Strategic Alliance of Two Companies - Essay Example

Strategic Alliance of two companies Summary: A strategic alliance is formed when two or more companies merge together whether they may be for financial purpose, to enlarge the business and to enhance the performance of the business. The Strategy Design suggests as to how to align with the other company. What should be the process? The companies chosen here are Sony and Ericsson. The two companies merged together in the year 2001. Ericsson had the technology of making cell phones and Sony being a global leader in the entertainment industry was meant for aligning with each other. The main reason for the merger of the business was to compete against the other mobile brands operating in the market. After being aligned together Sony Ericsson in a short span of time captured the market share of Nokia, Motorola and Samsung. The main reason behind this gaining of market share was the reasonable price of the phone, additional features, attractive looking of the mobile phones. Slowly and gradually they are making advancement in technologies and bring better phones into the market for the consumers. The consumers are satisfied with the products of Sony Ericsson and the eye catching mobile phones of Sony Ericsson are a brand in the minds of the customers. The Stylishness of the phone along with the features including Camera, Blue tooth, Infrared, Java enabled games, mp3 player being available at a reasonable price, and easy to use mobile phone. Most consumers are opting for the Sony Ericsson Mobile phones. With the changing times, people have started to adapt to changing technologies and quite rightly so, Sony Ericsson has caught on the bandwagon well. Relevance Section: A strategic design is a trade process that comprises plans as well as its organization into the strategy configuration process, and applies at every level of the business. Strategic alliances are chances for small businesses to achieve things that would otherwise take much more money or staff time. There are several ways small businesses can work together with other business unit. While you may be courageously stepping down the path of running and increasing your businesses, there may come a time when you need to form strategic alliances for your business. Given the current state of business today, competitive pressures are forcing companies to come-up with creative ways to improve brand identity, attach with clientele and draw top-notch staff. Corporations are teaming up more today to enhance their competitiveness in the marketplace and keep speed with the quick modification of technological improvement. More than 20,000 corporate alliances have been formed worldwide over the past two years. Strategic alliances are shaped when one company alone cannot fill the gap in helping the needs of the marketplace. It involves two companies that pool jointly knowledge and capital to enter new markets, share financial risks and get products and services to market faster. Some strategic alliances are formal written agreements; others are informal as a handshake. With the Internet, some alliances are entered into after several email exchanges, even without the physical meeting of the parties concerned. Some alliances involve sharing of resources and an exchange of funds; or sharing of traffic between two dotcoms; others are as simple as a cooperative marketing arrangement. Whatever their structure, one goal prevails: strategic alliances are opportunities for small businesses to accomplish things that would otherwise take much more money or staff time. Small business owners, with their incomplete resources and marketing reach, could profit from supportive planning with other corporations and business entities. Combining forces with another corporation can allow your business to finance certain services or production functions by sharing expertise, assets, expenses, and risk without necessarily incurring cash debt or trading equity. For small businesses, strategic alliances often consist of simple "exchanging" with customers, suppliers, and even competitors. Background: Ericsson : Ericsson was established in the year 1876 by Lars Magnus Ericsson as a telegraph apparatus mending shop. In the early years after its establishment the company Ericsson became a market leader in Manual telephones afterwards it launched automatic phones. In the year 1916 Ericsson inaugurated the world’s biggest ever manual telephone exchanges which gave out about 60,000 lines. A 35 - 40 percent market split was with Ericsson of the established cellular telephone systems. Stockholm, Sweden is where the head office of Ericsson is located. Sony: One of the world’s major media organizations was established in Tokyo, Japan. One of its partition Sony Electronics is one of the foremost producers of electronics, videos, communications and information technology both for the customer and the specialized market. The main company of the Sony group is Sony Corporation and it has six different sections comprising of electronics, music, games, pictures, financial service and others. This has made Sony one of the most established entertainment organizations in the world. In U.S.A Sony’s business comprises of Sony Electronics Inc. The Merger of Sony and Ericsson: In the year 2001 two companies, one a Japanese Electronic consumer corporation by the name of Sony and the other a Swedish Telecom Company by the name of Ericsson decided to merge their mobile communication business. The main reason behind this merger was to compete against the top operating mobile brands available in the market mainly Nokia and Motorola. The Venture started working on October 1, 2001 with a capital of $250 million from each company. A total of 3500 employees were hired in the field of Marketing, Sales of the product. The head office is based in London with the research and development teams all over the world including Sweden, United States, Japan, China, and United Kingdom. The current president of the company is Miles Flint with the corporate executive vice president being Jan Wareby. The first joint products were launched in 2002. Sony Ericsson has now become a worldwide supplier of mobile devices including feature rich phones and accessories, PC cards and M2M solutions. Sony Ericsson products have a powerful technology with inventive functions for mobile imaging, communications and entertainment. The result is that Sony Ericsson is an attractive product that creates forceful business openings for mobile operators and pleasing, fun products for end users. The products of Sony Ericsson have a worldwide demand and are different in the areas of imaging, design and applications. The company has time after time introduced products that make top use of the main mobile communications. Such as the 2G and 3G platforms, while attracting its contributions to entry level markets. In 2005, a large number of phones, networking products and accessories were introduced to boost the portfolio of Sony Ericsson significantly and are expected to encourage a new phase of expansion for the corporation. The phones which were included were the eye-catching yet reasonable K600 3G UMTS handset that take the possibility of the 3G network to a wider public; the K750, the company’s first 2 Mega pixel, auto focus camera phone; and the W800 Walkman® branded music phone that consist of a mobile phone, a quality digital music player with up to 70 hours’ battery life, and a 2 Mega pixel camera. As new products are launched in the market, existing products continued to collect awards and Sony Ericsson is now established as a world leader in design and innovation. The worldwide highly praised T610 is a legend of the mobile phone industry and later generations of the company’s product range often win awards. The V800 was voted the Best 3G Handset for 2004 by the GSM Association, which is a fully-featured phone completed for Vodafone with the full selection of mobile entertainment features and multi-directional camera, and the K750i received the TIPA Award 2005/2006 for “Best Mobile Imaging Device”, chosen by 31 leading European photography/imagining magazines and judged on quality, performance and value for money. Sony Ericsson also often achieves ‘Best in Class’ for picture quality, the latest example of this being the S700 1.3 Mega pixel ‘swivel design’ camera phone. Sony Ericsson struggles to be a cutting edge provider of applications, counterfeiting partnerships with application developers and satisfied providers. An accord with Sony Music Entertainment is one way in which the company is bringing the top and latest products in entertainment which is satisfying to its customers. A sponsorship deal with a major worldwide sports event which is the Women’s tennis Association Tour which was later changed into the Sony Ericsson WTA tour. The Partnership with the WTA is an extraordinary chance for Sony Ericsson to present tennis fans with new ways to experience the game thorough mobile technology, connectivity and content. In the year 2004 the First Java facility was available in the Sony Ericsson products and took the lead in the mobile gaming market. In the year 2005 Sony Ericsson is also thinking of bringing 3D games to a wider audience. Analysis Section: Strategic Alliance is a connection formed by two or more business that divide (proprietary), contribute in joint investments, and enlarge linked and frequent procedure to boost the performance of both the businesses. Many businesses form strategic alliances to boost the performance of their common supply chain. Following are the benefits which the companies have after being merged with each other: There is a certain amount of raise in the capital for researching and developing of the product with risk being low. The talent and resources of each company are brought together which neither company can build up on its own. The technologies which both of the companies have are exchanged when the companies are strategically merged. Another benefit is that there is a quick accomplish scale. An economy of Scale is superior the better for the company. It also helps the companies to enter into the foreign market easily. Brand Awareness tends to become easy too. Consumers are given added value benefits. When companies form a strategic Alliance it is basically formed in four steps which are: Strategy expansion: The aligned companies feasibility, objective and rationale are analyzed in this stage and its main focus is on the major subject and challenges. Developing of strategies for the production of the product, enhancing the technology and benefits for the consumers. Partner Evaluation: It involves assessing the strengths and weaknesses of the collaborator. Making strategies for the partner according to their organization method, prepare a selection measure which is fitting. To recognize the reason for aligning with the company is also a part of this stage. Contract compromise: It consists of determining whether all the parties have objectives; build high quality teams, defining each partner’s role and reward for the role. Also discussed is the security of secret information, deal with termination section, and consequence for poor performance and emphasize the quantity to which the procedures are visibly declared and understood. Alliance Operation: It consists of addressing senior management obligation. Find the resources which will help the alliance, budgets and resources with strategic priorities and supervising and satisfying alliance performance. The reason for the merger of Sony and Ericsson was to challenge the likes of Nokia and Motorola. The hand sets of Ericsson were not establishing themselves in the market, so Ericsson decided to merge its business with a global multi billion dollar brand Sony to produce mobile phone and introduce a new brand name which was Sony Ericsson. By being aligned the two companies have captured a market share from Nokia and Motorola. Before the merger the mobile phone of Ericsson were not establishing their product in the market because Nokia was advanced in every way whether it be in budget, technology and personal. But after the merger with the media technology coming from Sony, and the mobile phone technology coming from Ericsson, the company was able to launch mobile phones which established in the market in a short span of time. Sony Ericsson offered more features than Nokia, Motorola, Samsung phones. The first Java enabled phones were in the Sony Ericsson phones. These enabled the phones to be installed with new games and also were installed with features such as blue tooth, GPRS and that too at a relatively reasonable price. After the merger of Sony Ericsson the mobile phones which were launched were given several awards by different organizations. Sony Ericsson was the first company to come up with a 2.0 mega pixel camera. Sony Ericsson comes up with new brands of cell phone after a short span of time because of the budget and technology that Sony and Ericsson has. With Sony being a leader in the music equipment industry, it also installs MP3 player in the mobile phone for the benefit of the consumers. The stylish looking new models attract the customer. It also has launched a new set of mobile namely the Walkman phone which has been stored with a lot of memory so that consumers may install new songs and listen to it. This will create a forceful customer plan able to redefining the digital music market and pouring operator revenue. Based entirely on open principles, the strategy will focus on delivering easy-to-use music phones supported by a full range of exciting music download services including Sony Group digital music offering. A convincing mobile music player must combine a wide selection of key features such as easy-to-use software to copy music to the device, large music storage capacity, long battery life, quality headphones and cutting edge design. Sony Ericsson will put together these with superior phone functions such as brilliant voice, messaging, imaging, and on-line connectivity, to give an appliance that not only please customer wants, but also offers great chance for network operators to expand new and exciting services. Sony Ericsson’s triumphant P900 and P910 smart phones already support the world’s first modified mobile streaming solution, offered by an operator in Finland under Sony’s StreamMan brand. PlayNow, Sony Ericsson’s popular ring tone download service, function on a global basis in grouping with Sony BMG Music Entertainment, has fascinated hundreds of thousands of users in its first months of operation. Sony Ericsson mobiles have recently launched a mobile phone in which you can download movies. With its head office in London and its research and development department all over the world, Sony Ericsson has been able to keep an eye out for the consumer and what sort of a mobile phone do they want. With due researches, they have come up with mobile phones which are beneficial for the consumer, reasonably priced, attractive looking with lots of functions. Sony Ericsson will carry on functioning with a number of music associates together with Sony Group companies to offer noticeable and easy-to-use consumer download and music streaming services. The latest offering by Sony Ericsson is they are coming up with a new Mobile phone The Sony Ericsson Cyber shot phone which includes all the features in the camera and a phone. An astounding 3.2 mega pixel camera and with one click you can take 9 pictures at a time. The camera will take 4 picture before the shot and 5 after it. Scroll thorough all the pictures and select the best one. The new spectacular innovation in technology will boost the market share of Sony Ericsson and increase its profits. BIBLIOGRAPHY Wikimedia Inc (2006) history of Ericsson, Viewed on July 8 2006. http://en.wikipedia.org/wiki/Ericsson Wikimedia Inc (2006) History of Sony, Viewed on July 8 2006. http://en.wikipedia.org/wiki/sony Wikimedia Inc (2006) Merger of Sony Ericsson Viewed on July 8 2006. http://en.wikipedia.org/wiki/Sony_Ericsson Sony Ericsson Mobile communication (2006) Sony Ericsson Mobile Communications: Innovation in partnership, viewed on July 8 2006. http://www.sonyericsson.com/spg.jsp?cc=global&lc=en&ver=4001&template=pc1_1&zone=pc&lm=pc1 Wikimedia Inc (2006) Definition of strategic alliance, viewed on July 8 2006. http://en.wikipedia.org/wiki/Strategic_alliance 12manage Rigor and relevance, What is strategic alliance, viewed on July 8 2006. http://www.12manage.com/description_strategic_alliance.html Isabel M. Isidro (2001) Small Businesses and the Power of Strategic Alliances, Viewed on July 8 2006. http://www.addme.com/issue208.htm Ericsson, History of Ericsson. Viewed on July 8 2006. www.ericsson.com Sony, History of Sony. Viewed on July 8 2006 www.sony.com Sony and Ericsson, Merger of 2 companies Sony and Ericsson, viewed on July 8 2006. www.sonyericsson.com Word Count: 2,515 Read More