The identification of resources, as well as capabilities, enables a comparison of strengths and weaknesses against opportunities and threats (McGee et al., 2005). The value of these resources should increase in the event of an alliance.
The three companies have considerable financial resources given their global presence and a combined equity of almost a hundred billion Euros. They have manufacturing facilities within the NAFTA area, the EU, and the BRIC countries. These two resources represent a strong position within the industry since the companies can save cost by manufacturing parts in a location that is least costly. This list of resources is not exhaustive since each member in the alliance has other partnership agreements.
Renault and Daimler have a strong research tradition that will drive the production of new engines. Nissan, on the other hand, has a production method that it has perfected over the years. Each of the members of the alliance has brand strength that is a valuable resource. Daimler has a global presence. Renault has a strong European presence while Nissan has a strong Asian and North American presence.
Each of these resources comes with a human resource replete with experience, tradition, and expertise that represent the strongest point of the synergy (Gladwell, 2000). It is, therefore, quite clear that each member has brought so much to the alliance for mutual benefit.
4. Rationale for the alliance
The rationale is simply the Strength and Opportunities section of a SWOT analysis. The first is financial since a combination of three global enterprises brings so much power and the potential for profitability. It is, therefore, possible for the alliance to finance capital intensive projects like the research into the development of electric cars (Carpenter & Sanders, 2009). The companies have swapped shares in order to deepen their financial interests in each other.
The companies share knowledge in research and processes. Further, the members pool resources together to share platforms and even facilities such as warehouses and factories. This results in economies of scale that lower cost margins and result in higher profits even in an extremely competitive environment. It is also less costly for an alliance to fail than when a merger fails.
The members within the alliance reap benefits of each brand and corporate image without the complexities of coming up with fresh brands. This is a significant advantage of the model of the alliance. Each member has exceptionally strong brands on which other platforms can ride. It is essential to note that the borrowing of technology from each other would strengthen brands which did not have an edge (Carpenter & Sanders, 2009).
The biggest gain is when the companies provide each other with a means to enter new markets. This results in fast market penetration for members of the alliance. Daimler has a worldwide presence, but Nissan and Renault have to complement each other. Furthermore, the knowledge base, brand presence, and competitive edge the established player provides the new player is essential (Kotler and Armstrong, 2012). This makes it easy to market, distribute, and provide services for a consistent brand.
There is a trend in globalisation where the organisations try to make sure there tailor their products to the local region. The alliances provide this touch since the individual members bring necessary expertise within their region of dominance. Furthermore, an alliance maintains the brand names and corporate image ensuring that previous associations made by the customers are still useful.
The model of operation involving an alliance has several challenges. First, some of the members may underperform either in terms of total sales, total revenue, or model development. This is a key issue since the general image of the alliance involves the sum of the individual images of the members. Secondly, there can be ownership conflicts especially for patents, images, research materials, and many other resources especially those that are intangible.
There emerges a dominant player in alliances who may push the other plays into oblivion. The result would be the disappearance of brands especially when they share common platforms. This would also translate into a fight for control of the various shared aspects in the alliance like facilities and brands. These challenges may not be apparent when the alliance is functioning healthily but would be a headache to top management if there is a fall out.
The members of the alliance have different corporate cultures and exist in different cultures. There is a challenge of integrating these cultures in the management of the personnel, drafting strategies for joint ventures, and evaluating the performance within the organisation. Some aspects of culture such as language are quite obvious. However, other aspects of culture may not be obvious and may affect such things as negotiations. This issue of culture also affects customers who are from varied cultures.
The alliance is a global network that is subject barriers and tariffs that exist within certain countries or trading blocks. This would be a challenge because of non-homogeneity that would arise for the products especially when manufacturing occurs in far flung places. This is a necessary factor to consider in allocating manufacturing facilities within the alliance.
The alliance is necessary for the survival of the organisations in a competitive world. These recommendations cover the challenges that face the alliance. There should be clear structures on ownership of patents and any products that result from joint projects. This would protect the individual members in case the alliance dissolves. Furthermore, the individual members should be accountable to each other in matters of brand image. This set up is there through an organisation that consists of the senior managers in Daimler, Nissan, and Renault.
Dominance within the alliance should be positive. However, there is a risk of pushing other players into oblivion. Therefore, there should be structures to help promote each of the players by actively engaging the members in alliance activities. Within the alliance, there is sharing of functions like factory production and design engines (Gladwell, 2000).
The cultures within the companies are merging since managers are interacting and using similar models of operation. Furthermore, educating members on the cultures of other countries is a sure way of avoiding any misunderstandings.
The alliance is a norm in the auto-motive industry (Golding, 2006). However, this is unique since within it is another alliance of Nissan and Renault, which is quite successful. This alliance allows companies to remain profitable even in economic crises. The companies should maintain this model of operation while evaluating it continuously to ascertain any weakness in the system.
Alliances are the way to go in this age. However, the members should form strategic alliances so that they can evaluate and understand core weaknesses, capabilities, and culture of each other.
Thompson, J, (2004), Strategic Management: Awareness and Change, International Thomson
Press, 3rd Edition
Kotler, P. And Armstrong, G. (2012), Principles of Marketing (Global Edition) (14th Edn.)
Pearson Education, Upper Saddle River New Jersey
Lynch, R. (2009), Strategic Management (5th edn.) FT Prentice Hall, Harlow
Johnson, G., Whittington, R. And Scholes, K. (2011), Exploring Strategy (9th edn.) FT