Reference no: EM132225580

1. What INTANGIBLE resources (both strengths and weaknesses) do you think the McDonalds and Ray Kroc possess initially (before their strategic alliance)?

2. Initially, how is Ray Kroc able to solve the franchising problems of the McDonalds? In other words, what resourcedoes Ray Kroc locate that is complementary to (resolves the weaknesses inhering in) the McDonalds flawed franchising strategy?

3. A primary governance mechanism for this strategic alliance is the contract. Though Ray Kroc seems to have located a resource that would make the strategic alliance successful (#2 above), the contract nevertheless remains untenable for him. I suggest that this is because the weaknesses of each side have been formalized in the contract.

Some contracts are written containing clauses that avoid the very problems that surface in this strategic alliance. Propose one clause that would help to avoid the seemingly unresolvable conflict here.

4. Ray Kroc (or, more precisely, Harry Sonneborn) eventually identifies (fortuitously) a new resource that lies outside of the contract, thereby allowing him to save the alliance and, ultimately, to prosper. What new resource has he identified?

5. Finally, unlike one-off sales transactions, strategic alliances suggest an on-going interdependence between parties. In this case, the McDonalds are dependent upon Ray Kroc to grow (franchise) their idea and he is compensated for this (royalties) in the license. At the same time, the franchisee (Ray Kroc) remains dependent upon the franchisor (McDonald’s) to provide the highest reputation, the know-how (e.g, most efficient methods of providing “fast food”), etc. The McDonald’s also receive royalties under the contract for this service.

Nevertheless, strategic alliances can be temporary arrangements – things change. Does this one end? If it ends, why and how do you think it ends?