Success factors in sustaining strategic alliances between large and small businesses in the IT sector in South Africa

Smith, Esme Joy (2008-12)

Thesis (MBA)--Stellenbosch University, 2008.

Thesis

ENGLISH ABSTRACT: Collaborative strategies such as strategic alliances are being adopted by small and large companies to gain a competitive advantage in a fast changing global and local business environment. Companies are recognising the value of achieving their business goals through mutually beneficial strategic alliances. Strategic alliances provide a more flexible, non-permanent means through collaborative engagement between companies to attain complementary services, skills, products and resources. This study aimed to contribute to an understanding of the nature of strategic alliances between large and small companies within the information technology (IT) sector in South Africa and to highlight the particular dynamics, challenges and success factors from the perspective of these companies. The research question posed was: "What are the success factors that impact on the sustainability of strategic alliances between large and small companies within the IT industry in South Africa?" In this study, a strategic alliance was defined as a "co-operative arrangement between two or more local and / or global firms that invest in a collaborative effort to achieve their individual and mutual goals and positively impact their competitive positioning". Limited research had been conducted on strategic alliances in South Africa in general and no research was available on the IT sector. This exploratory research study was conducted to provide an overview of the dynamics and issues related to strategic alliances keeping the respective contexts of small and large companies in mind. This study contributes to an understanding of the respective contributions of small and large companies in complementing their respective strengths and experiences to achieve business objectives. This area of study supports government policies and initiatives in promoting the collaboration between large and small companies in developing the economy and the small business sector in particular. Within a dynamic and fast-growing information communications technology (ICT) sector, there are increasing opportunities for strategic alliances between small and large companies within the IT sub-sector. A qualitative, inductive research approach was used to determine the kind of alliances that existed, test the themes identified in the literature review in relation to the South African context and identify new insights based on the experiences of respondents engaged in strategic alliance relationships. This approach supported the assumption that the circumstances explored are complex and dynamic and require flexibility both in the approach and methods used. Semi-structured, face-to-face interviews were used as the instrument or method of data collection. An interviewer guide was developed to direct the interview. Themes and key factors identified through the literature review provided input into the structure and content of the interviews. Three small and three large companies from the IT sector were interviewed as part of this study. The number of employees was used as the primary indicator of company size using the guidelines provided by the DTI. Research results indicated that the main motivations for engaging in strategic alliances included risk sharing, access to new markets, expanded product service offerings, complementary skills and learning, funding support and enhancing competitive positioning. The primary motivator that all respondents identified was 'collaborative bidding for business'. Forty-three percent of alliances of the small and large companies interviewed were with small companies. Small companies indicated a wider range of alliances and included partnering with micro enterprises to large multinationals in their alliance formations. Strategic alliances were monitored and measured by all respondents. Quantitative measures were used most frequently and included measures such as profitability, delivery to project deadlines, meeting service levels and delivery to baseline commitments made in the solutions submitted to clients. Qualitative measures were identified but applied in a less structured way. Challenges identified by small and large companies included achieving an understanding of the culture and needs of small and large companies, managing the financial challenges, relationship management and dealing with co-opetition where competitors are incorporated into the strategic alliance. Respondents all indicated that the value of strategic alliances outweigh the cost of establishing and managing strategic alliances particularly between small and large companies. The success factors identified were largely similar between small and large companies. The highest ranked factors identified by small companies were partner selection and benefit analysis whereas leadership and strategy were the main priority factors for large companies. It is recommended that further research be conducted into measuring and monitoring methods that assists in monitoring the effectiveness of alliances and to develop the capacity of strategic alliance managers in managing the complex of relationships between alliance members, alliance delivery performance and client demands and influences on the strategic alliance.

AFRIKAANSE OPSOMMING: Klein en groot maatskappye gebruik toenemend samewerkingstrategiee soos strategiese alliansies om 'n kompeterende voorsprong te verkry in 'n vinnig veranderende globale en plaaslike besigheidsomgewing. Maatskappye besef die waarde daarvan om hulle besigheidsdoelwitte te bereik deur wedersydse voordelige strategiese alliansies. Strategiese alliansies verskaf 'n buigsamer, nie-permanente metode, deur middel van samewerking tussen maatskappye, waarmee bykomende dienste, vaardighede, produkte en hulpbronne verkry kan word. Hierdie studie beoog om by te dra tot die begrip van die aard van strategiese alliansies tussen groot en klein maatskappye in die Informasie Tegnologiesektor (IT-sektor) in Suid-Afrika en om die spesifieke dinamika, uitdagings en suksesfaktore vanuit die perspektief van hierdie maatskappye te belig. Die navorsingsvraag is: "Wat is die suksesfaktore wat 'n impak het op die volhoubaarheid van strategiese alliansies tussen groot en klein maatskappye in die IT-bedryf in Suid-Afrika?" In hierdie studie word 'n strategiese alliansie gedefinieer as 'n "samewerkingsooreenkoms tussen twee of meer plaaslike en / of globale maatskappye wat bele in 'n samewerkingspoging om hulle individuele en gesamentlike doelwitte te bereik en wat 'n positiewe uitwerking het op hulle kompeterende posisionering." Beperkte navorsing is al gedoen oor strategiese alliansies in Suid-Afrika in die algemeen en geen navorsing was beskikbaar oor die IT-bedryf nie. Hierdie ondersoekende navorsingstudie is gedoen om 'n verkennende oorsig te verskaf van die dinamika en kwessies verwant aan strategiese alliansies, spesifiek binne die konteks van onderskeidelik klein en groot maatskappye. Hierdie studie dra by tot 'n begrip van die onderskeie bydraes van klein en groot maatskappye in soverre hulle onderskeie sterk punte en ervarings mekaar komplementeer om besigheidsdoelwitte te bereik. Die navorsingsveld ondersteun ook die regering se beleid en inisiatiewe om samewerking tussen groot en klein maatskappye te bevorder en daardeur die ekonomie, spesifiek die kleinsakesektor, te ontwikkel. Binne 'n dinamiese en snelgroeiende Informasie- en Kommunikasiesektor (IKT-sektor), is daar toenemend geleenthede vir strategiese alliansies tussen klein en groot maatskappye binne die IT-subsektor. 'n Kwalitatiewe, inleidende navorsingsbenadering is gebruik om die tipe alliansies wat bestaan te bepaal, die geidentifiseerde temas uit 'n literatuurstudie, toegespits op die Suid-Afrikaanse situasie, te toets en nuwe insigte, gebaseer op die ervarings van die respondente in strategiese alliansieverhoudings, te identifiseer. Hierdie benadering het die aanname bevestig dat die omstandighede wat ondersoek is, kompleks en dinamies is, en buigsaamheid in beide die benadering en metodiek, vereis. Gedeeltelik gestruktureerde, persoonlike onderhoude is gebruik as die navorsingsinstrument of -metode van dataversameling. 'n Vraelys is opgestel as riglyn vir die onderhoude. Die temas en kernfaktore, wat geidentifiseer is uit die literatuuroorsig, het insette vir die struktuur en inhoud van die onderhoude verskaf. Drie klein en drie groot maatskappye in die IT-bedryf is as deel van hierdie studie nagevors. Die getal werknemers is gebruik as die belangrikste bepaler van die maatskappy se grootte volgens die riglyne verskaf deur die Departement van Handel en Nywerheid (DHN). Die navorsingsresultate het aangedui dat die belangrikste beweegredes vir die sluit van strategiese alliansies die volgende is: gedeelde risiko's, toegang tot nuwe markte, uitgebreide produk- / diensaanbiedings, aanvullende vaardighede en opleiding, steun vir befondsing en die bevordering van kompeterende posisionering. Die belangrikste beweegrede wat alle respondente geidentifiseer het, was "gesamentlike tender vir besigheid" . Drie-en-veertig persent van die alliansies van die klein en groot maatskappye wat ondersoek is, was met klein maatskappye. Klein maatskappye het 'n wyer verskeidenheid van alliansies, insluitend vennootskappe van mikro-ondernemings tot groot multinasionale maatskappye, in hulle alliansievormings, ingesluit. Strategiese alliansies is deur alle respondente gemonitor en gemeet. Kwantitatiewe meetinstrumente is die meeste gebruik en het maatstawwe bevat soos winsgewendheid, lewering binne die projek se spertye, die nakom van diensvlakvereistes en die nakom van die aanvanklike ooreenkoms in die oplossings voorgehou aan die kliente. Kwalitatiewe meetinstrumente is ook geidentifiseer, maar minder gestruktureerd toegepas. Die volgende uitdagings is deur beide klein en groot maatskappye geidentifiseer: om'n begrip te vorm van die kultuur en behoeftes van klein en groot maatskappye, bestuur van die finansiele uitdagings, verhoudingsbestuur en die hantering van kooptering waar mededingers in die strategiese alliansie ingesluit is. Al die respondente het aangedui dat die waarde van strategiese alliansies die koste verbonde aan die sluit en bestuur van strategiese alliansies oortref, veral tussen klein en groot maatskappye. Die suksesfaktore wat geidentifiseer is, was hoofsaaklik dieselfde by klein en groot maatskappye. Die faktore wat die meeste waardeer is deur die klein maatskappye, was die keuse van vennote en voordele-analises, terwyl leierskap en strategie die twee hooffaktore vir die groot maatskappye was. Daar word aanbeveel dat verdere navorsing gedoen word oor meetinstrurnente en moniteringmetodes wat kan help om die effektiwiteit van alliansies te monitor. Die kapasiteit van strategiese alliansiebestuurders om die verskeidenheid van verhoudings tussen alliansielede, alliansie-diensleweringvermoens en klientvereistes en invloede op die strategiese alliansie, te bestuur, moet ook ontwikkel word.

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