© 2008 pearson prentice hall 7-1 chapter 7: global alliances and strategy implementation powerpoint...

© 2008 Pearson Prentice Hall

7-1

Chapter 7:Global Alliances and

Strategy Implementation

PowerPoint by

Hettie A. Richardson

Louisiana State University


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Opening Profile: Spanish Companies Flex their Muscles

Spain traditionally invested in Latin America

Now Spain is turning toward the US and European markets

In 2005, Spanish completion of foreign deals was up 69% from 2004


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Opening Profile: Spanish Companies Flex their Muscles

Focus in the US is not only on Hispanic markets

Spanish economy is single biggest beneficiary of European monetary policy

Further expansion through acquisitions and mergers is necessary


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Strategic Alliances

Partnerships between two or more firms that combine financial, managerial, and technological resources and their distinctive competitive advantages to pursue mutual goals

Also referred to as cooperative strategies


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Categories of Alliances

Joint Ventures PSA Peugeot-Citroen Group and Toyota

Equity strategic alliances TCL-Thompson Electronics


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Categories of Alliances

Non-equity strategic alliances UPS and Nike

Global strategic alliances Covisint


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Motivations and Benefits of Global and Cross-Border Alliances

To avoid import barriers, licensing requirements, and other protectionist legislation

To share costs of research and development Toshiba


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Motivations and Benefits of Global and Cross-Border Alliances

To gain access to markets that favor domestic companies

To reduce political risk

To gain rapid entry into a new or consolidating industry


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Challenges in Implementing Global Alliances

Many alliances fail or end up in takeover

Choosing the right form of governance

The benefits of cooperation vs. the dangers of new competition


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Guidelines for Successful Alliances

Choose a partner with compatible strategic goals and objectives

Seek complementary skills, products, and markets


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Guidelines for Successful Alliances

Work out how each partner will deal with proprietary knowledge or competitively sensitive information

Recognize that most alliances only last a few years


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Comparative Management in Focus: JVs in the Russian Federation

Investigate whether a joint venture is the best strategy—acquiring a Russian business may be better

Set up meeting with appropriate authorities well in advance


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Be above board in paying taxes

Set up stricter controls and accountability systems

Make it clear your firm does not pay bribes


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Assign the firm’s best managers and given them enough authority

Take advantage of local knowledge by hiring Russian managers

Designate considerable funds for promotion and advertising to establish an image


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Strategic Implementation

Involves putting decisions about global alliances and entry strategies into action

Successful implementation requires creating a “system of fits”

Resources must be allocated

Leadership is key


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Implementing a Global Sourcing Strategy

Examine your reasons for outsourcing

Evaluate the best outsourcing model

Gain the cooperation of management and staff


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Implementing a Global Sourcing Strategy

Consult your alliance partners

Invest in the alliance


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Managing Performance in IJVs

IJV control: Ensures that the way a joint venture is managed conforms to the parent company’s interests


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Choice of partner Suzuki and TVS Motor in India

Organizational design and strategic freedom


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Three complementary dimensions of IJV control: The scope of activities over which parents

have control The extent or degree of control The mechanisms of control


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Government Influences on Strategic Implementation

Unpredictable changes in governmental regulations China’s new restrictions on foreign

investors Caterpillar and tax breaks Ousting of Indonesian President Suharto in

1998


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Cultural Influences on Strategic Implementation

Western HungarianSource of Difference

Focus on core competencies

Focus on empire building

Systemic

Live to work Work to liveCultural/ systemic

Play by rulesBeat the system

Cultural/ systemic

Market-driven technology

Volume-driven technology

Systemic


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Six dimensions of national and corporate culture that affect alliances: Organizational formality Participation in decision-making Attitudes toward risk Systemization of decision-making Managerial self-reliance Attitudes toward funding


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The American need for autonomy and independence can cause problems with head office Europeans

Mercedes in Tuscaloosa, Alabama


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E-commerce Impact on Strategy Implementation

E-commerce enablers

NextLinx


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Management Focus: Mittal’s Marriage to Arcelor

In June 2006 Mittal Steel of India merged with Arcelor of Luxembourg to create the world’s largest steel company

Resistance in Europe and by Arcelor: Arcelor had outdated views of Mittal Concerns about losing control of a

European multinational


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Management Focus: Mittal’s Marriage to Arcelor

Resistance in India: Concerns about breaking Marwari rules

Mittal put family interests behind industry and shareholder interests

Lakshmi Mittal gave up half of his 90% share in Mittal, will share chairmanship

© 2008 pearson prentice hall 7-1 chapter 7: global alliances and strategy implementation powerpoint...

Documents

pearson prentice hall

global alliances

successful alliances

advance slide

necessary slide

crossborder alliances

consolidating industry

development toshiba