Posted on by Judy

Fabricate-It, Inc., is a medium-size manufacturing company that uses standard assembly lines to produce its products. Its employees tend to be poorly educated and perform monotonous work. Think-It, Inc., is a software design firm that writes customized programs to solve its customers’ problems. Its employees tend to be highly educated and perform highly creative work. Both are reconsidering their current organizational designs. How might each of these organizations benefit by entering into strategic alliances with other organizations?

Strategic alliances are agreements made by two firms that have resources that complement each other. Such agreements are short of mergers/ acquisitions as there is no change in their legal entity. This is typically done to add capacity, enter new markets, share costs, etc.
In case of Fabricate-It, they have an assembly manufacturing line with low skilled employees. By entering into strategic alliance, the firm may benefit in the following ways:
Fabricate can enter into an alliance with a large market leader in the same industry by becoming contract manufacturers. This would help the large company which is operating at over capacity to move some of their assembly work to Fabricate-It. In return, Fabricate-It can get regular business and gain knowledge of better design and process in assembly manufacturing.
Employees of Fabricate-It can learn new skills and upgrade their knowledge from the alliance with a larger well established firm that has higher skilled workers. This can be achieved through knowledge transfer and skills training programs.
The alliance with a larger firm will increase the brand value for Fabricate-It that will benefit the firm in upgrading its market profile and gaining bargaining power.
In case of Think-It, the firm can have strategic alliance with enterprise technology firms provide hardware servers and data storage. Think-It being a software design firm can benefit by having an alliance with server storage firms in the following ways:
The two firms can approach their target customers together as an end-to-end solutions providers. Customers would find value in dealing with the same party for both hardware and software solutions.
The highly educated employees of Think-It can become specialist in the technologies offered by the partner firm. This gives Think-It a competitive advantage in the market.
Marketing and selling expenses can be shared by the partner firms.
There are also synergies for Fabricate-It to have a strategic alliance with Think-It.
The two firms are not competitors but they have complementary strengths. Fabricate-It has an assembly line and Think-It has high skilled employees.
Think-It can develop custom built software for Fabricate-It and help them streamline their operations. Once the solution is implemented at Fabricate-It, the technology can be offered as licensed packaged software to other clients. The license revenue can be shared with Fabricate-It.
The alliance will help the employees of Fabricate-It to upgrade their skills by learning from the highly skilled employees of Think-It. Training programs to use the software can be provided to the employees by Think-It.
 
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  1. Fabricate-It, Inc., is a medium-size manufacturing company that uses standard assembly lines to produce its products. Its employees tend to be poorly educated and perform monotonous work. Think-It, Inc., is a software design firm that writes customized programs to solve its customers’ problems. Its employees tend to be highly educated and perform highly creative work. Both are reconsidering their current organizational designs. 1.What type of organizational design would you imagine would best suit the needs of Fabricate-It? Explain your decision.
  2. Fabricate-It, Inc., is a medium-size manufacturing company that uses standard assembly lines to produce its products. Its employees tend to be poorly educated and perform monotonous work. Think-It, Inc., is a software design firm that writes customized programs to solve its customers’ problems. Its employees tend to be highly educated and perform highly creative work. Both are reconsidering their current organizational designs. What type of organizational design would you imagine would best suit the needs of Think-It? Explain your decision.
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