Discover new opportunities for synergy within existing partnerships by assessing resources used by all the value chains: this is the advice of the management-issues.com website.
Pursue synergies: But how?
Operational synergies require examining the value chains of different businesses. The similarities or dissimilarities across them must be exploited.
1) Consolidation: This involves creating value across highly similar resources by eliminating redundancies. The resources need to be adjusted.
Examples:
- merging departments to reduce the total headcount
- merging resources of several business units to form shared resources
2) Combination: This involves pooling highly similar resources to gain bargaining power. When combining, no resources are eliminated.
Examples:
- combining purchasing to obtain volume discounts
- acquiring a competitor and then raising prices (beware, however, of anti-trust regulations)
3) Customisation: This is a partnership formed by two different value chains. The outcome is that the final product works better or costs less. Intangible assets (best practice, knowledge) from one company can be customised by another to generate value.
Example:
- A mobile phone operator and a software company collaborate to develop highly compatible handset hardware and operating system software.
4) Connection: This is about bundling, whereby dissimilar value chains link up to expand their market reach by combining resources.
Examples:
- Cross-selling
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