Strategic Alliances in the Automotive Industry
-Business Processes and IT Requirements-
by
Denise Cristina Nishimura
31 August 2010
Project Supervisor
Prof. Dr. Axel Uhl
Client
SAP
Strategic Alliances in the Automotive Industry
- Business Processes and IT Requirements
Management Summary
“Alliances are a big part of this game [of global competition]…
They are critical to win on global basis…The least attractive way to try to win on
a global basis is to think you can take on the world all by yourself”
Jack Welch, CEO, General Electric
(Speech at Harvard Business School, October 28, 1987)
Economic pressures, fast technological changes, powerful customer demand
and other issues influence drastically on corporate strategy of companies in the
automobile industry. As a response to that many automakers engage more and
more in strategic alliances which affect all level of business processes within the
supply chain.
This paper attempts to identify which businesses processes are involved in the
partnerships and how they are supported by IT requirements. In order to do this,
interviews with representatives of the automobile industry based on multi-cases
were conducted.
The results confirmed that partnerships are inherent for companies to keep
competitive sustainable within the industry. The joint business processes
basically follow the product life cycle chain with more involvement in ones and
less in others. IT was somehow always present within the business processes
showing how it plays an important role to support and enhance them.
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Strategic Alliances in the Automotive Industry
- Business Processes and IT Requirements
Authenticity Statement
I, the undersigned, declare that all material presented in this paper is my own
work or fully and specifically acknowledge wherever adapted from other
sources.
I understand that if at any time it is shown that I have significantly
misrepresented material presented here, any degree or credits awarded to me
on the basis of that material may be revoked.
I declare that all statements and information contained herein are true, correct
and accurate to the best of my knowledge and belief.
August 31st, 2010
Denise Cristina Nishimura
Nishimura
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Strategic Alliances in the Automotive Industry
- Business Processes and IT Requirements
Table of Contents
Management Summary………………………………………………………………..l
Authenticity Statement………………………………………………………………...ll
Table of Contents……………………………………………………………………...lll
1.
Introduction ................................................................................................. 1
2.
Literature Review ........................................................................................ 2
2.1. Strategic Alliances in the Automotive Industry ......................................... 2
2.1.1.
Reasons for Strategic Alliances Formation ................................... 3
2.1.2. Types of Strategic Alliances .............................................................. 4
2.1.2.1. Horizontal Alliances .................................................................... 4
2.1.2.1. Vertical Alliances ........................................................................ 5
2.1.3. Strategic Alliances and Business Processes..................................... 6
2.1.4. Business Processes and IT requirements ......................................... 9
3.
Exploratory Research Design.................................................................... 14
3.1.
4.
Qualitative Technique ........................................................................ 15
Results ...................................................................................................... 16
4.1.
Cases................................................................................................. 16
4.1.1. Prince Engine Case......................................................................... 16
4.1.1.1. Prince Engine Business Process Model ................................... 20
4.1.2.
Daimler and Renault - Nissan Case............................................ 20
4.1.3.
Fiat and Bitron............................................................................. 22
4.1.3.1. Fiat and Bitron Business Model ................................................. 24
4.1.4.
Multiple Relations........................................................................ 25
4.2. Data Analysis ......................................................................................... 27
5.
Conclusions............................................................................................... 28
6.
Bibliography .............................................................................................. 31
7.
Glossary .................................................................................................... 33
8.
APPENDICES ........................................................................................... 34
Appendix A ................................................................................................... 34
Appendix B: Motor Prince ............................................................................. 35
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Strategic Alliances in the Automotive Industry
- Business Processes and IT Requirements
1. Introduction
Alliances have been a strategic approach to cope with challenges and
pressures from a highly competitive world. Reuer (2004) suggests that the
drivers and the manner strategic alliances have collaborated with each other,
have been changing over the time.
In the automotive industry recent linkages present some differences in
comparison to the conventional partnerships. In horizontal arrangements, it is
likely that automakers remain independent, rather than dependent as in the
cases of merging and acquisitions. While in vertical ones, there may be a
tendency that more and more suppliers are involved in components and
technologies development processes rather than just buy-and-sell relationships.
Under this scenario of alliances, all levels of the supply chain of companies
have been affected. A responsive and efficient supply chain is the key for
business prosperity, and IT plays an important role by enhancing business
processes in direction to the achievement of corporate strategy. All these facts
have attracted attention of software companies like SAP who are very
interested and keen to provide solutions to the companies involved in such
partnerships in order to cover some gaps towards their business optimization.
This paper investigates how business processes involved in partnerships are
supported by IT, attempting to identify its requirements. Also, it tries to falsify
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- Business Processes and IT Requirements
the correlations that the more projects partners do together, the more joint
business processes are involved, and the more joint business process are
involved, it is more likely for a new joint platform to be built.
2. Literature Review
2.1. Strategic Alliances in the Automotive Industry
Although strategic alliance has been increasingly a common topic for many
academics, its definition is broadly distorted. For the purpose of this study, a
strategic alliance is a trading partnership which links certain business processes
of two or more companies which may augment effectively the competitive
strategies of the firms involved while providing mutual benefits by exchanging
technologies, skills, resources, or products. A strategic alliance can vary in
form, function and framework.
The automotive industry appeared in Europe in the 1800s and spread all over
the world, from artisan production style passing through “Henry Ford” mass
production to the “state-of-the-art” technologies used in present times.
Throughout this development process automakers have been forming alliances
with other automakers and suppliers. However, current alliances seem to
distinguish in some points to conventional ones as mergers, acquisitions and
joint ventures.
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According to Yoshino and Rangan (1995), in the “new” alliances firms remain
independent from each other. During the arrangement there are common goals,
but each firm has its own strategic goals. Benefits and performance control over
the assigned tasks have to be shared by the alliance partners. Trade of
contribution in key strategic areas is mutual among partner firms. The partner
firms are frequently collaborating reciprocally in their core of their competences
rather than in peripheral businesses. Such arrangements are often made
between rival firms, something unfeasible decades ago, and with firms from
unrelated industries. For Reuer (2004), these alliances are also forming not only
bilateral links but also multiple linkages, on the national and international level,
making the management of flow of information within and out of the firms’
boundaries more complex.
2.1.1. Reasons for Strategic Alliances Formation
The combination of political, economic, social, technological and ethical, in
other words, all exogenous factors related to the automotive business market
can be antecedents for endogenous reasons for automakers engage in
alliances. As Vyas et al (1995) emphasized, the increasing market competition,
reduced product life cycle, high capital investment cost, the increasing demand
for innovation and high technologies, among other external factors, are making
pressure on companies to come up constantly with new strategies in order to be
sustainably competitive in this business environment.
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As companies adapt their strategies, reasons to form alliances may vary. Kale
and Perlmutter (2000) appoint three rationales that these variations can be
based on. First, strategic motive, which can relate gaining or enhancing
company’s competitiveness position in the market. Second, costs dimension
which relates to reduce costs of production through economies of scale or
scope, sharing cost of investments and other costs concerns. Third, learning
motivations relate to using alliances to expand more quickly and efficiently their
core capabilities, learn crucial skills and other technologies.
2.1.2. Types of Strategic Alliances
2.1.2.1. Horizontal Alliances
In the automobile industry, horizontal alliances occur when an automaker links
with another automaker with reciprocal collaborations in joint activities. The
level of interaction between the partner firms can be optimized accordingly to
the firms’ goals and the set of common activities. Partners can joint production
to achieve economies of scale, or joint sales in order to gain more market
share, or basically to transfer technological knowledge. Conventional examples
are represented by the acquisition of Citroen shares by Peugeot forming a
partnership also called PSA, the merger of “equals” of Daimler and Chrysler
which has failed, and now Chrysler belongs to Fiat.
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2.1.2.1. Vertical Alliances
Vertical integration occurs when the automaker builds relationship with
suppliers who provide goods and services in any business process along with
the vertical chain. Basically vertical relations were mostly based on the decision
making process of “make-versus-buy”. Making decision means that the
automaker produces in-house. One of the main reasons behind it is to protect
its core competitive advantages. Buying decision means that the automaker
purchases or outsources the production of a good or service. The reason to do
so could be to reduce costs and bureaucracy related to the production of
peripheral parts, and focus on the production of their core parts such as the
engine (Besanko et al, 2007).
Nowadays, in the automobile industry 30% of the parts of a car are produced by
automakers, while the other 70% of the parts which will be assembled in the
final car are produced by suppliers. Suppliers can play basically three different
roles (Marini, Goncalves, Giacobo):

As suppliers for non-core parts of the car such as tires, screws and
others. Focus in this relationship is price;

As suppliers for modules partially or totally complete;

As co-developers which participate in development of new products or
technologies.
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These suppliers mentioned above are directly linked to automakers therefore
can be called first-tear suppliers, which are followed by second-tear suppliers
and specialty suppliers. Basically, second-tear and specialty suppliers provide
materials and parts to first-tear suppliers (Marini, Gonçalves and Giacobo).
According to Olin, Greis and Kasarda (1999), the relationship with first-tier
suppliers for modules and as co-developers have been increasingly tighter, and
they are more and more engaged in the development of products. For them,
this is a trend which may be influenced by the constant improvement of
differentiation and cost reduction from automakers. An illustration of this is the
case of collaboration between Mercedes and Bosch in the development of the
ESP (Eletronic Stability Program) which is applied across Mercedes vehicle
portfolio.
2.1.3. Strategic Alliances and Business Processes
When companies seek for forming alliances, each one has to align its aims
related to the alliance with each one’s overall corporate strategy. As the right
partner is found, the alliance partners after signing the contract and addressing
all conditions such as clauses, budgets, and others, they also have to determine
the people and the business processes which will be involved and how the
integration is going to be done between the partners. For this study, business
process is a set of coordinated tasks and activities, conducted by people or
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- Business Processes and IT Requirements
machine, or by the combination of both, in order to accomplish specific
organizational goals and strategies.
Business processes are spread all over the supply chain of the company which
entails not only suppliers and distributors, but also all processes necessary to
fulfill customers requests such as transportation and warehouses. The overall
supply chain of each partner has to be aligned with its corporate strategy, as
mentioned before, and also aligned and supporting the alliance strategic shared
business processes.
The Figure1 shows a general example of supply chain with some specific
activities:
Figure 1:
Source: Wikimedia Commons
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In the automotive industry, alliances partners usually ground their joint business
processes on the product life cycle (Figure 2) of a car and of its parts and
components. The life cycle of a product process can be divided into the
following macro processes: Customer Demand and Marketing Sales, Design
and Engineering, Manufacturing, Sales and Delivery, After-Sale Service,
Product End-of-Life or Product Recycle.
Figure 2:
Source: Author based on Saasksvuori and Immonen p.14
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2.1.4. Business Processes and IT requirements
Macro process of production of a car and production of parts of the car may be
similar along the product life cycle through the supply chain, however the way
each automaker executes the activities and the tools used in each process may
certainly vary. Since each organization has its own strategy, its core competitive
competences, all business processes are structured in order to accomplish the
goals to achieve strategy and maintain or improve core competitive
competences. IT plays an important role to the firms enhancing these
processes by translating their functions into IT terms in order to bring IT
solutions such as systems, software and tools which can improve, support and
even transform business process in an automation manner by increasing
efficiency and effectiveness, as reducing costs, increasing speed in
responsiveness within the processes, controlling and sharing the workflow and
the information flow, reflecting positively in the corporate strategy.
An IT structure of a company consists of IT components - wireless
communications, telecommunications and networks, software, and hardware and IT services system development, managing security and risk, data
management (Rainer and Turban ,2009).
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Figure 3:
Source: Author
According to the needs of the business processes, companies can develop their
IT solutions “in-house” or buy, lease, rent an “off-the-shelf” solution from many
software vendors. Any IT solution has the advantages and disadvantages.
Comparing the options just mentioned in this paragraph, automakers when
deciding to develop “in-house” software for its business processes, they might
invest certain amount of capital for the software development, also it may
require a certain amount of time until the software is created, however it might
be a good option to protect their core technologies. In contrast, “off-the-shelf”
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- Business Processes and IT Requirements
software which can be in a form of standard package, may be a cheaper option
in comparison to “in-house” software, but may not cover all the requirements for
the business process; or it can be customized to the companies’ existing
systems and applications as contract software bringing more flexibility to
companies.
An example of IT solution can be represented by the Product Life Cycle
Management System which provides the user with all the necessary information
related to all stages of the product such as tracking progress on the
development of the product. As it is a system which can play a central role for
an automaker firm, it can be integrated with other important systems and
applications like CRM (Customer Relation Management) which helps
company’s interaction with customers and sales prospects, ERP (Enterprise
Resource Planning) which helps to consolidate most of business processes,
and CAD (Computer Aided Design) which assists design processes (Saaksvuori
and Immonen, 2002).
In order to illustrate business processes and IT solutions involved in a
conventional alliance, the partnership of Renault - Nissan is taken as an
example. The alliance which was an acquisition by Renault over Nissan has
been succeeding since the 1990s. The strategy behind for Renault was the
access to Asia-Pacific and North American markets, expansion of portfolio of
products with Nissan’s light commercial vehicles and bigger passenger cars. On
the other side, Nissan could avoid its own death and find solutions for huge
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- Business Processes and IT Requirements
debts. Also, Nissan gained knowledge in marketing, design and platform
strategy.
As two large enterprises are working together the bargaining power over
suppliers increases helping them to achieve economies of scale. Therefore joint
business process are basically related to manufacturing while sharing platforms
all over the world, relationship with suppliers, export and import processes,
control of flow of car parts. One of the solutions found was to build a
collaborative platform. Another one was to unify both different systems in one
technical document through Common Bill of Materials, which is a common list of
all parts of the product components of both brands. This list serves as a primary
data for product development and engineering processes in which CAD was
used. Both brands are manufactured in same plants Just-in-Time systems
spread all over the world. Business processes related to commercialization
such as sales, after sales, warranty, are executed by each brand separately1.
1
Source: Renault’s IT manager’s power point presentation in possession of the author
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Figure 4:
TC
MAD
Manufacture Flow
SCENIC
Retoque
COMPLETION
clio II
PAINTING
BODY
ASSEMBLY
TRI
STOCK
Source: Renault’s IT manager’s power point presentation in possession of the author
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3. Exploratory Research Design
This exploratory research is characterized by gathering qualitative data through
multi-cases which are taken from the real life. These cases were chosen with
the intention to compare with the literature research and identify the issues
which are not published.
Along with the literature research some assumptions and hypotheses were
made serving as guidance for the exploratory research.
Assumptions:
a. There is a trend for automakers to remain independent while forming
horizontal strategic alliances.
b. There is a trend that more and more suppliers are involved in codevelopment projects.
Hypotheses:
H1: The more projects partners do together, the more joint businesses
processes are involved.
H2: The more joint business processes are involved, it is more likely the
need to build a new joint platform.
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3.1. Qualitative Technique
Qualitative interviews by telephone with automotive industry experts were used
to gather the qualitative data. As each case shows peculiar differences, the
interviews were not held to the same structure. Due to a non-disclosure
agreement, names and other details of some interviewees are not mentioned in
this document. It is important to emphasize that the sample selected to this
study cannot be taken as a general rule.
Research Question
1. How are business processes involved in partnerships
supported by IT?
Hypotheses
1. The more partnerships do together (regarding any joint
project), the more joint business progresses are involved.
2. The more joint business processes are involved, it is more
likely the need to built a new joint IT platform.
Questionnaire (not structured)
Qualitative Interviews with experts
based on cases
Interviews Results
Conclusion
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Comparing with the
literature review
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4. Results
4.1. Cases
4.1.1. Prince Engine Case
BMW and PSA (Peugeot / Citroen) in 2006 announced a formation of strategic
alliance to develop a new family of gasoline engines and small petrol engines
with fuel-efficient power and reduced emissions of CO2 for lower car segments.
BMW has the know-how of more innovative engines and PSA has the knowhow of large production of small cars and certain components as the cylinder
heads.
The strategy behind is to add value for both partners by improving their
technologies, reducing their costs of production influenced by increase
bargaining power over suppliers.
For this project called Prince Engine (Appendix B), both companies shared the
development process of the product. Production of components of the engine
was under responsibility of PSA, even the production by suppliers, as well as
the purchase of raw materials. The assembling of the engine was made under
each plant.
Since the technology transfer was made from BMW to PSA, around 15 expats
went to work in BMW Munich in a platform called “Prince Plateau”. The
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- Business Processes and IT Requirements
development process which took around 3 years comprises the following
processes: product development, supplier validation and processes validation.
In the product development process, each component of the engine had to be
adjusted from BMW system (meaning under BMW specifications) to PSA
system because the production was planned to be in PSA production plant.
Some parts were in “pro-engineer” version and had to be converted to CATIAV4 PSA version. Others were already in CATIA-V4 version but in BMW version
which also had to be converted into PSA version. Due to this incompatibility of
versions, an interface problem occurred by losing some data of the
components. The designer therefore had to “rewrite” in engineering language all
the details of the components in PSA standards. Hence, the engine consists of
hundreds of components.
For this product development process there was an IT support. A subnet LAN
PSA had to be made within BMW communication network. Details of this
solution are: connection VPN (Virtual Private Network) via ENX (European
Network Exchange). In order words, a remote network which allowed PSA in
France to connected to “Prince Plateau” in BMW in Munich through a secure
network.
Advantages of this solution regard the flow of information in a secure
environment, fast flow of information, and cheaper costs in comparison to make
a new system or leasing from a third company only for this purpose. In contrast,
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- Business Processes and IT Requirements
a development of specific net which will not be used after the termination of the
partnership can be considered as disadvantage fact.
As not only PSA will produce the components of the Prince Engine, but also
some suppliers, the supplier validation process is made for each supplier. This
is necessary to ensure that suppliers meet the requirements requested
according to PSA specifications. This process consists of creating a database of
the suppliers, soliciting suppliers for the confirmation of certain memberships or
certificates related to quality and security recognized world wide by some
organizations as Rosettanet or ISO. The communication in this process is
basically through telephone, fax and e-mails. The usage of proprietary
validation system is applied in this process.
Process validation process refers to validate the processes that will be involved
in the production of the components. Thus, verifying that processes can
produce the component meeting all the specifications pre-determined by BMW
and PSA consistently over time. Controls like quality control, quantity control
and others, are precisely monitored through series of tests.
Production of the components is made in PSA plants by PSA team in Douvrin,
France. The components are transported by train to BMW car engine assembly
plant in Hams Hall, England, where engines are produced for the BMW Group.
These completed engines are then shipped to the Mini factory in Cowley,
Oxford. For PSA cars, the engine is produced in Douvrin.
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Purchasing of raw material is the responsibility of PSA for both partners, which
is basically made by phone, fax and e-mails with suppliers.
The family of Prince Engines 1.4-liter and 1.6-liter have been used in all Minis
produced by BMW, and in Peugeot 207 and 308, and Citroen C4 and C4
Picasso.
Figure 5:
Source: Author
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4.1.1.1. Prince Engine Business Process Model
4.1.2. Daimler and Renault - Nissan Case
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Around April of 2010, Daimler and Renault-Nissan announced an alliance to
share and co-develop petrol and diesel engines. Both sides will remain
independent holding 3.1% shares of each other. Daimler will develop the next
generation of SMART 2-doors and the SMART 4-doors, Renault will generate
the Twingo, and Nissan will boast the engine of Infiniti with the intention of
expand market share in the luxury market. Both partners want to reduce cost of
production by increasing volume of cars produced and augment bargaining
power over suppliers. In addition, Daimler wants to expand its market entering
in the Japanese market first and later in the Chinese market.
The negotiation regarding where the production and other business processes
are still ongoing, but according to a former Daimler CIO some joint business
processes and the respective IT requirements can be predicted as follow:
Figure 6:
Source: Author
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4.1.3. Fiat and Bitron
In this case, Bitron, a producer and developer of mechatronic components for
the appliance and automotive industry, made collaboration with Fiat for
exclusive production of switches for electronic window and headlights used in
Palio Third Generation (Appendix A).
Generally, the first contact between the automaker and a part supplier occurs
when the Procurement Department from the automaker request for proposals
issuing invitations with specifications (e.g. quality certification) to the
Commercial Department of some suppliers. The suppliers, then, send their bids
with their price and their conditions. Among these suppliers, basically the one
who offers the cheapest price is contracted by the automaker for the project. In
this process the IT solution used was RFQ (Request for Quotation) software.
The benefits of this software are related to the automation of the process such
as when the best quotation is chosen, a letter of rejection is sent to the rejected
bids. All data is stored in one device. The process is much faster than when
executed by e-mail, fax or telephone.
The next process involved in this “co-design” collaboration, as mentioned by the
interviewee, is the Product Development and Engineering. For this Fiat gives all
the dimensions (size, weight, style, etc) that the switches can be to be
assembled in the final Fiat Palio, inclusive, the dimensions of all components
which will be in the perimeter of the switches. Thus, Bitron can produce the part
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which will not bring interferences with neighbor components produced by other
suppliers and vice-versa. In this process UG software, which is a 3D solution for
design, was used. In this case, since most of the time the in charged people
from both parties involved in this project worked in their own sites, B2B system
was used as a main communicator. As a system-to-system integrator, this
solution allows exchange of data in a safe environment, traceability of data,
ease and fast access. Through this solution channel, it seems that it is possible
to be updated with the disclosure of standards such as quality standards which
are very important for suppliers to ground their innovation development
processes.
A Product Validation Process is made by Fiat through a series of test with the
prototypes sent by Bitron to Fiat until all defects are found and eliminated.
After this the manufacturing of the switchers occurs in Bitron site. Fiat will
constantly process orders for the switchers according to the prevision based on
the sales demand for Palio.
Even after the contract for this project is terminated, the supplier has to continue
to produce in smaller quantities to provide parts for reposition to the market.
Generally, the automaker has more two or three suppliers for the same parts. In
case a supplier for whatever reason cannot supply anymore or its price rises
substantially. However, this approach is applicable according to the investment
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- Business Processes and IT Requirements
costs. Basically, more specific components which usually involve substantial
investments, concern to only one supplier.
4.1.3.1. Fiat and Bitron Business Model
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4.1.4. Multiple Relations
Suppliers like Bitron participate in co-development of parts, components and
technologies with several automakers, and vice-versa. The business processes
are very similar to the ones mentioned in the “Case Fiat and Bitron”. However,
some issues of interface may occur regarding the 3D software.
In the case between Fiat and Bitron, the same software was used, Unigraphics.
In collaboration with GM, for instance, would not occur either since the
automaker also uses this solution. For PSA and Ford, as shown in the Figure 6,
an incompatibility problem would occur as both use CATIA. In order to convert
the alternatives emphasized are:

Use software that makes the conversion.

Buy a license from which allows using an application that does the
conversion automatically.

Buy both solutions CATIA and Unigraphics.

Contract a third party who has the converter software and pay him in
worked-hours basis.
All these solutions imply and vary in costs and are normally applied
subsequently to the volume of projects.
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Figure 7:
Source. Author
On the 1st Tier Level along with suppliers like Bitron who participate in
developments as co-designer, there are the ones who bring modules to be
assemble in the car or work inside the automaker facility over modules but they
can also play the role as a co-designer, and the other type is represented by
those ones who sell parts like mirror, screws and so on. All of them also work
with several automakers because the bigger the production, the cheaper for
them to produce.
The 2nd Tier Level consists of the suppliers of the 1st Tier level and some times
of some automakers because they usually provide more specific parts. And on
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the 3rd Tier Level there are the suppliers who basically provide parts and
components to the 2nd Tier Level.
4.2. Data Analysis
Through this analysis the author attempts to test the hypotheses cited in the
research design based on the cases of partnerships, and also emphasize some
other relevant findings.
H1: The more projects partners do together, the more joint businesses
processes are involved.
According to the findings, basically the business processes in a macro level
involved not only in the horizontal arrangements, but also in the vertical ones
(relations of co-development) are very similar. They may vary in names within
the firms, but most follow the product life cycle chain. However, when
approaching closer to some business processes within the macro blocks, it
becomes evident how many more joint businesses are involved. For instance, in
the product development process in which components or parts have to be
converted from one company’s version to the other company’s version, as it
shows in the BMW and PSA case, an engine with hundreds of sub-parts, it is
possible to detect a correlation of the more sub-components and sub-parts the
product has, more business processes are involved, when compared to the
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switches sub-parts. Therefore, the more complex the product involved is, the
more joint business processes are likely to be involved.
H2: The more joint business processes are involved, it is more likely the need to
build a new joint platform.
In the cases, several joint platforms for communication and data transfer were
created. For instance, B2B system in Fiat and Bitron case, and the VPN in PSA
and BMW case. In the cases in order to communicate e-mails and telephones
were used. Nevertheless the evolvement of more sophisticated channels of
communication was due to security reasons. Therefore, it seems like to exist a
correlation of the need to build a new joint platform as more joint business
processes are involved.
Other relevant findings relate to the strategy behind of the companies. Through
the cases there are evidences that corporate strategy of automakers when
forming partnerships, horizontal and vertical, is essentially similar.
5. Conclusions
The study presented in this paper highlights the existence of two types of
strategic alliances within the automotive industry which can be represented
as some alternatives to automakers to cope with their corporate strategy. The
reasons and goals, which in this theme may overlap, are essentially the same.
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Reduction of costs and risks, expansion of market share, and improving
technologies and quality, are basically the strategic drives for automakers to
seek an alliance formation.
Vertical and horizontal relationships are shown as inherent for every automobile
company confirming that going alone strategy is no longer sustainable to remain
competitive in the market.
In this paper based on the literature review and the findings, it becomes clear
that corporate strategy is the main influencer on business processes not only
within the organization but also along with the partnerships. In a macro level
basically the business processes involved in the partnerships related to the
cases are: product development and engineering, manufacturing, and
procurement. There is a great emphasis in joining these processes because by
joining forces they can drastically reduce costs of investments in developing a
product; enhance their technical capabilities and skills by technological transfer;
achieve economies of scale by increasing production; reducing their costs by
increasing bargaining power over suppliers; and reducing costs by outsourcing.
With the remaining business processes for each automaker other such as sales
and after-sales services, they can enhance their appealing as a brand and gain
more and more loyal customers.
The IT solutions found supporting the referred joint business processes in a
macro level varied substantially. Nevertheless there were constant concerns in
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- Business Processes and IT Requirements
traceability, timeliness, and accessibility of data in a safe environment; low
costs, easy integration and higher compatibility of solutions. Issues of
incompatibility might concern substantially all stakeholders in business
processes. Therefore conceivably there will be more and more a need of a
more robust solution providing partners more and more flexibility when they
work together. Standardization from “off-the-shelf” solutions can be the “light of
the tunnel” for many interface problems, however, up to a certain extent as at
the same time automakers have to protect their core technologies by
developing their in-house solutions.
Like most empirical work, this study has limitations that might be addressed by
further research. The cases used in the research are not representative in the
industry, and it was approached the view of only one parties of the partnerships.
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6. Bibliography
Besanko,D.,Dranove, D., Shankey, M. and Shaefer, S. 2007. Economics of
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Kale, P.,Singh, H. and Perlmutter, H. 2000. Learning and Protection of
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Olin, J.G., Greis, N.P. and Kasarda, J. D. 1999. Knowledge Management
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Marini, L.M., Goncalves, M.B. and Giacobo, F. O Relacionamento e as Novas
Configuracoes ente Montadoras de Automoveis e seu Fornecedores. Vll
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Reuer, J.J. 2004. Strategic Alliances: Theory and Evidence. Oxford: Oxford
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Yoshino, M. Y. and Rangan, U. S. 1995. Strategic Alliances: An Entrepreneurial
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7.
Glossary
CAD: Computer Animated Design
CATIA: Computer Aided Three-Dimensional Interactive Application
CRM: Costumer Relationship Management
ERP: Enterprise Resourcing Planning
ENX: European Network Exchange
IT: Information Technology
JIS: Just in Sequence
JIT: Just in Time
LAN: Local Area Network
RFQ: Request for Quotation software
VPN: Virtual Private Network
UG: Unigraphics software
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8. APPENDICES
Appendix A
Eletric Window Switch
Headlight Switches
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- Business Processes and IT Requirements
Appendix B: Motor Prince
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