A PROJECT REPOT ON

OPERATING COSTING

SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENT FOR

MASTER OF COMMERCE (M.COM)

ACCOUNTACY GROUP

SEMESTER - II

IN THE SUBJECT

ADVANCE COST ACCOUNTING

TO UNIVERSITY OF MUMBAI

BY

MONAM UMASHANKAR TIWARI

ROLL NO. 15A142

2015-2016

UNDER THE GUAIDANCE OF

PROF. GANESH BHOSALE

CHETANAS

H.S. COLLEGE OF COMMERCE & ECONOMICS

& SMT KUSUMTAI CHAUDHARI COLLEGE OF ARTS

BANDRA (EAST), MUMBAI- 400 051

1
 DECLATRATION

I, MONAM TIWARI student of Master of Commerce

(M.COM)

Accountancy Group Semester -II, Roll no. 15A142 of

Chetanas H.S.

College of Commerce & Economics & Smt K.C.

College of Arts.

(CHETNAS M.COM. CENTER) Bandra (East), Mumbai

400 051,

hereby declare that I have completed the project on

OPERATING

COSTING in the subject ADVANCE COST ACCOUNTING

for the

Academic Year 2015- 2016.

MONAM TIWARI

Date: 2nd March, 2016

2
 CERTIFICATE

I, Prof. GANESH BHOSALE hereby certify that MONAM

TIWARI ,

Roll no. 15A142 of M. Com Semester II of ChetanaS M.com

Center ,

has Successfully completed project on STRATEGIC

ALLIANCES

AND CORPORATE GOVERNANCE TECHMAHINDRA in the

subject STRATEGIC MANAGEMENT for the Academic

Year 2015 - 2016

Internal Examiner External

Examiner

Coordinator Principal

3
 ACKNOWLEDGEMENT

As the juncture , Iould like to exepress my sincere

gratitude to those who have helped me directly or
indirectly during the project.

My sincere thanks to Prof. DR. B. B. KAMBLE for his

whole hearted Support, constructive advice and practical
guidance. I would also like to thank the college library for
the reference material and information used.

MONAM TIWARI

4
 INTRODUCTION ON STRATEGIC ALLIANCES

Strategic alliances are not new. They have been with us for many
decades. However, there is a renewed interest and awareness of these
types of activities, in many cases due to increased opportunities
provided by developments in global markets and technology
(Nooteboom, 2004). Also, pressures for organizations to improve their
competitiveness have encouraged then to seek collaborations with
other organizations, to access complementary competences that would
otherwise be too difficult or time consuming to develop in-house.

Since the 1980s, strategic alliances have been the subject of

research interest in a variety of different literatures. Both empirical and
theoretical papers cross many academic fields including engineering,
management, marketing, accounting and international business.
Strategic alliances account for a large proportion of organizational
activity, yet there is relatively limited empirical research has been
devoted to understanding governance1 and control of these
arrangements. Much of the research has been normative or anecdotal.
The aim of this paper is to drawn on this literature and on a case study
to consider how trust and risk influence the choice of alliance structure
and control system.

Strategic alliances are interfirm cooperative arrangements

aimed at achieving the strategic objectives of the partners (Das and
Teng, 2002). They provide a way for organizations to pool their
resources to create value that each partner could not achieve if they
acted alone (Inkpen and Ross, 2001). These voluntary organizational
relationships involve meaningful and durable exchange, sharing, or co-
development of new knowledge, products, services or technologies (de
Rond, 2003, p. 90). Strategic alliances come in many forms, including
horizontal alliances between competitors, vertical alliances between

5
buyers and suppliers, and diagonal alliances between firms in different
industries (Notebook, 1999, p. 1).2

They can take the form of outsourcing, franchises, joint

ventures, joint product development, joint research and development
and joint marketing arrangements. However, to describe an alliance in
these ways does not always capture the essence or scope of the
arrangements, and is not very helpful when the focus is on analysing
the relationships and understanding the nature of alliance structure
and control systems. A common way of viewing alliances is to
represent them as equity or nonequity alliances, and this implies
certain governance and control arrangements. Alliance structure is not
predetermined by the purpose of the alliance and various forms can be
used to achieve the same strategic objectives (Das and Teng, 2001b).

Strategic alliances are said to be a source of competitive

advantage (Ireland et al., 2002; Das and Teng, 2000). However, there is
also a growing body of evidence of a high failure rate in such
arrangements (Gerwin, 2004; de Rond, 2003). One cause is the high
level of risk associated with alliances, compared to in-house activities
(Das and Teng, 2001a). Risk may be caused by the difficulties inherent
in gaining cooperation with partners who have different objectives and
orientations, and the potential for partners to opportunistically exploit
the dependence relationship (Dekker, 2004). It has been argued that
appropriate governance structures and management control systems
(MCS) and trust, may work to reduce risk and decrease the probability
of failure (Das and Teng, 2001a; Spekl, 2001; Dyer, Kale and Singh,
2001; Nooteboom, 2004), and there have been several calls to extend
the domain of MCS to consider the nature of these inter-firm control
arrangements (Otley, 1994; Hopwood, 1996; Spekl, 2001).

In recent years, the relationship between MCS and trust in

outsourcing and supplier relationships has been the focus of several
case studies (Seal and Vincent-Jones, 1997; van der Meer-Kooistra and
Vosselman, 2000; Das and Teng, 2001a, 2001b; Mouritsen, Hansen and
Hansen, 2001; Langfield-Smith and Smith, 2003; Dekker, 2003, 2004;
Cooper and Slagmulder, 2004).

There is also theoretical work that has focused on risk and

control (Das and Teng, 1996; McCutcheon et al., 2004) or on risk, trust
and control (Das and Teng, 2001b; Nooteboom, 2004) in strategic
alliances. However, there are limited empirical studies that have
considered the role that trust and risk plays in influencing the choice of
governance structure and the design of management control systems
(MCS) under various forms of strategic alliances. Thus, the aim of this
paper is to draw on these theoretical and prior empirical studies, to
consider how trust and risk influence choices of governance structures
and control systems in strategic alliances.

A case study of a strategic alliance in the construction industry

will be drawn on to illustrate the relationships. This paper is structured
as follows. In the following section, concepts from transaction cost
economics are considered, and combined with theories of trust and risk

6
to form a model of the relationships between trust, risk, relational
characteristics, alliance governance structure and MCS.

The next section describes a case study of an alliance in the

construction industry which focuses on the processes of forming and
managing the relationship in the pre-alliance and interim alliance
stages. The case is then analysed to consider the relations in the
theoretical model. In the final section contributions of this research are
summarised and areas for further research are presented.

DEFINITION OF STRATEGIC ALLIANCES

A strategic alliance is an agreement between two or more parties

to pursue a set of agreed upon objectives needed while remaining
independent organizations. This form of cooperation lies
between mergers and acquisitions and organic growth. Strategic
alliances occurs when two or more organizations join together to
pursue mutual benefits.

Partners may provide the strategic alliance with resources such as

products, distribution channels, manufacturing capability, project
funding, capital equipment, knowledge, expertise, or intellectual
property.

The alliance is a co-operation or collaboration which aims for

a synergy where each partner hopes that the benefits from the alliance

7
will be greater than those from individual efforts. The alliance often
involves technology transfer (access to knowledge and
expertise), economic specialization, shared expenses and shared risk.

DEFINITIONS AND DISCUSSION

There are several ways of defining a strategic alliance. Some of the

definitions emphasize the fact that the partners do not create a new
legal entity, i.e. a new company. This excludes legal formations like
joint ventures from the field of Strategic Alliances. Others see joint
ventures as possible manifestations of Strategic Alliances. Some
definitions are given here:

HISTORICAL DEVELOPMENT OF STRATEGIC ALLIANCES

Some analysts may say that strategic alliances are a recent

phenomenon in our time, in fact collaborations between enterprises
are as old as the existence of such enterprises. Examples would be
early credit institutions or trade associations like the early Dutch
guilds. There have always been strategic alliances, but in the last
couple of decades the focus and reasons for strategic alliances has
evolved very quickly

In the 1970s, the focus of strategic alliances was the performance of

the product. The partners wanted to attain raw material at the best

8
quality at the lowest price possible, the best technology and improved
market penetration, while the focus was always on the product.

In the 1980s, strategic alliances aimed at building economies of scale

and scope. The involved enterprises tried to consolidate their positions
in their respective sectors. During this time the number of strategic
alliances increased dramatically. Some of these partnerships lead to
great product successes like photocopiers by Canon sold under the
brand of Kodak, or the partnership of Toshiba and Motorola whose
joining of resources and technology lead to great success with
microprocessors.

In the 1990s, geographical borders between markets collapsed and

new markets were enterable. Higher requirements for the companies
lead to the need for constant innovation for competitive advantage.
The focus of strategic alliances relocated on the development of
capabilities and competencies.

9
 ADVANTAGES AND DISADVANTAGES OF STRATEGIC
ALLAINCES

1). ADVANTAGES OF STRATEGIC ALLIANCES.

For companies there are many reasons to enter a Strategic Alliance:

Shared risk: The partnerships allow the involved companies to

offset their market exposure. Strategic Alliances probably work
best if the companies portfolio complement each other, but do
not directly compete.

Shared knowledge: Sharing skills (distribution, marketing,

management), brands, market knowledge, technical know-how
and assets leads to synergistic effects, which result in pool of
resources which is more valuable than the separated single
resources in the particular company.

Opportunities for growth: Using the partners distribution

networks in combination with taking advantage of a good brand
image can help a company to grow faster than it would on its
own. The organic growth of a company might often not be
sufficient enough to satisfy the strategic requirements of a
company, that means that a firm often cannot grow and extend
itself fast enough without expertise and support from partners

Speed to market: Speed to market is an essential success

factor In nowadays competitive markets and the right partner
can help to distinctly improve this.

Complexity: As complexity increases, it is more and more

difficult to manage all requirements and challenges a company
has to face, so pooling of expertise and knowledge can help to
best serve customers.

Costs: Partnerships can help to lower costs, especially in non-

profit areas like research & development.

Access to resources: Partners in a Strategic Alliance can help

each other by giving access to resources, (personnel, finances,
technology) which enable the partner to produce its products in a
higher quality or more cost efficient way.

Access to target markets: Sometimes, collaboration with a

local partner is the only way to enter a specific market.
Especially developing countries want to avoid that their
resources are exploited, which makes it hard for foreign
companies to enter these markets alone.

Economies of Scale: When companies pool their resources and

enable each other to access manufacturing capabilities,

10
 economies of scale can be achieved. Cooperating with
appropriate strategies also allows smaller enterprises to work
together and to compete against large competitors.

2). FUTHER ADVANTAGES

Access to new technology, intellectual property rights,

Create critical mass, common standards, new businesses,

Diversification,

Improve agility, R&D, material flow, speed to market,

Reduce administrative costs, R&D costs, cycle time

Allowing each partner to concentrate on their competitive

advantage.

Learning from partners and developing competencies that

may be more widely exploited elsewhere.

To reduce political risk while entering into a new market

2). DISADVANTAGES

Disadvantages of strategic alliances include

Sharing: In a Strategic Alliance the partners must share

resources and profits and often skills and know-how. This
can be critical if business secrets are included in this
knowledge. Agreements can protect these secrets but the
partner might not be willing to stick to such an agreement.

Creating a Competitor: The partner in a strategic

alliance might become a competitor one day, if it profited
enough from the alliance and grew enough to end the
partnership and then is able to operate on its own in the
same market segment.

Opportunity Costs: Focusing and committing is

necessary to run a Strategic Alliance successfully but might
discourage from taking other opportunities, which might be
benefitial as well.

Uneven Alliances: When the decision powers are

distributed very uneven, the weaker partner might be
forced to act according to the will of the more powerful
partners even if it is actually not willing to do so.

11
 Foreign confiscation: If a company is engaged in a
foreign country, there is the risk that the government of
this country might try to seize this local business so that
the domestic company can have all the market on its own.

Risk of losing control over proprietary information,

especially regarding complex transactions requiring
extensive coordination and intensive information sharing

Coordination difficulties due to informal cooperation

settings and highly costly dispute resolution.

SUCESSSFUL FACTORS FOR STARTEGIC ALLAIANCES

Use the eight steps below as a guideline to help you develop a plan
and structure new strategic partnerships, and keep the relationships
with your existing partners on solid footing. These success factors do
more than build good partnerships; they will build revenue
streams that will grow steadily over time:

1. When establishing a new alliance, hold a strategic planning

meeting between the key stakeholders of both firms. In this initial
kick-off meeting it is very important to include a cross-functional team
of people from product management, marketing, sales, finance, and
the executive sponsors. This will get everyones ideas, concerns, and
expectations on the table and create positive momentum.

2. Agree on the targeted revenue and benefits each party will

receive. Both parties need to have some skin in the game.

3. Determine the marketing support needs for both companies.

Create a partner marketing plan that outlines all the programs, costs,

12
roles, and responsibilities. The marketing staff from each company can
create sub team to develop the plan and meet as often as necessary to
refine it.

4. Evaluate the training needs for various functional teams

(marketing, sales, technical, customer service, etc.), paying special
attention to training for the sales force. Sales teams need ongoing
training, not just a one-time training event.

5. Agree on how each company will support the sales teams in

sales calls. If your product or service is technically complex, a joint
sales team consisting of both a sales and technical expert should meet
with customers. An added benefit to this approach is it is a fast,
efficient way for each company to learn from the other. The team will
learn key benefits of the joint solution, hear customer objections and
learn how to overcome them, and it will help them refine their value
proposition.

6. To establish early momentum, find a sales evangelist who is

successfully selling the product or service and making significant
commissions. Find out what he or she is doing and promote this to the
larger sales teams so they can learn how to be more successful and
make more sales from the strategic alliance.

7. Agree on the measures of success up front. What metrics

will be tracked, measured, and reported to both companies to
understand if the partnership is successful? A simple one page
document or brief executive summary can be a valuable
communication tool. Then quarterly, the cross functional team meets
to review results and adjust the game plan.

8. Focus on creating quick wins. Dont take on too much too

fast; otherwise, the alliance will just be viewed as another program of
the month that didnt work. Start small and build momentum and
success stories. Both teams should agree on what the early wins will be
so there is focused energy toward realizing the goals.

The most successful strategic partnerships have structure,

accountability, and encourage collaboration. Follow these eight
steps and create strategic alliances that are set up to succeed.

LIFE CYCLE OF STRATEGIC ALLIANCES

1). FORMATION

13
Forming a Strategic Alliance is a process which usually implies some
major steps that are mentioned below:

Strategy Development: In this stage the possibility of a

Strategic Alliance is examined with respect to objectives, major
issues, resource strategies for production, technology and
people. It is necessary that objectives of the company and of the
alliance are compatible.

Partner Assessment: In this phase potential partners for the

Strategic Alliance are analyzed, in order to find an appropriate
company to cooperate with. A company must know the
weaknesses and strengths and the motivation for joining an
alliance of another company. Besides that appropriate criteria for
the partner selection are defined and strategies are developed
how to accommodate the partners management style.

Contract Negotiations: After having selected the right partner

for a Strategic Alliance the contract negotiations start. At first all
parties involved discuss if their goals and objectives are realistic
and feasible. Dedicated negotiation teams are formed which
determine each partners role in the alliance like contribution
and reward, penalties and retaining companies interests.

2). OPERATION

In this phase in the life of a Strategic Alliance, an internal structure

occurs under which its functions develop. While operating it, the
alliance becomes an own new organization itself with members from
the origin companies with the aim of meeting all previously set
objectives and improving the overall performance of the alliance which
requires effective structures and processes and a good, strong and
reliable leadership. Budges have to be linked, as well as resources
which are strategically most important and the performance of the
alliance has to be measured and assessed.

3). END / DEVELOPMENT

There are several ways how a Strategic Alliance can come to an end:

Natural End: When the objectives, the Strategic Alliance was

founded for have been achieved, and no further cooperation is
necessary or beneficial for the involved enterprises the alliance
can come to a natural end. An example for such a natural end is
the alliance between Dassault and British Aerospace which was
founded to manufacture the Jaguar fighter aircraft. After the end
of the program no further jets were ordered so the involved
companies ended their cooperation

14
 .

Extension: After the end of the actual reason for the alliance,
the cooperating enterprises decide to extend the cooperation for
following generations of a respective product or expand the
alliance to new products or projects. Renault for example worked
together with Matra on three successive generations of their
Espace minivan, whereas Airbus expanded its cooperation to
include a complete family of airplanes.

Premature Termination: In this case the Strategic Alliance is

ended before the actual objectives of its existence have been
achieved. In 1987 Matra-Harris and Intel broke up their Cimatel
partnership before one of the planned VLSI chips was
manufactured.

Exclusive Continuation: If one partner decides to get out of the

alliance before the common goals have been achieved, the other
partner can decide to continue the project on its own. This
happened when Saab decided to continue with the designing of a
commuter aircraft (SF-340), after the partner Fairchild had to
cancel the alliance because of internal problems. After Fairchild
left the project it was named Saab 340.

Takeover of Partner: Strong companies sometimes have the

opportunity to take over smaller partners. If one firm acquires
another the strategic alliance comes to an end. After almost ten
years of cooperation in the field of mainframe computers a
British computer manufacturer, named ICL, was taken over by
Fujitsu in 1990.

15
 STRATEGIC ALLIANCES WITH TECH-MAHINDRA

Developing new WIN next generation platform and joint go-to-market

strategies in key expansion territories

June 29, 2009, London: WINplc, the leading provider of interactive

mobile information and entertainment services, today confirmed it had
agreed a strategic alliance with global systems integration and
business transformation specialist, Tech Mahindra.

Under the terms of the initial agreement, Tech Mahindra will work with
WIN to develop the companys next generation mobile platform. As a
first step in a broader strategic alliance the two companies will also
look to develop joint go-to-market strategies in key territories, notably
Tech Mahindras strong Asian market.

Announcing the agreements, WINplc CEO Graham Rivers said: This is

an exciting investment in the future by WIN. The initial project with
Tech Mahindra will extend WINs market leadership by providing
improved service set-up and monitoring capabilities, enhanced
transaction reporting and analysis with significant improvements in
capacity and throughput to support even more media and feature rich
services.

We plan to migrate all our existing customers across to the new

platform in the next 12 months and at the same time embark on a
programme with Tech Mahindra to take our extended capability to a
wider audience, he added.

The new platform that Tech Mahindra will develop for WIN will provide
increased functionality, new payments solutions and faster throughput
of transactions across a broad range of media services. It will also
build on the investments WIN has made in the last two years on web
and WAP-based services and portals, video streaming, audio,
entertainment content and online storefront management tools.

Welcoming the alliance, Jagdish Mitra, CEO CanvasM (Tech Mahindras

VAS subsidiary) commented: WIN has been a leader in providing VAS
services in Europe and their expertise in delivering information and
entertainment to mobile phone users in Europe has great replication
potential and can be integrated into broader outsourced service
offerings and other efficiency tools for large enterprises.

Our experience in offering VAS services in India, South East Asia and
the Middle East offers significant synergistic value. The customer reach
combined with the expertise of our two organisations is very
complementary and we are excited about the prospects of being able
to develop joint initiatives together that maximise our core
strengths.As part of the broader agreement, WIN will have access to
Tech Mahindras applications and outsourcing services including

16
development resources for large scale projects. This will also enable
WIN to focus its own development team on core product and service
enhancement.

About WIN

WIN is an innovator in interactive mobile entertainment and information distribution with

a ten-year track record of developing an unrivalled variety of services for Europes
leading content owners, mobile operators, corporate enterprises, broadcasters and media
corporations.

WIN enables companies to use mobile services to improve business efficiency, grow
revenues and reduce costs. Companies using WINs services are able to improve
communication with existing customers, attract new customers, increase brand loyalty
and enhance customer satisfaction. An impressive and growing client list includes such
household names as Vodafone, T-Mobile, Orange, Sony Ericsson, AOL, The AA, Centrica
and E-On.Headquartered in Buckinghamshire, UK, the Group has built on its success by
extending its reach into new overseas markets including Ireland, Germany, Austria,
Hungary, Greece, Scandinavia, Australia, Africa, Malaysia, Thailand and Singapore. WIN
is structured into three operational units, Managed Services, Enterprise Solutions and
New Media.

TECHMAHINDRA LTD (TECHM) COMPANY HISTORY

Tech Mahindra is a global systems integrator, business transformation

and consulting firm focused on the communications industry. Started
its life in the year of 1986 as Mahindra-British Telecom Limited, for over
two decades, Tech Mahindra has been the chosen transformation
partner for wireline, wireless and broadband operators in Europe, Asia-
Pacific and North America.

Majority owned by Mahindra & Mahindra in partnership with British

Telecommunications plc (BT). As a leading provider of IT Solutions to
the Telecom industry, the company committed to quality, Tech
Mahindra adds value to client businesses through well-established
methodologies, tools and techniques backed by its stringent quality
processes. It is ISO 9001:2000 certified and is assessed at SEI-CMMI
Level 5. Also awarded the ISO 20000-1 (IT Service Management
standard) and ISO 27001 (Security Management standard) certification
for its development centers across India and UK.

Tech Mahindra is certified at PCMM Level 5 for its people-care practices

and is the third company in the world to have been appraised for SSE-
CMM Level 3. The Company's global footprint spans 24 locations in 14
countries including 11 state-of-the-art development centres and 13
sales offices in Americas, Europe, Middle East, Africa and Asia-Pacific.
Commenced its business during the year 1987 and incorporated MBT
International Inc in 19923, the first overseas subsidiary of the
company. As for quality, the company awarded the ISO 9001
certification by BVQI in the year of 1994.

After a year, in 1995, Tech Mahindra established one branch office in

UK, following this; the company incorporated MBT GmbH, Germany
during the year 2001. In 2002, the company assessed at Level 5 of SEI
CMM by KPMG and in the same year Tech Mahindra incorporated MBT

17
Software Technologies Pte Limited, Singapore. Re-certification was
happened in the year 2003 to ISO 9001:2000 by RWTUV.

Due to market changes, the company combines leading offerings in

Application Off-shoring (AoS) with scarce skills and COTS integration
capabilities in the year 2003. To meet the off-shoring challenge the
Company has developed a transition process framework (mASTER)
during the year 2004 for effective service delivery to customers.
Moreover, the Company has developed a revolutionary diagnostic tool -
ShoreCan - to evaluate the off-shoring potential of a project or group of
projects in any phase of development.

During the year 2005, the company was certified as BS 7799-2:2002

(Information Security Management Framework) by RWTUV now known
as TUV Nord, in the same period Tech Mahindra acquired Axes
Technologies (India) Private Limited, including its US and Singapore
subsidiaries and the company assessed at Level 5 of SEI CMMI by
KPMG

Name of the company was changed from Mahindra-British Telecom

Limited to the present name Tech Mahindra Limited in 3rd February of
the year 2006. In the same year 2006, the company assessed at Level
5 of SEI People-CMM (P-CMM) by QAI India, in August of the year Tech
Mahindra raised Rs4.65 billion ($100 million) from a hugely successful
Initial Public Offering (IPO) to build a new facility in Pune, to house
about 9,000 staff and formed a JV with Motorola Inc under the name
CanvasM to develop a focused entity that would leverage Tech
Mahindra's solution integration expertise and Motorola's R&D
capabilities.

The Company noted as Leaders in the Telecom Vertical in India (Frost

& Sullivan 2006) and received Deloitte Tech Fast 50 2007 Award, Award
for Outstanding Achievement in the industry (Billing & OSS World
2007).

The Company acquired iPolicy Networks Private Limited during the year
2007 to enhance its offerings in the security solutions and services
domain, that develops next-generation, carrier-grade integrated
network security solutions for enterprise and service providers and in
the identical year 2007, the company launched the Tech Mahindra
Foundation to address the needs of the underprivileged in our society,
especially children.A strategic alliance was made between the
company with Sun Microsystems in May 2007 to enable the rollout of
cost-effective and efficient IPTV services to the Indian and Asia Pacific
markets.

As part of this alliance, Sun and Tech Mahindra along with AMD plans to
jointly set up a next generation IPTV lab at the Tech Mahindra facility in
Pune. Tech Mahindra has expanded its relationship with Oracle in March
2008 to deliver a comprehensive software suite for the global
communications industry. The Company entered into a strategic
partnership with Veracode during April 2008, it's a very strategic,
giving the company access to a unique, on demand application

18
security technology, which allows the company to further strengthen
our application security capability as they expand into new markets.

Tech Mahindra has won the prestigious Billing & OSS World 2008
Excellence Awards in the `Best Billing Solution' category for its LHS
BSCS iX Release 1 Integrated with Ericsson Charging System project.
As on June 2008, the company has entered into a strategic global
alliance with Microsoft Corporation to address its System Integration
(SI) requirements for deployments of the award-winning Microsoft
Mediaroom Internet Protocol Television (IPTV) and multimedia software
platform.

The Company bags $7.6 million deal from Telecom Fiji in June 2008, as
the first Indian IT Company to received this transformational deal, Tech
Mahindra provide local and international (trunk) telephony services in
Fiji. Tech Mahindra has signed a deal with Telecom New Zealand in June
of the year 2008 to provide solutions to the company's retail business
and the products it offers.

The deal is worth between $20 million and $30 million The country's
sixth largest software exporter and second largest solution provider to
the global telecom industry is known to as Tech Mahindra Limited, is
focused on creating sustainable value growth through innovative
solutions and unique partnerships. It wants to be the leading global
software solutions provider to the Telecom industry.

INTRODUCTION TO ALLIANCES

1).How did the idea of alliances begin? What made organizations to

look beyond own organization to work with other organizations?

The answers to these questions are not simple. Different theories have
been debated and studied. But most prominent of all is the impact and
influence of global economy. In early 1960s, most of American large
corporations were unchallenged for their technology, leadership, skills
of marketing and ability to manage businesses with complex and large
scale. However, this saw significant shift as mid 1980s the revolution
spread globally and many companies outside America started
matching or nearly matched American corporations. This was
paradigm shift in newer technology driven computers market to skill
based matured industries like Automobiles, where new entrants
adapted more readily to changing requirements in the markets.

This led to formation of relationships across different markets and

domain that eventually shaped in to Alliances and partnerships.
Alliances can be described in many ways based on how two or more
companies decide to work together. It can be cross referrals,
Outsourcing to 3 p a r t i e s co-marketing, online af f i li at e
arrangements, business partnership arrangements, j oint ve n t u r e
companies, legal partnerships or strategic alignment. These can have
different drivers for different organizations.

A strategic alliance is a voluntary, formal arrangement between two or

more parties to pool resources to achieve a common set of objectives
that meet critical needs while remaining independent entities.
Strategic alliances involve exchange, sharing, or co- development of

19
products, services, procedures, and processes. To these ends, strategic
alliances can in f a ct , f requent ly do call on c o n t r i b ut i o n s of o r
g a n i z a t i o n -specific resources and capabilities (that may involve
trade-offs in capital, control, and time). The generic motive, to a
greater extent than in the 1990s, is to sustain long-term competitive
advantage in a fast-changing world, for example, by reducing costs
through economies of scale or more knowledge, boosting research and
development efforts, increasing access to new technology, entering
new markets, breathing life into slowing or stagnant markets, reducing
cycle times, improving quality, or inhibiting competitors.

To address these changes in the competitive environment, companies

have created network of alliances that collaborate to succeed together
and gain competitive advantage. Criteria for Business Partnerships are
many. Based on these two or more companies may agree to steps and
role for forging alliance. Usually it starts with due diligence of each
partner including SWOT analysis, cost benefit analysis and evaluation
of these partnership drivers against virtual scenario of not partnering
and effect of these on speed, focus and make verses buy situations

Usually most of partnerships are led by situations where two or more

organizations are in need of one or more of below mentioned strategic
approaches to deliver own business plan with minimum risks and
maximized rewards. Some of them are -

Each side brings something to the table the other doesn't have

Each made strategic decision not to spend the time or money to

do it alone, or cant do it alone

Together, partners are better equipped to meet a market

opportunity.

Partnering with one or more other companies can help evolve

unique selling proposition or differentiating market positioning
that cannot be easily (or at least quickly) matched by
competition

Alliance network can help gain critical mass for success, spread
cost over large volumes and achieve economies of scale.

Faster time to market where new technologies combined

together offer solutions that have demand

CONVENTIONAL APPROACH TO STRATEGIC ALLIANCES

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The usual steps to forming a strategic alliance, each the subject of
learned texts are

Locate and validate the alliance within the long-term vision,

mission, and strategy of the organization for short term and long
term

Specify the objectives and scope of the alliance regarding the

organization- specific resources and capabilities that are desired,
and underscore the importance of these.

Question what to offer and what to receive in exchange to highlight

interdependence. (Alternatively, what must be retained internally
for strategic purposes, what cannot be done internally, and what
could be done externally)

Evaluate and select potential partners based on the level of synergy

and the ability of the organizations to work together.

Identify and mutually recognize the opportunities, including the

transparency and receptivity of information they call for.

Evaluate negotiation capabilities.

Understand joint task requirements and develop and propose a

working interface with the prospective partner. (This might
necessitate an evaluation of the impact on shareholders and
stakeholders.)

Negotiate and implement an agreement, anticipating longevity that

defines progress and includes systems to monitor and evaluate
performance (while eschewing performance myopia).

Define the governance system that will oversee the alliance,

enforce its administration, build trust and reciprocity, and curtail
opportunistic behavior.

Plan the integration and its points of contacts.

Create the alliance and catalyze it with leadership commitment.

Manage for value identification, creation, storage, sharing, and usage

over time, while assessing the alliances interdependence with other
relationships

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 KEY DRIVERS FOR FORGING STRATEGIC ALLIANCES

These days, strategic alliance is a usual strategy in many businesses.

Two or more enterprises choose to cooperate to achieve their
mutually beneficial objectives via partnership approach. Strategic
Alliances are formed out of the desire of enterprises to achieve their
independent business objectives cooperatively. But, in the true fact of
todays globalizes and complex market place, in order to gain
competitive advantage, it is the need to make such a business
arrangements among the fierce competitors in the market place.

Usually these set of benefits are varied in nature. The drivers for such
benefits depend upon the market, products, nature of business and
many more dependencies. Some of them are common to most of
businesses that are elaborated here.

Capability Enhancement

Capabilities are gaining critical importance as key differentiator for

selecting vendors. In such times, an enterprise may want to produce
something with enhanced capabilities or acquire certain resources that
have limitation or scarcity of the knowledge, technology and expertise.
It may need to seek those capabilities that the other firms have.
Strategic Alliance with such organizations is the opportunity for the
enterprise to achieve its objectives in this aspect.

Improved Market Access and Reach

Launching new products in the existing markets or even introducing

the existing products in a new market can not only be costly but can be
extremely difficult and sometimes complicated. It may expose some
challenges such as entrench competition, complicated and
unmanageable government regulations and operational difficulties. The
opportunity cost and proportionate risks of direct or indirect losses due
to incorrect or incomplete assessment of the market situations may be
risk in addressing such market access aspirations. Choosing a strategic
alliance as the entry mode can not only help overcome some of those
problems but as well reduces the cost of entry and other barriers for
increasing reach.

Shared Risk and Rewards

Venturing in any new activity independently may give you access to

secure 100% rewards in case of success. At the same time it poses
threat of exposure to 100% risks and hence makes business non
lucrative many a times. In such events, sharing rewards with partners
as well de-risk t h r e a t s t o s i m i l a r p r o p o r t i o n . Enterprises
c a n r e d u c e t h e i r i n d i v i d u a l enterprises financial risk by

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strategic alignment with other companies. It is often difficult decision
but distribution of risk and reward is often safer bet in many
circumstances when certainty of business is challenge or markets are
competitive. Unless the companies are not entering markets with
innovation that is usually not accessible to competition and has strong
demand, they always have risks that cannot be under estimated. A
strategic partner can help reduce and share such underlying risks. In
turn the rewards shared with partner are worth to de-risk challenges.
Many a times it is observed that shared risks and rewards do not
impact negatively on rewards as collective strength of partners
enhance the scale and volumes that often compensate for shared pie
of rewards.

Dealing with Political Challenges

Every market has a governing regulation driven by local administration

and political regime. Bringing your products into such new markets
might confront the enterprise with political factors and strict
regulations imposed by the local administration and governance. Some
markets will be liberal while some will be politically restrictive. Some
are highly concerned about the influence of foreign firms on their
economics that they require foreign enterprises to engage in the joint
venture with local firms. In this circumstance, strategic alliance work as
enabler to address such newer markets without objections from local
political or administrative regimes

Achieving Synergy and Competitive Advantage

Increased success rates are often driven by synergy and competitive

advantages that provide edge over competition. Often businesses
may not be strong or large enough to attain such elements on own.
Sometimes, forming a strategic alliance or partnership may provide
such leverage for gaining competitive advantage by leveraging on
joint efforts with another company. The combined strengths of such
partners may out pass individual strengths by multiple times and
enable all partners to compete more effectively and succeed together.
The synergy may help drive faster success and fundamental
advantage that competition may take time to evolve on standalone
basis. The value created by such synergy may be unique proposition
that is compelling to customers and difficult for competition.

Time to Success

The corporations then have to indulge in to risky propositions to

achieve incremental growth such as take out hefty loans and exercise
risky propositions. Bigger debts and longer return on investment
proportion may increase risk in business. Strategic partnerships forged
to address such inorganic growth opportunity provide sustainable

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growth without loading with such debts and risks making faster return
on investment and improved viability of business case. Reduce time to
success may provide assured positive upside due to early mover
advantage. Time to success is importantly becoming critical success
factor in markets that are not fundamentally controlled by capitalism
but often driven by demand supply gap in favor of demand. As more
players invest and enter such markets, the demand supply gap
narrows down and forces all players in to increased competition
making market not only unattractive but increases risk for failure.

Focus

Every large and growing business has limitation of resources due to

consumption of developed resources to be used for success. Further
just because you can do something mean you doing it is always most
profitable. Many a times, profitability can increase many folds by
doing it through innovative or different means than on own. The
percentage of doing it right and how many things one business can
always do right is always a matter of imposing risk to existing
successful business while driving business growth. Even large
corporations are outsourcing very specialized and core functions
rather than doing all on own. Unless you have intellectual property
that is core of success of your business and need extreme protection
for sustaining in the business, it is always a matter of choice in using
your resources for what is most critical for success of your business
rather than doing it all on own. It is important to focus on few,
important and critical business drivers to be delivered through own
resources and focusing on them rather than forcing your resources to
do what you can get done in cheaper and better way.

Even small businesses can adapt to this strategy to ensure they focus
on what they believe is core to success of business and do not
increase risks and liabilities by enduring in to what they can adapt
from third parties. Partnering with players who can fill in these pockets
of your business can provide more secured approach to business.

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