Strategic Partnering
Partnering is a key strategic issue for automotive suppliers. Partnering options include mergers, acquisitions, joint ventures, licensing agreements and strategic alliances.
Partnering successfully is more difficult than many firms anticipate. Those companies that do it well spend sufficient time and resources assessing the partnership, formulating the agreement, and managing implementation. These are the findings from ACG's "Winning Strategies for Supplier Partnering," an analysis of 185 supplier partnerships. The study provides a framework for strategically managing each step of the partnering process.
Partnering among automotive suppliers in the form of mergers, acquisitions, joint ventures, licensing agreements and strategic alliances is becoming commonplace. As automobile manufacturers continue to consolidate their supply base, many suppliers are looking to partnering to meet new demands set forth by their customers. For many suppliers, partnering is seen as a means to provide OEM customers with global resources, innovative technology, full service support, and design, testing and engineering capabilities.
Although many suppliers are forming partnerships to meet business goals, not all partnerships are providing the anticipated benefits. Partnering successfully and strategically is a difficult task. ACG assists suppliers in partnering more effectively.
ACG assists in all phases of the partnering process including strategic assessment of the partnership, structuring of the partnership agreement, and implementation:
Strategic Assessment
| Corporate Strategic Assessment | Cultural Assessment |
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| Market Assessment | Technology Assessment |
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Structuring the Agreement |
Implementation |
| Type of Agreement | Core Teams |
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Representative Assignment
A supplier of rollstock understood the critical role that culture can play in the success or failure of a partnership. The company was contemplating a strategic alliance with a supplier of door and dash insulation in order to produce a modularized product to meet emerging OEM demands. The supplier's largest volume customer was pushing hard for the alliance and there was heavy pressure on the supplier to put the venture together quickly. Failure to respond quickly to customer needs could jeopardize a sizable OEM contract. Nevertheless, the supplier took precautions to identify and address diverse cultures in the two companies before a decision was made whether or not to proceed with the alliance.
The supplier had been burned once before. In the company's first alliance, no effort was made to identify cultural issues. As a result, the supplier lost more than a new business opportunity -- its reputation as a quality manufacturer was negatively impacted, and it was still feeling the repercussions. So in its next alliance opportunity, management commissioned ACG to evaluate the potential partner.
ACG met with both organizations several times in different settings to better understand the intricacies of various cultural policies and practices. It was discovered the cultures were drastically different. One company was characterized by a flat, more informal organization while the other was more hierarchical in nature. ACG's recommendations centered on meetings between the two groups to discuss their diverse differences. This early exposure to the culture and social systems made everyone more tolerant of the disparities, and it helped minimize conflict later on. Although these cultural distinctions still exist, the partnership is thriving.