Post on 19-May-2015
Cross-Border Collaboration
Managing across Corporate Boundaries
The Bigger, the Better
http://www.youtube.com/watch?v=TqqISjfTbJ4
Companies desire multi-dimensionality
Expanding internationally allows bigger business
Must be able to manage assets and resources
Costs and risks associated with managing internationally
Roles of Management
Traditional
Protect profits from competitors or bargain power
Strong control over firm’s activities
New
Develop interdependent and integrated network within company
External relationships with other firms, customers,etc. Caused by rising costs, shortened product life, barriers
to entry
Friendly Competition?
Strategic Alliances
Companies that were once strict competitors have now allied
AT&T and Toshiba
Traditional alliance MNE in industrialized corporation joint ventures with junior local
partner in less-developed country
New alliances can be between two industrialized countries
Motivation for Strategic Alliances are technology exchange, global competition, industry convergence, economies of scale, and alliances as alternative to merger
Partners can pool resources and concentrate activities to raise the scale of activity or rate of learning
Alliances share and leverage strengths
Trading saves high cost of duplication
Risk-hedging since none of the participating firms bears the full risk
Renault-Nissan
Lomptit bloc onigea
Form alliances to compete with other international companies of similar size
Evens out playing field
Symbian alliance of psion, Eericsson, Nokia, Matsushita, and Motorola created as response to Microsoft’s entry into PDA market.
StarAlliance and OneWorld are airline alliances formed to avoid merging into one company
Created because rules against foreign ownership When rules lifted, mergers are created Alliances like Concert and Unisource created
Worldcom, France Telecom and Deutsche Telekom
???
Speeds up communication
Breaks boundaries between industries
Increases R&D technology
IT, electronics, pharmaceuticals,, specialty chemicals Material supplies team up with auto
companies to transfer and adapt to market GEC trasferred Ford Xenoy bumper technology
from Europe to U.S.
Producers of computers and telecommunications are merging
Biological and chip technologies intersecting
Develop the complex and interdisciplinary skills necessary in the time frame required
Era of Alliance “Euphoria”
1980s fueled concepts of triad power and stick-to-your-knitting
Triad power emphasized developing significant positions in U.S., western Europe, and Japan
Focus investments, efforts, and attention on only those tasks they have significant competitive advantage Outsource or use alliances for other tasks
Risks of Competitive Collaboration
Assymetry
SonyEricsson Risk could be that one of the partners will learn and
internalize other’s skill while protecting its own
Ajinomoto Japanese food giant allied with General Foods
Also capturing investment initiative to use the partnership to erode other’s position
Possibility that alliance breaks, one partner is made stronger
Strategic and Organizational Complexity
International partnerships represent a mix of different economic, political, social and cultural systems
Creates organizational challenge
Xerox and Fuji Xerox (Japan)
Building Cooperative Ventures
Partner Selection: Strategic and Organizational Analysis Availability of partner Tangible assets Time and distance Strategic capabilities Ongoing process. “Thrill of the Chase”
People are different after the chase is over Strategic capabilities
Simplicity and Flexibility
Managing Cooperative Ventures
Managing the Boundary Start with limited agreement? Always easier to expand
Managing Knowledge Must prevent outflow of any info or knowledge
they don’t want partners to know InterfaceManagers
Well versed in organizational processes Personal credibility
Governing Structure If partners are equal, hard to achieve anything
Conclusion
Alliances don’t have to be permanent
Flexibility is important
Always learn