Aegis Analytical Corporation was founded in 1995 in Lafayette Colorado by Jahn. Primarily, the firm was formed to offer market and business solutions in process manufacturing of software and consultancy services. Before starting the corporation, the founder had over 20 years’ experience in information technology and integrated systems management. Another co-founder, Neway was a biochemist with more than twenty years of experience in management. He was working on areas to do with operational issues, quality control, and regulatory processes in pharmaceutical manufacturing. Another co-founder Gretchen had over 20 years’ experience in information technology. The corporation also boasted a host of highly experienced and learned executives with hands-on experience having worked in areas of management for a couple of years. Having performed well in the markets for a few years, in 2003, the firm sought to enter into strategic alliances with the objective of making it more visible in the markets, enhancing its business portfolio, and meeting the company’s growth plan. In 2002, the firm entered into a strategic alliance with Honeywell POMS that handled add-on products that were Aegis Analytical initially offerednalytical and another partner Rockwell that dealt with pharmaceutical manufacturing. The alliances attracted millions of dollars in seed capital for business development and marketing of new products and services. However, as it turned out, the firm’s new products with its new ally did not sell in the markets as anticipated. It caused the management of Aegis Analytical to question the relationship between their firm Honeywell POMS and Rockwell firms, their strategic alliance, and the feasibility of their business as a matter of going concern.
Contemporary businesses use strategic management as a way of guiding them through the dynamic business environment. Through this approach, firms make decisions that are feasible and sustainable for them to continue being in the markets. Through strategic management, corporate executives formulate various strategies that offer their businesses a superior and competitive fit in the business environment, hence, helping the company to achieve its objectives. The essence of strategic management is to come up with an approach that offers a clear plan of action. The business strategy should also give a company a competitive edge in the markets by exploiting its core competencies in the strategic alliance. It should also enhance synergy and deliver value to the target customers of the firm. For a new business strategy to work for the organization, its management should find several areas of a strategic fit between the partnering firms. To evaluate this, the management should assess the external and internal business environment of the partnering firms and establish if they are compatible. In effect, strategic factors that one evaluates include the strengths and opportunities that the partnering firms have prospects for as well as their strengths and weaknesses. After that, the management should identify the areas where either firm can enhance the other in increasing or reducing the strengths and weaknesses respectively. Notably, formulating a business strategy is different from its execution. For instance, companies should evaluate their internal business environments and identify the internal problems before creating goals and strategies that aim at addressing them. On the other hand, the execution of a business strategy should use managerial and organizational resources to operationalize the set strategies. To formulate such an approach effectively, companies should employ various strategic management tools such as conducting a SWOT analysis, BCG matrix, and Ansoff matrix among other tools (Saoner 37). The goal is to determine the true position of the business and ascertain the viability and sustainability of strategic decisions that the management of the firm intends to take.
Strategic alliance is one of the business decisions that corporations make to enhance their performance in the markets. Businesses interact with others along their environments and industry lines through this approach. Strategic alliances are either competitive or cooperative. For the case of Aegis Analytics, the company entered into a competitive partnership with the objective of improving its business portfolio, market share, and profitability in the market (Saoner 37). However, as it turned out, the alliance failed miserably as the firm did not increase its sales. Based on the analysis of the Aegis Analytical Corporation case study, the following problems are considered as the reasons behind the poor performance of the strategic alliance.
Failure to conduct a proper business analysis before getting into a strategic alliance
Aegis Analytical Corporation did not perform a prior investigation of its business environment before formulating a strategic partnership. It failed to establish its strengths and weaknesses before embarking on the strategic alliance decision. Aegis also was unable to determine how the other partners Honeywell and Rockwell will enhance its business position in the market. For instance, Aegis was a relatively small company with over 35 employees and was considering partnering with large and established companies. The marketing, products, and sales cycles of the companies also differed considerably. Other issues that the management of Aegis Analytical did not look at include the administration of either company and the way their managerial experience and expertise would enhance and synergize the new alliance. Given this, Aegis Analytical failed to use managerial tools such as a SWOT analysis, BCG matrix, and Ansoff analysis. In effect, the strategic decision that it took was not backed by credible strategic tools of management, hence, was doomed to fail right from the start. Furthermore, the firms did not clearly define the nature of their relationship. In turn, it left the new entity vague for long and distracted its business focus while trying to adjust to the new business realities. In addition, from the start, the business failed to define the primary objectives of the strategic alliance, the strategic framework to guide it, and measures to take to ensure that it worked for the posterity of all firms.
Poor Strategy Formulation
Strategy formulation entails outlining comprehensive action plans that identify the long-term direction of the firm. It also provides frameworks on the way organizational resources are utilized to realize the set company goals with competitive advantages that are sustainable. The formulators of a business strategy should also incorporate energies that unify partnering firms through compelling objectives. Secondly, the goals of strategic management are to enhance the firm to realize above-average returns from the strategic endeavors by increasing the returns on business investment. However, the analysis of Aegis Analytics following the strategic alliance demonstrates that it was unable to formulate its business strategies well. For instance, the company failed to analyze itself, its business environment, competitive strategies as well as its current approaches. Aegis also was unable to identify its mission, stakeholders, objectives, and core values among others. Moreover, it failed to recognize its strengths, opportunities, weaknesses, rivalry, and attractiveness in relation to the anticipated partnership. During the strategy formulation, it was unable to revise its business objectives in relation to the new strategies right through the corporate, business, and functional levels.
Lack of a strategic fit
Mainly, the failure of a strategic alliance between Aegis Analytics Corporation and two other partners was due to lack of a strategic fit between the strategies that the three firms used. The firms’ management failed to realize a strategic fit while implementing the new plan. For instance, the focus of Aegis was market growth while the partnership changed this to business development. Also, following the alliance, there was a loss of strategic personnel in the organization. In turn, it broke the communication strategy and efficiency in the organization. Consequently, the firm took much time trying to rebuild and normalize its organizational functionaries such as communication, day-to-day management, and review of business strategies. Because of this, the firm did not optimize its synergies on regular management practices, systems and strategic leadership.
From the partnership outcomes, it is clear that the management of the new partnerships had challenges in implementing the strategic alliance. In addition to the challenges discussed in the above paragraph Aegis Analytics Corporation failed to implement its strategic alliance business strategy effectively. For example, the management of the new alliance failed to evaluate the results of its performance just-in-time to prevent further decline of the business. The new management of the firm also failed to renew its strategic management processes following the partnership or after it failed to make the firm realize the desired goals and objectives. Conversely, the implementation team of the new strategy failed to evaluate the results of its performance and effectively control and adjust its corporate governance strategies (Rothärmel, Pg. 83).
The alternative solutions entail the strategic direction that Aegis Analytics Corporation needs to take to get itself out of the situation it is in at present. From the analysis of the partnerships, it is evident that partnership failed and the management of the firm needs to make difficult decisions. While making difficult decisions, the organization should also be awake to the fact that the business environment is dynamic and that it needs to take immediate action before competitors in the market take advantage of its weaknesses. This analysis proposes that the firm urgently reviews its implementation strategy of the strategic alliance by restructuring the partnerships in its strategic alliances. Secondly, the firm should also consider doing away with the partnership and focus on improving itself. Thirdly, the firm should consider terminating either of the relationships that it considers not effective in its business performance (Rothärmel, Pg. 77).
Recommendation and conclusion
Strategic alliances entail integrations among businesses and their business environment for mutual benefits. Interorganizational relationships are either competitive or cooperative. In business alliances, firms depend on each other’s resources and utilize their synergies to leverage on their competitive advantages in the business environment. The strategic alliance between Aegis Analytics Corporation, Honeywell and Rockwell corporations failed because of failure to conduct an effective business analysis, poor formulation of business strategy, lack of strategic fit and poor implementation of the partnership strategy. In view of the outlined alternative solutions, this analysis recommends Aegis Analytics Corporation to let go other partners and focus on improving its business (Hitt, Pg. 105).
Hitt, Michael A. Strategic Management: Competitiveness & Globalization: Concepts and Cases. New york: Cengage learning, 2017. Print.
Rothärmel, Frank T. Strategic Management. , 2019. Print.
SALONER, GARTH. Strategic Management. Place of publication not identified: JOHN WILEY, 2018. Print.