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Many MNEs in response to globalization are becoming increasingly engaged in international business beyond their countries boundaries to achieve and maintain competitive advantages over competitors. This entry into international market is facilitated by foreign firms working together in joint venture relationships referred to as Global Strategic Alliances (GSAs). GSAs are formed by firms to gain new technology, gain access to specific markets, reduce financial risks, reduce political risks, to ensure or achieve competitive advantages (Wheelen and Hungar, 2000 as cited by Elmuti and Kathawala, 2001). Shenkar and Luo, (2008, pp.332) stated that “Global strategic alliances are cross-border partnerships between two or more firms from different countries with an attempt to pursue mutual interests through sharing their resources and capabilities”.
Global strategic alliances have not always lived up to the expectations of the initiators. 60% of strategic alliances fail (Kalmbach and Roussel, 1999 as cited by Elmuti and Kathawala, 2001). Certain factors have been implicated in making global strategic alliances prone to failure. Parkhe (2001) listed these factors as societal cultures, national context, corporate culture, strategic directions and management practices and organisation.
The GSAs are formed by two or more firms from different nationalities, diverse backgrounds and cultures. These multiple inter organizational relationships create difficulties which affects the longevity of the alliances. Cultural differences such as languages, attitudinal behaviours, societal norms and corporate business ethics might be so divergent and incongruous leading to the failure of the GSAs. Parkhe (2001) however argued that these negative tenden...
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...ning its goals and objectives has little chance of survival. Feasibility studies and researches on cooperation principles and methods must be carried out by managers before concretizing GSAs formation.
Coordination among the management teams must be encouraged to avoid a situation where partners could still pursue their different business interests which will fuel competition among the alliance partners.
Reference:
1. Elmuti, D. and Kathawala, Y., (2001), An Overview of Strategic Alliances, Management Decision, Volume 39, No. 3, pp. 205 – 217.
2. Shenkar, O. and Luo, Y., (2008), International Business, 2nd Edition, Thousand Oaks, CA: Sage Publications, Chap. 12, pp. 331-337.
3. Parkhe, A., (1991), Interfirm Diversity, Organizational Learning, and Longevity in Global Strategic Alliances, Journal of International Business Studies, Fourth Quarter, pp. 579 – 601
& J. D. Hunger (12th ed.), Strategic management and business policy (pp. 29-1 – 29-23).
Yan, A. and Luo, Y. (2001), International Joint Ventures: Theory and Practice. (New York and London: M.E. Sharpe, Inc.).
How can firms minimize or manage the bumps, hurdles, or conflicts that often occur when firms join together in an alliance or partnership?
Hill, C., Wee, C. and Udayasankar, K. 2012.International Business:An Asian Perspective. 8th ed. Singapore: McGraw-Hill.
Before the alliance the two firms were in totally different market and they were also in different country but the industry was of same type. Both of the firms were aware about their future plan and lacking.
Multinational enterprise (MNE) is “a company that is headquartered in one country but has operations in one or more other countries” (Rugman and Collinson 2012, p.38) that has at least one office in different countries but centralised home office. These offices coordinate global management in the context of international business. MNEs have increasingly essential influence on the development of the global economy and coordinate with other companies in different business environments. However, there are many issues involved with how MNEs operate well overseas, especially in emerging markets (EMs) (Cavusgil et al., 2013, p.5).
The first challenge that confronts managers of multinational corporations is related to the host-country issues. Both the international corporations and the countries that host their overseas operation should mutually share opportunities from any business relationship. Multinational en...
Ensign PC 2004, ‘A resource based view of interrelationships among organizational groups in the diversified firms’, Strategic Change, Vol. 13. pp. 125-137.
A successful organization recognizes its need to adapt changes to survive global competition. Locally and around the globe, mergers and acquisitions are becoming more common between companies. Mergers occur when two or more companies combine their operations and participate as equal partners in order to achieve strategic and business objectives (Sudarsanam, 2003). Sudarsanam, S 2003, Creating Value from Mergers and Acquisitions The Challenges An Integrated and International Perspective, Harlow FT Prentice Hall. An acquisition occurs when a company takes over a smaller company and gets control to determine how combined operations will be managed (Shook & Roth, 2010). Shook, L V & Roth,
Organisational change can arise due to a change in strategy and this begins with examining capabilities and the internal environment. This is portrayed in the Strategy diamond. Firstly through arenas the organisation can plan where they will be active in and which part to place most emphasis on for example technologies or value creation strategies. Only after determining this can they implement a positive change, leading to the next element, vehicles to get them where they need to be such as alliances. This can lead to change in management along with strategic partnerships, and the way managers transition to this change will determine if the strategy impacts on the overall organisation in a way that reinforces its purpose and goals. Partnerships indicate how an organisation can strengthen its capabilities by merging with businesses who possess the skills they lack. (Carpenter et al. 2010)
1John D. Daniels and Lee H. Radebaugh, International Business: Environment and Operations (USA: Addison Wesley Longman, Inc., 1998), 181.
18. Rugman, Alan M. and Collinson, Simon. International Business 4th Edition. Essex : Pearson Education Limited, 2006.
Hitt, M., Ireland, and Hoskisson, R. (2009).Strategic management: Competitive and Globalization, Concepts and Cases. In M.Staudt & Stranz (Ed).
Daniels, J. D., Radebaugh, L. H., and Sullivan, D. P., (2011). International Business: Environments and Operations. Prentice Hall, Upper Saddle River, New Jersey.
Stonehouse, G., Campbell, D., Hamill, J. & Purdie, T. (2004). Global and Transnational Business (2nd ed.). Chichester: John Wiley & Sons.