Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 14

Value Chain; Strategy Map; Role in Corporate Alliances A recent report of the consulting firm McKinsey Company indicates that about one-half of all corporate alliances fail. These alliances are partnerships in which two corporations jointly participate in one or more of the activities in the industry value chain. A good example, provided by Robert S. Kaplan and David Norton (founders of the balanced scorecard and strategy map; see Harvard Business Review, January 2010) is the alliance between the European pharmaceutical company, Solvay, and U.S.- based Quintiles, a company that specializes in the conduct of clinical trials for testing potential new drugs. Solvay's strategy is to employ its research-driven organization to develop and market new drugs. One of the steps in Solvay's value chain is to complete the testing required by the U.S. Food and Drug Administration. Rather than divert its operations from research, Solvay has partnered with Quintiles. Realizing that they both benefit from the success and growth of Solvay's products, the two companies have developed a joint strategy map and identified the critical drivers for the joint success of the alliance.
Required Considering the Solvay-Quintiles collaboration, we know that about 50% of such alliances fail. Explain briefly how you think the strategy map and value-chain analysis can help this alliance to succeed.