Protecting Business Innovations Via Strategy Strategy can be useful for protecting business innovation when no other form of protection exist (e.g. copyright, patent & trademark). Strategy can also compliment and strengthen other forms of innovation protection. Understanding how to use strategy to protect innovation and limitation of strategy as a form of protection will be useful for business managers. This course is one part of a four course series focusing on protection of business innovations using copyright, patent, trademark and strategy, and these four courses may be taken in any order that is most beneficial to students interested in learning about protecting innovation. Watch Course Overview: https://youtu.be/81adg1ZnbS4
2.5 Alliances, Joint Venture & Licensing
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來自 The Hong Kong University of Science and Technology 的課程
Protecting Business Innovations via Strategy
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從本節課中
Move Fast or Get Passed
Small firms that lack resources of giants can create barriers by being faster and more flexible. Some large firms (i.e. Google & Amazon) also seek to use rapid innovation and change to create sustainable barriers to being copied.
與講師見面
Theodore Henry King CLARKAssociate Professor
Information Systems, Business Statistics and Operations Management Department
Welcome back to our course on Protecting Business Innovation via Strategy.
When we think about operational effectiveness or speed of operations,
one way to gain some advantages is by
extending your operations outside the firm with alliances,
joint ventures, licensing, or outsourcing as
ways of doing more than you can do within your company.
Now, effectively, when we think about alliances, partnerships,
we're looking at some way in which two or more companies are
working together to achieve mutually beneficial objectives.
For example, Apple works with
many suppliers to build the products that you buy as Apple products.
You don't buy a Foxconn phone,
but it's made by Foxconn.
You don't buy a Qualcomm phone,
but it's got the chip from Qualcomm that provides you data.
You don't buy a Samsung phone,
well maybe you do.
But when you buy an Apple phone,
you don't realize that your screen is from Samsung.
And many of the chips in the phone are from Samsung.
Samsung is one of the biggest suppliers to Apple and they're also a competitor to Apple.
So, this is kind of a stressful relationship.
We've got a whole video that we're going to talk about more about this,
some of the tensions in this relationship.
Needless to say, it's also beneficial.
Apple has done so much more by leveraging suppliers,
leveraging or outsourcing production
than they could have ever done if they had done everything themselves.
Sometimes, sharing is a way to win even when you're smaller.
Bank of Boston is the largest bank in Boston.
HSBC is the largest bank in Hong Kong.
They both decided, "Because we're the biggest, we're the giant,
we should have a closed ATM network,
which means that only customers of our bank can use our ATMs in our city."
So in Boston, you want to use Bank of Boston ATM,
you've got to be a Bank of Boston customer.
Now, the same is true in Hong Kong,
you want to use an HSBC ATM,
you've got to be an HSBC customer or one of the affiliated banks to HSBC,
one of the banks owned by HSBC.
What then happens is other banks decide "Well,
we don't want the scale of Bank of Boston,
but if we all joined together,
if we all come together and become one shared ATM network for all of our enterprises,
we collectively can be bigger than Bank of Boston."
And it turns out, yes,
every other bank joined together is bigger than Bank of Boston.
Eventually, that put pressure on Bank of Boston to say,
"Maybe I got to join the group because I'm not big enough to
compete with every other bank combined and that becomes a shared network."
HSBC is still alone in Hong Kong,
but Jetco is bigger in terms of number of
ATMs than HSBC because they have Bank of China, Citibank,
Standard Chartered Bank, DBS,
and every other bank in Hong Kong is part of the Jetco-shared ATM network.
So, sharing is a way of winning.
The Android Operating System is a shared operating system
where every other company whether it's Xiaomi,
or whether it's Samsung,
or virtually but not every other company,
but virtually every other cell phone company is using Android if they're not using Apple.
And so, totally, Android has bigger share than Apple.
That is a way of using a shared ATM network to gain economies of scale through sharing.
What's a joint venture?
And why do we do that? Well, the joint venture is a partnership where you share profit,
loss, and control with a partner in the venture.
You work together with another company or sometimes could be an individual,
but normally, it's two companies going together in business.
And some of these are for strategic reasons that may seem a bit odd like GM,
major car company in America,
doing a joint venture with Toyota.
You might say, "Why? they're competitors.
Why would they work together?
Just like Samsung and Apple work together."
In this case, GM said,
"We could learn from Toyota,
how they make cars better in Japan."
Toyota said, "We could learn from GM,
how they make cars in America."
They opened up a shared factory where they both owned half of the factory in America.
And they both produce cars in the same factory so they could learn from each other.
Both dominant players, both learning from each other.
Didn't last forever, but it was a learning experience for both firms.
Self-driving cars, not sure this will last forever,
but Alphabet or Google producing self-driving cars using Fiat as their partner.
And Fiat as a partner is a useful partner because Fiat knows how to make
cars and Google knows how to do self-driving or technology.
Google is not a very good car company.
Fiat is not a very good technology company for AI.
Together, they make good partners.
Baidu, good technology company,
partnering with a bank to offer banking services,
leveraging licences and relationships, but for the bank,
leveraging customers and trust,
a way of partnering.
That's examples of joint ventures.
Sometimes, licensing is also a way to get an advantage or to win.
Copyright licensing, where Disney or Warner Brothers will
license to Mattel or other companies to manufacture or retail their products.
Sure, Disney can retail them themselves or could make their products themselves,
but in many cases,
it's more profitable and more attractive to license to someone else.
And that way, they don't have to get into the toy business,
they can license to Mattel or someone else
and they have a revenue stream out of licensing.
They don't have to be a toy manufacturing company.
Sometimes, you license products to competitors.
Sony Blu-ray, they decided to license this technology,
the best technology, for DVD,
HD DVDs, to other companies because if they didn't,
what would happen is every other company would say,
"We will compete with Sony.
We will use a inferior technology,
but because it becomes a standard,
because everybody's doing it, we'll win."
You might say, "Oh, come on, really?
Would an inferior technology win?"
Think VHS, VCRs.
VHS was the VCR that every everyone adopted.
Sony had a better technology called Beta.
Sony Beta was better than Panasonic VHS,
but Panasonic licensed to the world,
Sony was proprietary, Panasonic won.
That is not new.
That's happened over and over.
So, Qualcomm saying "We could be in the phone business,
but it's so much better if we license our chips to everyone.
And so, every high-end phone that needs
good data services will be using our Qualcomm chips.
We'll make a lot more money out of
licensing than we would trying to compete by selling phones."
So, what are the benefits of partnerships?
Well, there could be cost advantages.
Foxconn gives Apple much lower production cost than Apple could achieve by themselves.
There can be market access.
Getting a partner in a country like China may be the only way to get into the market.
It may be the only realistic way to get licenses
or it may be the only way to understand customers.
You may be able to block new entrants by getting quickly to
economies of scale or quickly to distribution channels.
You may be able to lock up partners, customers,
suppliers that may block others from entering or competing in your industry.
You may be able to reduce risk by having knowledge in other industries.
Baidu doesn't have to learn everything about banking.
They can leverage their partner's expertise and reduce their risk
of getting into a new business that may not be as comfortable to them.
And for the bank,
they reduce their risk of doing online services,
which is a new turf for them.
It may be part of continuous innovations.
You're struggling to find new ideas, let's try partnerships,
let's try new things,
let's try licensing, let's try alternatives.
We're not sure what's going to work.
We'll find a new way of distributing,
a new way of reaching out to partner with other people.
And a project in this course later in this series of discussions,
we'll have a project looking at Starbucks and
innovations and how can they do many creative things using partnerships,
alliances, licenses, and retail relationships.
So, there's lots of benefits of partnerships,
but there're also some risks.
We'll also talk about that in our Apple video
looking at what are some of the problems. Thank you.
