. This is considering that risks have the potential of damaging any business including the international joint ventures. Risk mitigation process has both direct and indirect impacts on the partnership. The direct impact of the risk mitigation process is the ability to avert any loses from the risks and hence increases the profits for the venture. The indirect impact includes the close working relations between the partners as well as clearly understanding the real risks that the venture may face (Cummings, 2012). Bibliography Wilmerding, A, 2005, Venture Capital Term Sheets & Valuations, Aspatore Books. Wolf, R, 2000, Effective International Joint Venture Management, M.E. Sharpe. Bamford, D, et al, 2002, Mastering Alliance Strategy, Jossey-Bass. Rosenbloom, H, et al, 2002, International M&A, Joint Ventures, and Beyond: Doing the Deal, Wiley 2nd Ed. 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British standards, 2011, Collaborative business relationships – Part 2: Guide to implementing BS 11000-1, BSI 2011, ISBN 978 0 580 73086 3. Cavusgil, S, 2002, Doing Business in Emerging Markets: Entry and Negotiation Strategies, Sage Publications Ltd. Kotter, J, 2006, Leading Change Why Transformation Efforts Fail, Havard business school publishing corporation. Cummings, J, et al, 2012, Best-fit Alliance Partners: The Use of Critical Success Factors in a Comprehensive Partner Selection Process, Long Range Planning, vol 45. Read More