Strategic Alliances In The Financial Services And Chemical Industries

Abstract

The penetration and practice of strategic alliances and Total Quality Management in a goods industry (Chemical Industry) was compared to that for a service industry (Financial Services).   The ingoing hypothesis that the Financial Services Industry and the Chemical Industry were similar as it relates to strategic alliances and TQM, based on the longevity of these concepts, was not fully supported. Clear industry similarities and differences were noted. For example, the penetration of TQM and strategic alliances was deeper in the Chemical Industry. This is thought to be the result of the earlier application of TQM and strategic alliances in goods industries. Company size, as measured by revenue, did not affect whether small or medium sized companies in either industry practiced TQM, engaged in strategic alliances or the number of strategic alliances that each had.  The proportion of strategic alliance practitioners who also practiced TQM was statistically similar for both industries. Importantly, a high, and similar, proportion of strategic alliance participants in both industries achieved business growth.  While those practitioners did achieve a reduction of the numbers of suppliers there is significant room for improvement in both industries. Strategic alliance performance met or exceeded expectations and alliance costs were on or below forecasts in both industries but the result was significantly better for the Financial Services industry in both instances. The lower outcomes for the Chemical Industry are most likely rooted in negative aspects of relationships with strategic alliance partners as suggested by the top 5 advantages and top 5 disadvantages responses. Significantly, a high proportion of strategic alliances will continue with most of these being with the current partner and a few with new partners.  The Financial Services Industry outperforms the Chemical Industry on this measure.

It is recommended that firms in the Financial Services Industry closely examine the benefits that strategic alliances can yield, and then conduct pilot tests. On the other hand, firms in the Chemical Industry need to improve their relationships with potential partners in order to maximize the outcome of strategic alliances.