1(a) Description of the exercise:
The exercise is on the topic: âDecision making using Operations Research in Sustainable Partner Selection for a potential collaborationâ.
Supply chain management is one of the hottest topics of today. A lot of research is being done in this field. Operations research has a major role to play in this field. Collaboration, strategic alliances and joint ventures are one of the most important concepts. But the question is: How do we choose a partner? How do we choose a supplier? This is a very important consideration for a successful collaborative partnership, given the fact that there are a lot of people or companies in the market and in the same field too. Thus, we need to have some basic methodologies for partner selection and supplier selection problems. Today, âSustainabilityâ is the new buzz word. The world economy is moving towards sustainable development. In this context, sustainable partner selection methodologies has become very important. But, there are a lot of risks involved in these procedures (in both traditional and sustainable processes). This is exactly where Operations Research (OR) comes into play. This gives us a proper methodology to analyse various parameters involved in a given process. On the basis of the analysis using techniques of operations research, we can weigh on the various parameters and finally come to a decision or a solution to the various problems as cited above.
In this whole exercise, we have done a thorough literature review on the above mentioned topics. We have given some standard definitions to the various terms. And then we have mentioned various criteria of the problems as mentioned above. Further, the methodologies make the involvement of Operations Research in the decision making procedure more visible. And finally, we have concluded with our observations from the exercise.
1(b) Collaboration, Alliance and Joint Venture:
âCollaboration is defined as two or more companies sharing the responsibility of exchanging common planning, management, execution and performance measurement informationâ .
Examples of collaboration :
1. American Express and Foursquare: It enables American Express to expand its network and facilitates Foursquare to enter the business of shopping by mobile phone and to increase its user traffic.
2. NASA and LEGO: LEGO provides 3D models to members of NASA to perform various experiments. NASA helps LEGO by providing educational videos and also providing it with newer concepts for its toy collection.
3. Coco-Cola and Eco-Plastics: Both the companies have decided to run a recycling plant for plastic wastes/ plastic bottles. Eco plastics would provide with technology for recycling and Coco-Cola would provide it with its bottles.
4. Starbucks and Square: Run an online application for bill payment. Square benefits by popularisation and Starbucks is benefitted by new technology involved in Daily routine.
5. Reebok and Marvel: Footwear lined with comic superheroes.
âA strategic alliance is an ongoing, formal, business relationship between two or more independent organizations to achieve common goalsâ . The main purpose is to achieve organizational growth and improve overall efficiency of both the partner firms. It is different from merger and acquisition.
Examples of alliances :
1. HP and Disney
2. Starbucks and âBarnes and Noblesâ
3. GSK and Dr.Reddy Labs
4. ICICI Bank and Vodafone India: âmâ-pesa
5. Apple and IBM
âJoint venture is formed when two or more parties come together to enter into an agreement to combine resources for a specific business undertaking. Although the parties share responsibility, the joint venture is its own legal entity that remains separate from the partiesâ other business interests. The main purpose is to combine strengths and increase competitiveness while minimizing risksâ . In other words, the involved parties form a new company for the specific business purpose.
Examples of Joint ventures:
1. TATA AIG
2. Toshiba and Samsung
3. Fuji Xerox
4. Fujitsu Siemens
5. Max Bupa
Strategic alliances and Joint ventures are a form of collaborative partnership. However, strategic alliances and joint ventures differ from each other. Generally, in joint ventures, two or more parties come together to achieve a common long term goal. Whereas in case of strategic alliances, the partnership is to achieve a short term goal. According to the definitions of Joint Ventures and Strategic Alliances, Joint ventures are a legal relationship while the Strategic alliances are just a formal or business relationship. Strategic alliances are not as legally binding as the Joint Ventures.
1(c) Sustainability and Partner Selection:
In todayâs economy, sustainability is the new buzz word. Sustainability refers to an integration of social, environmental and economic responsibilities . The definition of Sustainable development was presented by World Commission on Environment and Development states: âDevelopment that meets the needs of the present without compromising the ability of future generations to meet their own needsâ. This gives a broad and an inclusive definition of the term sustainability.
Some literature also define the term sustainability in a more specific manner. For example, Starik and Rands define sustainability as: âThe ability of one or more entities, either individually or collectively, to exist and flourish (either unchanged or in evolved terms) for lengthy timeframes, in such a manner that the existence and flourishing of other collectivities of entities is permitted at related levels and in related systemsâ .
The relationship with a supplier and that with a partner is completely different. Supplier is the one who facilitates or provides the companies with various raw materials or goods or services, according to the requirement. The supplier may or may not be a partner. In general, suppliers and partners are completely different entities . We can say that the partners may be suppliers but the suppliers may not be partners always.
Some of the criteria for supplier selection are:
â¢ The supplier should be able to supply in the required price range.
â¢ The quality should match the requirements.
â¢ The supplier should have a good record of its supply history and moreover it should fit into the companiesâ scheme of plans.
The major difference between the supplier selection and partner selection is that the supplier selection is more or less independent of the final product. Whereas, the partner selection problem is highly dependent on the final product or technology that has to be produced.
1(d) Sustainable Partner Selection for Collaboration:
Decision making process is the crucial part in the success of any public, private and third party organization (Nutt, P. C., 2000). Owing to the highly competitive world, there is a recognition of optimization in each step of supply chain management. This led to working in collaboration to combine their respective expertise and optimize business processes. Time, money, ideas, experiences and even risks are exchanged in order to reach common goals. Hence the decision to select collaborator or partner (Mikhailov, 2002)  comes into picture, thereby need to develop appropriate criterions, guidelines and methods  .
Mostly partner characteristics; exempli gratia, trust, commitment, complementarity, and financial pay-off; alliance project type (Swaminathan, 2008) were topics of research about the methods of partner selection but the concept of sustainability is further added which takes environmental, social and economic aspects into consideration while selecting a collaborator, hence called Sustainable Partner Selection (Carter and Rogers, 2008). Apart from that, values and ethics that need to be established in organizations are also incorporated in order to protect from market and social risks. 
Plenty of research is going on in this particular field to develop other relevant methods of sustainable partner selection, evident from the fact that Google scholar shows 12,300 results since year 2015.
1(e) Motives of Selecting a Partner:
Partner selection is one of the most important tasks that has to be performed by a company before a successful strategic alliance or a joint venture is formed. Partnership is a mutual relationship between two or more companies. This relationship should provide the involved companies with equal benefits or advantages. Thus, there has to be to some definite criteria or motivation for selecting a partner. In the following text, after a brief literature review, we have tried to mention some of the important criteria or motives of partner selection [16, 17].
The motivations are listed below:
â¢ The individual companies may be in need of finance and search for a partner that can help them to fund their project or product.
â¢ Two or more companies can integrate their technology and form a new R&D department and could take up a new project.
â¢ The partnership should also help the individual companies in further globalisation of their companies and thus increasing their market zones.
â¢ Two companies may be facing stiff competition from each other in a given market (before partnership). This may harm their growth as may hinder their profits. Thus, the partnership sometimes may help them to reduce the competition.
â¢ The partnership should help them to club their resources (human resources, capital, etc.)
â¢ The partner should be able to communicate with each other with ease and there should be no barriers in this criteria.
Some of the important criteria has been mentioned in the above paragraph. In the recent past many in the field of Operations Research have taken interest in it. This field has a very important role in the partner selection as well. The various parameters for partner selection, supplier selection and other factors are considered. People try to weigh on these factors and try to optimize the various criterions and then reach a final solution and present the company.
2(a) Criterions for Sustainable Partner Selection
The following tables lists the various criterions in sustainable partner selection, often called triple border line (John Elkington, 1997).
Economic Criterions Description Author (Year)
Price It is of utmost importance in terms of profit. Ordoobadi, 2009
Financial Capability It specifies the partnerâs long term capability to survive. Kwong et al., 2000
IT Capability It captures technological advancement of partner Zhu et al. (2010)
Process Quality Quality of process is important to satisfy customers. Zhu et al. (2010)
Environmental Criterions Description Author (Year)
Geographical Location It helps in meeting government and environmental agencies norms regarding land usage. Chan et al. (2008)
Packaging ability It captures usage of bio-degradable packaging. Simpson, M.P. et al. (2002)
Energy Consumption It specifies energy efficiency of the partner. Zhu et al. (2010)
Social Criterions Description Author (Year)
Working Conditions They are very important in terms of social responsibility. Must meet minimum requirements. Zhu et al. (2010)
Education Employees must be educated enough to do their work. Sridhar (2010) 
Health and Safety Standards Adequate safety of workers should be there in case of any mis-happening. Bos-Brouwers (2010) 
2(b) Effect of risk in selecting partners:
â¢ Governmental ideology and local partners:
In case of International Joint Ventures (IJV) the ideology of the government intervening is an important factor to be considered. The local partners selected must satisfy certain set of requirements to be able to be selected as a partner. Market power, international experience and organisational collaboration are the major requirements of the local partners. If the government changes the laws according to its ideology then the ability of the local partner to adopt to the changes and continue to work in a sustainable way determines its selection. If the local partner fails to meet the criteria then this risk affects the collaboration and even worse might affect the countryâs reputation in the world. 
â¢ Customer satisfaction:
The customers have started to give importance to the firms that are confirming that the products have been produced under environmental and socially responsible conditions. PharmChem was publicly defamed by the NGOs due to the non-sustainable business practices. The NGOs and the customer groups have become more active these days and any mistake or breach of law committed by the firms is being perceived strictly. So selecting a partner should include the aspect of customer satisfaction failing which leads to the risk of defamation. 
â¢ Second tier suppliers:
In order to quickly start the business the firms tend to rush up in selecting the second tier partners. This may lead to unexpected situations. For example a company chose a second tier partner and it supplied defective wires which were used in various appliances. When the appliances started malfunctioning, the company came to know of the defective wires and ended up spending large amounts on repairing and reinstalling the wires. So a negligence in choosing a second tier partner might lead to a risk of paying hug amounts in the repairs. 
â¢ Credit risk:
If a partner is not able to meet the standards of the social and environmental issues that are set in the contract due to lack of funds then that leads to credit risk. The institution will also be held responsible for this and fines and penalties may be imposed upon it due to the negligence of its partner. In such a case, the risk affects in the form of the partner not being sustainable and also not being able to meet the obligations of the contract and thereby affecting the collaboration. 
2(c) Different types of Risks in Sustainable Partner Selection Process:
Risk in Sustainable Partner Selection Description Author (Year)
Performance Risk Targets based on unrealistic goals Jeffery L. Cummings (2012) 
Relational Risk Individual firm politics Jeffery L. Cummings (2012) 
Customer Relationship Risk Poor handling of Customer Information Jeffery L. Cummings (2012) 
Quality Risk Inability to control quality Jeffery L. Cummings (2012) 
Risk associated with social Responsibility Improper CSR implementation Robert E. Speckman, Edward Davis (2004) 
Risk of Opportunism Partners serving their own interest Robert E. Speckman, Edward Davis (2004) 
Financial Risk Financial incapability of one partner Reference 
Reputational Risk Bad market reputation of one partner Reference 
â¢ Performance risk: 
When an alliance is formed, the institutions generally set the targets that are based on achieving unrealistic objectives and goals. This in general leads to the risk of not achieving the goals and the institutions in the alliance start making each other accountable for the loss occurred. The alliance might face the risk of losing the investment due to the poor collaboration. The institutions in the alliance and the managers-in-charge are made responsible for the poor co-ordination and are looked down by the financial community.
â¢ Relational risk: 
It generally occurs due to individual firm politics, poor co-ordination among the institutions in the alliance and unexpected time and cost of increased co-ordination. The institutions might have to quickly respond to the changes that occur in the partner institution and this may be made even more urgent if there is a lack of co-ordination or poor collaboration. Politics within the individual institutions and deteriorating relationships might further increase such risks.
â¢ Customer relationship risk: 
The institutions in the alliance generally collaborate to create products for the customers of all the institutions in the alliance. So the institutions share the customer information such as the contacts, sales calls, customer management issues etc., with the alliance partners. If such critical information is poorly handled by the alliance then that leads to the risk of damage of the alliance. Such events have long-term effects on the alliance members.
â¢ Quality risks: 
When the partner companies do not possess the required quality controls and standards, it leads to the increased quality risks. The inability of the partner in establishing systems to document the records and also in establishing systems that maintain the standards will expose the alliance to quality risks. Such events lead to the situation where in the alliance is made liable to the environmental damage done by the partner institution and thereby damaging the collaboration.
â¢ Risk associated with social responsibility: 
The Corporate social responsibility (CSR) of an institution indicates the extent to which the institution is concerned about the society. The CSR of an institution also depends on its partners in the alliance. For instance when dealing with alliance in which the third world countries are involved, it is the institutionâs responsibility to check whether the human rights, child labour laws etc., are being followed by the partners and if not followed then there can be a risk of the institution losing its reputation.
â¢ Risk of opportunism: 
When the institutions in an alliance come closer then there is also an increased risk of opportunism associated with it. The partner may act according to its self-interest at the cost of the damage of the alliance members. When the partner is less competent or there is little trust in the alliance that leads to the increased risk of opportunism. There will be little collaboration and that leads to constant scepticism and little can be achieved in such an environment.
â¢ Financial Risk: 
An institution may have to suffer due to the financial risk that emerges due to the disruptions in the operations of the partner as a consequence of the social and environmental problems. If the partner is not able to meet the financial requirements in the partnership then its value goes down. The inability of the partner to tackle the environmental and social problems can lead the institution into trouble and the partnership will be severely affected. The institution might have to use its own resources to solve the problem of the partner.
â¢ Reputational risk: 
An institution may face the risk of losing its reputation due to the bad image of its partner in the society. The brand value of the institution is affected because of the partner. The image of the institution in the society, media and the financial community will be severely affected.
2(d) Risk as a dimension of Sustainability:
Three criterions of sustainability are economic, environmental and social aspects in partner selection. Now, adding âRiskâ in evaluating a potential partner does make sense.
Sustainability and Risks are not mutually exclusive but have much in common. Sustainability is concerned with the future which is unknown and therefore decisions regarding the future involve uncertainty and thus risk with regard to unknown implications of current decisions. So, there are environmental risks, social risks and economical risks as well. 
Risk can be added to a dimension of sustainability as done by Wehrmeyer and Pediaditi. 
There are other different models to consider risk and sustainability together, like Dyllick and Hockerts have developed six criteria required for organizational sustainability. 
Hence, by evaluating potential partner on basis of economic, social, environmental aspects and even considering associated risks will make choices better and more sustainable as they now have more information.
So, sustainability is open to mend as rightly said by Castor.
âWe don’t know what sustainability means.â â” Jane Castor
4(a) Parameters for selecting a Partner in an International Alliance:
International Strategic Alliances (ISAs) provide a different set of challenges and opportunities to all entities involved. Certain factors like cultural and social differences which do not matter in domestic alliances play a big role in International Alliances. Others like mutual trust exist in both cases but the way in which agreements are executed are changed. The following points define the parameters for International Partner Selection:
â¢ Technological Commitments: âThe greater the technological commitments required by an investment project, the more likely the MNC will select a prior partner for the ISA in an emerging economyâ. 
Technological commitments are very much susceptible to hazards and losses of propriety knowledge which can cause losses of value, especially when the Strategic Alliance is being formed in a foreign nation. In such cases a prior partner eases the transfer process and helps protect core values and competencies of a MNC.
â¢ Economic Structure: âIt is less likely for the MNC to select a prior partner for the ISA in an emerging economy when equity investment is involved in the ISA.â 
International Strategic Alliances may follow various ownership structures like a ânon-equity based form like International Franchising, long term supply agreements, co-production and co-marketing or an equity based form such as international joint ventures.â A social and economic dimension is associated with each ISA.
In the ideal case, the existence of trust can cause any expensive governance structure like an equity driven approach irrelevant as each partner can expect another to âfulfil their promises in wholeâ.  Research has indicated that an absence of prior trust can be substituted by presence of a legally binding structure like an equity based approach (that is, âformal governance can substitute informal governanceâ). Hence any MNC planning to form an ISA on an equity basis will not necessarily choose a prior partner. Here it is assumed that prior partners are more trustworthy than new partners.   
â¢ Institutional Distance: âThe institutional distance between the partnersâ countries of origin is positively related to the likelihood the MNC will select a prior partner for a new ISA in an emerging economyâ 
Institutional distance refers to the perceptible social gap felt between the two partner companies. It has been widely studied with respect to three dimensions: cognitive, normative and regulatory.
Cognitive refers to ease of communication between social actors depending on the actorâs perception and assumptions about âhow the social world operates.â
Normative refers to the âvalues, beliefs, norms and assumptionsâ about the behaviour and nature of people held by people from a foreign country. This decides ease of intermingling of people.
The regulatory component focuses on ââsetting, monitoring, and enforcing of rulesâ, which finally define ease of doing business within another countryâs legal framework. 
â¢ National Culture: âConsidering national culture when seeking and selecting a partner helps to avoid problems during the cooperation agreement. â
Different countries have a different culture, which relates to differences in language, communication styles and decision making parameters. These can also range to wide differences in social and religious beliefs, socially acceptable norms, and values. Taking these differences between institutions into account greatly helps to secure an International Alliance and reduces chances of conflict emerging out of differences in acceptable norms. These have been reported by AnguÃ© and Mayrhofer (2010) and Ghemawat (2001). 
â¢ Size of Institution: âConsidering size when seeking and selecting a partner helps to avoid problems during the co-operation agreement.â 
If two firms which come together are very different in size (in terms of market capitalisation of market power) then this may breed insecurity for the smaller firm in the alliance. There will always be a fear of strong arming by or unilateral execution of policies by the stronger firm. Consequently there will be âinsecurity, imbalance and instability in the relationship which can soon lead to problems in the daily workingsâ. Although there are many examples of small and large firms working together, it has been possible only because of very strong trust and cultural co-operation between the companies.
Thus, size is an important factor to be considered.  
â¢ Prior Trust: âConsidering trust from prior relationships between partners helps to alleviate problems during the cooperation agreementâ. 
Firms keep a record of all previous alliances to foster trust with partners. According to Parkhe (1998) and Ekanayake (2011), doing so helps develop familiarity between institutions and also helps them to learn from each other. Such a âmutual learningâ process is beneficial to both partners in the long run. Firms which are already known to each other have a minimum level of trust between them which helps to move matters forward smoothly. A lack of trust can prove disastrous when firms adopt âhidden agendasâ (Doz, 1988, p. 323) and misguide the partner about their true motives. Such concealment of ideas, thoughts and motives will further cause deterioration of trust and can ultimately lead to opportunistic behaviour by partners which will surely cause the alliance to fail (Parkhe, 1998).   
â¢ Hybrid Culture: âCreating a hybrid culture helps firms to achieve their aims in the cooperation agreementâ. 
It often becomes inevitable to seek alliances with firms with a large cultural difference. Although careful analysis is necessary, avoiding co-operation is not necessary in such situations. Sometimes mingling with a different cultural environment can enhance compatibility of firms and âenhance co-operation agreements to allow firms to complement each otherâ (Buckley & Casson, 1988; Shenkar & Zeira, 1992). Such dynamic mixing can also encourage creativity and consequently a hybrid culture would improve an international allainceâs viability. (Cox & Blake, 1991) (Patel, 2007)   
â¢ Resource/Risk Sharing: âResource/cost/risk sharing and international strategic alliances are positively correlated in low-tech industries, but negatively correlated in high-tech industriesâ 
â¢ Environmental Dynamism: âMitigating environmental dynamism in international strategic alliances relate negatively in low-tech industries but relate positively in high-tech industries.â 
Low tech and high tech firms use fundamentally different approaches to an International Alliance. Low tech firms want to share costs, risks and resources through an ISA, but high tech firms are more focussed on mitigating dynamism in the new environment. High tech firms are fully capable to deal with issues of cost and resources by themselves but want to get a strong footing in a new market. Low tech firms on the other hand will be keener to not stretch their financial resources and improve the risk taking capability.
Thus, the traditional view that ISAs are primarily used for resource, cost and risk sharing is true for low tech industries only.
Further, high tech industries do share resources to limited extent but their main aim is to mitigate environmental changes. 
â¢ Example: Given below is an example of differing criterion used by US and Korean executives for International Partner Selection 
It indicates the presence of a combination of all factors mentioned above to finally contribute to the selection of an International Partner.
Partner Selection Criterion used by Korean and U.S. Executives
(In order of Importance)
Korean Executives U.S. Executives
Technical CapabilitiesÂ¬ Financial Assets
Industry Attractiveness Managerial Capabilities
Special Skills to be learnt from partner Capabilities to provide Quality Products/Services
Willingness to share expertise Complementarity of Capabilities
Capabilities to provide quality Unique Competencies Products/Services
4(b) Consequences of wrong partner selection in an alliance/partnership:
A wrong partner selection can have a very detrimental effect on the fate of the JV or ISA. This can start from problems in day-to-day functioning of the arrangement which would then lead to management problems and can finally cause dissolution of the partnership/alliance.
The following problems can occur: 
â¢ Clash of Cultures: 
It is one of the most important factors. âThese cultural problems consist of language, egos, chauvinism, and different attitudes to business.â (Kilburn, 1999). Language problems are particularly acute as miscommunication can cause an arrangement to be doomed before they even start. Another problem occurs in approaches to expand business or deal with matters when the situations are tough. For example, âUS companies tend to evaluate performance on the basis of profit, market share and specific financial benefits. Japanese companies tend to evaluate primarily on how an operation builds its strategic position by improving skills.â (Daniels and Radenurgh, 2001)
â¢ Lack of Trust: 
There might be a case wherein one company is successful whereas the other might not. Unless a sense of commitment is generated, this can cause a problem of shifting blame on one another. It is notable to understand that trust is generated between individuals, not companies. So for a successful arrangement the people should enhance trust between themselves. Trust can also be of three forms â”âequality, responsibility and reliability.â If such conditions cannot exist between partners, the alliance will fail.
â¢ Lack of Clear Goals: 
The goals of firms entering into a venture together must match. This will enhance co-operation from both sides to ensure a smooth journey. It is necessary that the âmanagers properly research the steps necessary to ensure basic principles of co-operation. â(Lewis, 1992). A mismatch in goals will again cause inability to share risks, lack of trust and ultimately failure of the alliance.
â¢ Difference in Operating Procedures and Attitudes: 
One company might be behind schedules on its deliverables or the quality could be lower than expected. These issues could snowball into larger problems if management attitudes are different and cannot come to a common solution. This might even lead to conditions of a âhostile takeoverâ. (Melcher and Edmundson, 1997)
â¢ Relational Risk: 
There is a possibility that partner firms lack the commitment required to successfully run the alliance. It has been observed that even partners tend to be interested in their own interests rather than the interest of the alliance. So, any opportunistic behaviours or hidden agendas would jeopardise the partnership.
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