Samsung in Asia , or try to get in a dialog with Bauknecht in Europe . The two possible partners would give access to different geographies ( and that would have to line up with the Philips strategy ), but also a collaboration with Samsung would be affected by the fact that Samsung and Philips are competitors in the field of televisions . The latter would make collaboration less natural and less easy , perhaps .
In the third phase the long list is tested against a large set of criteria . This results in a shortlist of three to four most preferred potential alliance partners . Next , a “ needs and contribution analysis ” is performed for each of the potential partners : what does this company need from Philips , and what does Philips have to offer , and vice versa ? This assessment determines how a partner can be approached , with what kind of proposal , and is in fact also a first step towards preparing the negotiations of phase four .
In most cases one company emerges as the preferred partner . This company is then contacted at the appropriate level , and after a number of meetings the process is formalised to a certain extent . A nondisclosure agreement is signed , a temporary exclusivity is agreed upon , and sometimes some consumer research , or other work to test the idea we jointly like to bring to market , is conducted .
The letter of intent covering these items is signed by senior representatives of both companies , and a governance structure is created . In most cases there is contact at CEO level , there is a steering committee consisting of business managers and some staff functions such as marketing , and both sides appoint an alliance manager .
The fourth phase is all about forging the actual alliance . This involves checking the situation around intellectual property rights and agreeing on how to deal with these ( note that sometimes as a result of the alliance new inventions can be made that may be owned by one or both companies ). Development plans and implementation plans are drawn up , and most importantly : a structure of the collaboration is designed : what form does the business of the alliance take ? Who does what , how does the money flow ?
Ivo Rutten : “ A contractual alliance tends to be more difficult to arrange than a joint venture . With a joint venture you create a legal entity with a governance structure , you value and bring in the assets , you appoint the management and the management has to do the implementation and cope with changing circumstances . The JV structure in itself allows for solving problems when they occur , because the JV management has a focused incentive to solve them optimally , and the results of the solution in terms of profit and loss are automatically divided between the parents via the ownership structure . In an alliance this is different : all important problems need to be foreseen at inception of the alliance , and either solutions need to be pre-designed , or some sort of reliable resolution process needs to be installed . That makes setting up a JV easier and faster . On the other hand : a JV tends to require a higher up-front investment , and an exit is more complicated .
Take our alliance with Future Lighting Solutions . They are our exclusive distributor of high-power LEDs , and we recently expanded that collaboration to enable them to also sell higher-level products ( such as modules incorporating LEDs and other electronics ). We made certain tools and IP available to FLS , and gave them other means to be more successful in this venture . We did this because the lighting market is very localized and fragmented , and working with FLS builds on using their widespread infrastructure . Future Lighting Solutions addresses the spread out smaller customers in this partnership , the ones that would be hard to serve for Philips . FLS benefits from the collaboration by becoming able to serve their target
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