1 / 31

CHAPTER 8 INTERNATIONAL STRATEGIC ALLIANCES: MANAGEMENT AND DESIGN

CHAPTER 8 INTERNATIONAL STRATEGIC ALLIANCES: MANAGEMENT AND DESIGN. STRATEGIC ALLIANCES ISSUES. Stability and risk Failure rate of 30 to 60 percent Even profitable alliances can be torn by conflict.

amma
Download Presentation

CHAPTER 8 INTERNATIONAL STRATEGIC ALLIANCES: MANAGEMENT AND DESIGN

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. CHAPTER 8 INTERNATIONAL STRATEGIC ALLIANCES: MANAGEMENT AND DESIGN

  2. STRATEGIC ALLIANCES ISSUES • Stability and risk • Failure rate of 30 to 60 percent • Even profitable alliances can be torn by conflict

  3. Successful Alliances Must:Not Only Make Strategic Sense But Also Require Good Implementation(See Exhibit 8.1 for Steps in Implementation of Strategic Alliances)

  4. WHERE TO LINK IN THE VALUE CHAIN? • Depends on the objectives that the firm seeks to achieve • Exhibit 8.2 gives some examples of common links in the value chain

  5. SELECTING A PARTNER: THE MOST IMPORTANT CHOICE? • Seek • strategic complementarity • skill complementarity • compatible management styles

  6. ISSUES TO CONSIDER IN CHOOSING A PARTNER • The level of mutual dependency • The "anchor" partner • The "elephant and the ant" complex • Operating policy differences • Difficulties of cross-cultural communication

  7. TYPES OF STRATEGIC ALLIANCES • International cooperative alliances • informal • formal • International joint ventures

  8. INFORMAL COOPERATIVE ALLIANCES • Non-legally binding agreements between companies from two or more countries • limited involvement between companies

  9. FORMAL COOPERATIVE ALLIANCES • Higher degree of involvement than informal alliances • Formal contract • Popular in high tech industries because of high costs and risks

  10. INTERNATIONAL JOINT VENTURES • Separate legal entity owned by two or more parent companies from different countries • No need for equal ownership • Equity based on cash or other contributions

  11. NEGOTIATING THE AGREEMENT • Joint venture contracts: legal documents that bind partners together • The formal agreement is not as important as the ability of managers to get along

  12. ORGANIZATION DESIGN IN STRATEGIC ALLIANCES

  13. DECISION MAKING CONTROL • Majority ownership does not necessarily = control • Operational decisions • Strategic decisions

  14. MANAGEMENT STRUCTURES

  15. DOMINANT PARENT • One parent controls strategic and operational decision making • dominant parent often has majority ownership • dominant parent treats the IJV as wholly owned subsidiary

  16. SHARED MANAGEMENT • Both parents contribute approximately the same number of managers to the board of directors, the top management team, and functional area management

  17. SPLIT CONTROL • Partners usually share strategic decision making and split functional decision making

  18. INDEPENDENT MANAGEMENT • IJV managers act like managers from a separate company • IJVs often recruit managers from outside the parent companies

  19. ROTATING MANAGEMENT • Key positions rotate among partners • popular in developing countries • trains management talent and transfers expertise

  20. CHOOSING AN ALLIANCE MANAGEMENT STRUCTURE • If one parent has dominant equity position • dominant management structure more likely

  21. HUMAN RESOURCE MANAGEMENT IN STRATEGIC ALLIANCES • The HRM functions of an IJV are more complex because managers (and sometimes workers) come from two or more firms or from two or more cultures

  22. HRM ISSUES • HRM planning • Parent involvement • Staffing the alliance management and technical personnel • Staffing the alliance workforce • Assigning managers strategic or operations tasks

  23. HRM issues, continued • Performance assessment • Loyalty • Career development • Cultural differences • Training

  24. COMMITMENT AND TRUST: THE SOFT SIDE OF ALLIANCE MANAGEMENT • Without trust and commitment the alliance will fail entirely or never reach its potential

  25. COMMITMENT • Taking care of each other and putting forth extra effort to make the venture work • attitudinal commitment • calculative commitment

  26. TRUST • The confidence that the partner will deliver on their expected contributions to the venture and behave with good will • benevolent trust • credibility trust • “trust cycles”

  27. WHY ARE TRUST AND COMMITMENT IMPORTANT? • Required for IJV participants to contribute tacit knowledge and quality inputs • Weakness of formal contracts • can never identify all the issues

  28. KEY FACTORS TO BUILD AND SUSTAIN TRUST AND COMMITMENT • Pick your partner carefully • Know each side’s strategic goals • Seek win-win situations • Go slowly

  29. Key factors to build and sustain trust and commitment, continued • Invest in cross-cultural training • Invest in direct communication • Find the “right” levels

More Related