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