We have entered an era of real-time business that requires unprecedented agility and responsiveness, said Cathy Spencer, Research Director covering strategic sourcing for GartnerG2. To react quickly to changing conditions, businesses must be flexible and nimble. Rather than broadening scope and increasing scale through M&A, companies are choosing to develop broad reach through new technologies and business relationships and forming integrated business ecosystems.
According to Gartner's analysts, there are processes and functions within every business that could be performed better by other companies through sourcing relationships. The group predicts that today's tactical sourcing relationships, driven by cost reduction, will give way to more strategic relationships that will include the most critical sources of business value, sharing competencies among companies for mutual benefit.
As an example, the group highlights the global partnership forged between Merck and Schering-Plough in the area of cholesterol management therapy as a strong case for fierce competitors coming together to jointly pursue research, development, manufacturing and marketing for mutual benefit. The group stresses that the benefits of focusing on true core competencies and acquiring material value from partners within an ecosystem are so compelling in some industries that the enterprises that don'st virtualize's their value creation will be left behind.
From a business leader's point of view, sourcing decisions are deceptively simple: there are activities and processes your company should be doing itself and there are activities and processes that should be given to others, said Neil MacDonald, Vice President and Director of Research for GartnerG2. However, most businesses don'st understand that the rules governing the build versus buy's decision have changed. Getting this decision right means business growth, market leadership, faster delivery of solutions to market and improved agility - getting it wrong means relegating yourself to the pack of followers or, in some cases, extinction.
The group believes M&A isn'st obsolete, but is no longer the only option for growth and may, in fact, introduce inefficiencies that slow growth. According to Gartner's analysts, a few dominant companies will continue to pursue a bigger is better strategy to take advantage of the economies of scale. The rest, however, will compete on economies of scope delivering value through a symbiotic web of relationships. The new mantra, the group contends, is you don'st have to be big to deliver big.
You can learn more about how your company can benefit M&A and how strategic alliances and partnerships can increase your pipeline productivity at eyeforpharma's upcoming conference, Collaborative Strategies in R&D Europe, 2-4 December 2002, Amsterdam. Click here for full details.
For more information on speaking or sponsorship, please contact Event Director, Sebastien Rooryck on Tel: +44 (0) 20 73 75 75 51 or Email: sebastien@eyeforpharma.com.
To learn more about the report and GartnerG2, visit the group's Web site at www.gartnerG2.com.
