International business 5th griffin chapter 13

ion international strategic alliances... Chapter Objectives 1• Compare joint ventures and other forms of strategic alliances • Characterize the benefits of strategic alliances • Describ

ion

international strategic

alliances

Chapter Objectives 1

• Compare joint ventures and other forms of strategic alliances

• Characterize the benefits of

strategic alliances

• Describe the scope of strategic

alliances

Chapter Objectives 2

• Discuss the forms of management used for strategic alliances

• Identify the limitations of strategic alliances

Strategic Alliances

A strategic alliance is a business

arrangement whereby two or more firms choose to cooperate for their

mutual benefit

Joint Venture

A joint venture (JV) is a special type

of strategic alliance in which two or more firms join together to create a new business entity that is legally separate and distinct from its parents

Figure 13.1 Benefits of Strategic Alliances

Potential Benefits

of Strategic Alliances

Ease of

Market

Entry

Shared Risk

Shared Knowledge

and Expertise

Synergy and Competitive Advantage

Map 13.1 Namibia and Joint Ventures

Scope of Strategic Alliances

• Significant variation

– Comprehensive alliance – Narrowly defined alliance

• Degree of collaboration depends upon basic goals of each partner

Figure 13.2 The Scope of

Strategic Alliances

Types of Functional Alliances

Production alliances

Marketing alliances

Financial alliances

Issues in the Implementation of

Strategic Alliances

Partner selection

Joint management Form of

ownership

Factors Affecting Partner Selection

Compatibility Nature of

partner services

Relative safeness Learning potential

Approaches to Joint Management

Shared management agreements

Delegated arrangements Assigned arrangements

Figure 13.3a Shared Management Agreement

Partner

1

Partner

2

Both parties are active

participants

Figure 13.3b Assigned

Arrangement

Partner

1

Partner

2

Alliance

One partner takes primary

responsibility

Figure 13.3c Delegated

Arrangement

Partner

1

Partner

2

Figure 13.4 Pitfalls of Strategic Alliances

Pitfalls

Access to information Distribution

of earnings

Loss of autonomy

Incompatibility

of partners Changing

circumstances