Volvo Renault Alliance
Case analysis of Volvo – Renault alliance
INTRODUCTION
The article described the life cycle of the alliance between car manufacturers Volvo and Renault. That was one of the largest and most prominent alliances in Europe at that time. The marriage of the two corporations was promising as it held economic promises that were applauded by the industry experts. Three years after the alliance had been founded, the allies split apart under not very friendly circumstances.
Although the motive was good, outcome was unhappy. Six factors were recognized in the article that undermined the failure of the alliance:
1) Misalignment of senior and operating managers
2) Path dependence
3) Alliance recontracting
4) Leadership style
5) Cultural differences between the french and the Swedes
6) Time
MAIN POINTS IN THE ARTICLE
According to the article 60 % of the alliances fail. Even if the motive was strong between the parties and expectations were high, there are plenty of things that can go wrong in an alliance. Marriage of two companies can at its best mean higher production effencies and lower costs. It can expedite access to technology, markets and customers and also promote organizational learning. Strategic competencies can be expanded and strategic responses to a much larger competitors can be launched, provided that the co-operation between the two companies proves to be successful.
3 THE PROBLEM THE ALLIANCE FACED
The Senior Executives of both Volvo and Renault considered the alliance healthy and successful when the interviews were done in 1993. Components exchange was going well maybe because it had a long history. But operational executives were not that happy with the co-operation. Two projects proved that there were challenges in the alliance:
- P4 project was a development that aimed to manufacture a common platform for high-end executive car. In order to agree on the safety requirements and to have enough high power in
INTRODUCTION
The article described the life cycle of the alliance between car manufacturers Volvo and Renault. That was one of the largest and most prominent alliances in Europe at that time. The marriage of the two corporations was promising as it held economic promises that were applauded by the industry experts. Three years after the alliance had been founded, the allies split apart under not very friendly circumstances.
Although the motive was good, outcome was unhappy. Six factors were recognized in the article that undermined the failure of the alliance:
1) Misalignment of senior and operating managers
2) Path dependence
3) Alliance recontracting
4) Leadership style
5) Cultural differences between the french and the Swedes
6) Time
MAIN POINTS IN THE ARTICLE
According to the article 60 % of the alliances fail. Even if the motive was strong between the parties and expectations were high, there are plenty of things that can go wrong in an alliance. Marriage of two companies can at its best mean higher production effencies and lower costs. It can expedite access to technology, markets and customers and also promote organizational learning. Strategic competencies can be expanded and strategic responses to a much larger competitors can be launched, provided that the co-operation between the two companies proves to be successful.
3 THE PROBLEM THE ALLIANCE FACED
The Senior Executives of both Volvo and Renault considered the alliance healthy and successful when the interviews were done in 1993. Components exchange was going well maybe because it had a long history. But operational executives were not that happy with the co-operation. Two projects proved that there were challenges in the alliance:
- P4 project was a development that aimed to manufacture a common platform for high-end executive car. In order to agree on the safety requirements and to have enough high power in
Bibliography: James, G. 2007.Lessons from the Mega-Mergers. URL: http://www.bnet.com/article/lessons-from-the-mega-mergers/163246?tag=mantle_skin;content. Quoted: 4.10.2010. Kumar, R. Negotiating Strategic Alliance Partnerships. URL: http://www.negotiationtraining.com.au/articles/planning-alliances-strategically/. Quoted: 4.10.2010.