Strategic Alliances in Greek Mobile Telephony

Abstract

ABSTRACT The mobile telephony market is a very competitive market. Mobile telephony companies try to expand by forming strategic alliances with companies from various industries. The objective of this paper is to analyze the motives, the actions and the results of the collaborations and alliances of two Greek mobile telephony companies (Cosmote and Hellas). In addition, this paper illustrates examples of how the technology change and the technological convergence (Internet, computers, and mobile telephony) affected and activated the proliferation of these alliances. The entry of I-mode and Live! in the Greek market caused an increase in the number of alliances especially with content aggregators and media companies. INTRODUCTION During the last decade, strategic alliances have experienced a tremendous growth. Specifically, telecommunications companies have exploited strategic alliances to achieve competitive advantage and handle the organizational and technological complexities of the global market. In Greece, the mobile telecommunication sector is a quite competitive market. Cosmote and Hellas are the mobile operators with the largest Greek market share. During the last years, each company has formed a significant number of alliances. This paper investigates the reasons for this alliance's booming. It shows that the technology evolution (from 2G to 2.5G or to 3G), the convergence of mobile telephony with Internet and computers, together with the globalization drove Hellas and Cosmote to large numbers of alliances with content aggregators, media companies, equipment manufacturers, Internet service providers, computer and software companies. Both companies formed their alliances in order to support their innovative i-mode and Vodafone Live!. After a major alliance with the Japanese NTTDoCoMo, Cosmote concentrated its efforts in enriching i-mode's content. Similarly, Hellas' intention was the successful deployment of Live! into the Greek market. In this paper we present Cosmote's and Vodafone's alliance partners and we examine the motives for each alliance and the resources contributed by each alliance partner. Finally, we show the necessity and emergency of proper alliance formations for a mobile company, in order to survive and to further grow in the continuously changeable mobile telecommunications sector. STRATEGIC ALLIANCES Strategic alliances are formed when two or more companies agree to collaborate with each other on some domain, from the common manufacturing to the risky Research and Development domain. By linking the specific assets and facets of two or more businesses, a strategic alliance is able to provide a trading partnership that enhances the effectiveness of the competitive strategies of the participating firms by providing mutually beneficial trade in technology, skills and/or products (Yoshino & Rangan, 1995). Companies establish alliances in order to achieve their goals based on cooperation with appropriate partners. Furthermore, companies ally in order to stretch their boundaries, gain access to critical resources, restructure their capabilities and accumulate resources, experience and knowledge (Kogut, 1988). In a broad interpretation, strategic alliances are agreements between companies that remain independent while often they are in competition. Yoshino and Rangan (1995) have referred three common characteristics of alliances: * The partnering companies continue to remain independent even after the formation of the alliance. * The partners allocate responsibility for the conduct and performance of specific sets of tasks and are then able to jointly share the benefits. * The partners contribute on an ongoing basis, using their own resources and capabilities for the development of one or more areas of the alliance (important for them). …