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The best innovations in today world originate from individuals or organization collaborating, therefore, combining efforts using resources to accelerate performances. Firms are able to produce good results by minimizing risks, reducing the cost of production and time wastage as compared to individuals or organizations investing alone. However, collaboration might be a good idea, there is sharing of anticipated outcomes of innovation and total control of growth. Besides, collaboration exposes the firms into some of the potential risks because of the partnership. The paper is evaluating the strategic fit and relative fit of Wal-Mart’s collaboration with Google to enhance its ecommerce. For a long time, Wal-Mart’s has been trying to defeat Amazon in ecommerce but to no success. It has come to accept that it lacks the technological capability to defeat Amazon. This acknowledgment has made the company to team up with Google, the search engine juggernaut to at least leverage its core capabilities in online shopping.
Choosing on the partners significantly determine the impact of a collaboration. In this case, factors such as the size and strength, objectives, available resources and correspondence of share value and culture have an impact on partnership (Y and Hamel, 1997). Actually, narrowing those factors into two; resource fit and strategic fit is useful for better understanding.
Resource fit is the extent to which prospective partners possess resources of high value after strategically and effectively integrated. Subsequently, resources are either complementary or supplementary, therefore the organizations opt to go for complementary resources that they do not have, while on the other hand, supplementary resources help other organizations to add on the related resources they hold in their realization of their objectives. For instance, Wal-Mart’s collaboration with Google was inked so that the retaligiant can take advantage of Google technical skills in areas such as user experience and quick search which have an impact on online sales. Nonetheless, there are collaboration that are aimed at reducing competition through joining forces to enjoy broader market and reduce cost of operation. An example of this collaboration is that that happened between British Petroleum and Mobil.
Moreover, strategic fit is an extent to which partners have well-suited goals and elegances. In fact, the partners’ aims are not to interfere with each other goals but rather fulfilling the objectives of the collaboration. Strategic fit help the partners to identify the organizations that have compatible objectives as it reduces time wastage, resources and they can prevent conflicts.
Conflicts in collaboration happen when partners fog the alliance without understanding each other main objectives. An example is seen when General Motors and South Korea’s Daewoo collaboration collapses due to the mismatch of their objectives. The General Motors wanted to use the association to cut down the costs on its current automobile models, while on the other hand,Korea’s Daewoo firm initiative was to come up with new technologies and scheme new models.
Apart from looking at resource fit and strategic fit before collaboration, there was a need to assess the effect the firms on their opportunities and the possible threats that the alliance might on the external environment. The internal environment of a firm entails strength, weaknesses, and the competitive advantage. Both of the firms must examine their weaknesses and strength for accelerating the performance thus achieving the goals of the Alliance. During the collaboration, Google helped Wal-Mart redesign its site and assessment show that sales have been increasing. It is therefore evidence enough that the collaboration was successful and could have achieved even more if it was given more time. This shows that collaborations should be assessed from a long-term point of view and not short-term. This is so as the impact to the collaborating companies will take time before they manifest.
Another important factor that collaborating firms need to work on is the need for continuous assessment. This is necessary and important as it helps the companies to stay focused and ensure that they deliver on their promise. Without regular assessment, collaborating companies are prone to lose focus and have no beneficial impact.
In conclusion, firms need to be careful when entering into collaborations to avoid losses that might result due to incompatible partners. Also, firms collaborate with others to either complement or supplement on the resources they have for profit maximization through the joint investment. Lastly, firms have to consider the resource fit and strategic fit ease identification of the potential partners.
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