Session 05

Modifying Firm Scope

Managing Ambiguity in Strategic
Alliances
reading
Sasanka Sekhar Chanda
2016
Strategic Management - II

Functions of the Corporate Office

BOARD OF GOVERNORS
HEADQUARTERS
Functional Heads: FINANCE AND ACCOUNTS , IT, HR, OPERATIONS , R&D
Division Heads: SBU Leaders, COUNTRY Heads
Horizontal functions: Legal, Public Relations, Corporate Social Responsibility

SBU1

SBU2
SBU3
COUNTRY 1

SBU1A

SBU3B

COUNTRY 2

Strategic Business Unit (SBU) Functions

Analyze Product Market conditions, Respond to competitor moves and
technology changes by management of product life cycle, seek to deliver
higher value
Corporate Functions
Strategic Decision Making, Strategy Formulation, Guiding Strategy Implementation,
Diversification, Mergers and Acquisitions, Strategic Alliances, Internationalization,
Corporate Venturing, Knowledge Management
Control Function (TMT & Board of Directors) Leadership, Corporate Governance

Kumar R (2014)

Managing ambiguity in strategic

alliances
California Management Review, 56(4): 82-102

Managing alliance ambiguity

Alliance formation phase
Partner ambiguity

Interactional ambiguity
Operational phase

Evaluative ambiguity
Outcome phase
AMBIGUITY: Options may be known, probability of materialization
of outcome is not known, and cannot be known. Interpretation of
varied cues is resorted to, in order to draw tentative inferences

Partner ambiguity:

complementarity,

compatibility, commitment

Early negotiations identify value creation

potential: shared vision (strategic consensus)
Mixed motive nature of alliances: appropriate
sufficient value, & not let out too much of own stuff
Developing a relationship is necessary. Fairness &
mutual respect considerations.

Strategic consensus
Shared vision w.r.t.
Ends for the alliance
Means to accomplish

Differing perspectives, control requirements

Techniques
Task partitioning: collaborate early on low-conflict
issues. Focus on common-ground / win-win (p. 90)
Boundary spanners (bi-cultural)
Use of external (3rd party) protocols/ structures
Top management push (to go beyond technicalities)

Interactional Ambiguity
Team that runs the day-to-day different from the
team that negotiated the alliance
IA arises when unfavorable process discrepancies
show up. Usually sign of lack of (working consensus)
Effective coordination, communication & bonding

Antidote
Detect discrepancies early, before they become big
problems: alertness, proactivity, communication
Forestall damaging effect of display of negative
emotion by being respectful to the other, obligating the
other to reciprocate

Invoke routines, powered by interpersonal

relations, towards better coordination
Low environmental High
change
environmental
change

Low level of internal

contingency/ churn

Coordination Routines Sensing Routines

High level of internal

contingency/ churn in
alliance

Coordination Routines Sensing Routines

Learning Routines
Transformation
routines

Coordination Routines: Allying firms coordinate their actions

Learning routines: Allying firms transfer knowledge back and forth
Sensing routines: monitor environmental changes
Transformation routines: Allying firms restructure their pattern of interaction

Evaluative ambiguity
Outcome discrepancy: temporary or deeper problem
Reframing: A shift in meaning even as concrete
facts stay the same
Cognitive: Relation quality between the firms, tacit
and explicit learning, progress towards LT strategic
objectives, base for new cooperative agreements
Behavioral: change governance / resource allocation
patterns
Alliance champions may help: lack positional authority.
Much depends on their vision, commitment & energy
Carl Ghosn in Renault-Nissan.