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ContestCityPopulationJanFebMarchTotalPer CapitaAshburn,
VA43511305503546952765Vienna,
VA16370214522265429456Washington,
DC658893251013375680761490Leesburg,
VA47673558914501199819Fairfax,
VA2397312045212132133190Oakton,
VA34166247651666726917Reston,
VA58404235467623156723Middleburg,
VA7519875891000Annandale, VA41008456784712323145Falls
Church, VA13508233411356478934Chantilly,
VA23039260051993129997Lovettesville,
VA1801234154212814Great Falls,
VA15427102671567828987Washington,
VA842957570890McLean,
VA48115113661487020454Arlington,
VA224906905868945686701Merrifield,
VA15212174231624518754Springfield,
VA30484294562645628912Burke,
VA594691213645723689256Fairfax Station,
VA12030944697125682365Centreville,
VA7113511235417512685963Alexandria,
VA1488921023098459785Manassas,
VA37821121451143212354Purcellville, VA77211019981002
10
Multinational E-Commerce:
Strategies and Structures
Chapter
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Learning Objectives (1 of 2)
Define the forms of e-commerce.
Understand the structure of the Internet economy.
Identify the basic components of a successful
e-commerce strategy.
Know the basic multinational e-commerce business models.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Learning Objectives
Identify the practicalities of running a multinational
e-commerce business.
Understand the function of enablers in multinational
e-commerce operations.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
The Internet Economy
Although small in comparison to the traditional economy, the
Internet economy is:
Growing faster than any other business trend in history; a
worldwide phenomenon
Drastically changing how international business is done
The Internet allows any company to create a virtual and global
presence to conduct operations worldwide.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
The Internet Economy
Many of the issues involved in business over the Web are
similar to those faced by traditional MNCs.
The next generation of Multinational managers must address
unique challenges in formulating and implementing
multinational strategies for the Internet economy.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
What Is E-Commerce? (1 of 2)
E-Commerce is the selling of goods or services over the
internet, and includes those delivered online (downloaded
software) and offline (delivery by UPS).
Types of transactions:
B2C: Business-to-Consumer transactions
Example: buying toys from eToys.
B2B: Business-to-Business transactions
75-80% of transactions
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
What is E-Commerce? (2 of 2)
Types of transactions: (cont’d)
C2C: Consumer-to-Consumer transactions
Anyone selling online
eBay facilitates C2C transactions
C2B: Consumer-to-Business transactions
Example: price comparison websites
.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 10.1:
E-Commerce Value Chain
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Measuring
The Internet Economy
Two indicators of the global presence of e-commerce:
Secure Server: an Internet host that allows users to send and
receive encrypted data
Internet Hosts: computers connected to the Internet with their
own IP addresses
The extent of e-commerce is difficult to measure.
One method is to estimate its contribution to a country’s GDP.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 10.2:
Internet Economy as a Percentage of GDP for Selected
Countries
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 10.3:
Percentage of Households
with Internet Access
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Fundamentals of E-Commerce Strategy & Structure
E-commerce is evolving quickly.
Failures of many start-ups show it’s not without risks.
Each layer of the Internet economy has its threats and
opportunities.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 10.4:
E-Commerce Business Models: Openings and Barriers for Going
Global
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Steps for a Successful
E-Commerce Strategy
Experts suggest seven fundamental requirements:
1. Leadership
Successful e-commerce is only possible through dynamic and
strong leadership.
2. Build on current business models and experiment with new e-
commerce models
Use e-commerce to search for ways to reduce costs or enhance
the business.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Steps for Successful
E-Commerce Strategy (cont.)
Experts suggest seven fundamental requirements: (cont’d)
3. Meet the challenge of developing an e-commerce
organization.
The entire firm (not only top management) must be prepared to
embrace the e-commerce model.
4. Allocate resources to the e-commerce business.
Commit financial, human, and technological resources to
develop e-commerce capabilities.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Steps for Successful
E-Commerce Strategy (cont.)
Experts suggest seven fundamental requirements: (cont’d)
5. Have an e-commerce strategy.
Use strategic management to implement a strong and adequate
strategic e-commerce plan.
6. Develop appropriate e-commerce systems.
Remove traditional barriers to ensure increased coordination
and information flows among the various functional areas.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Steps for Successful E-Commerce Strategy (cont.)
Experts suggest seven fundamental requirements: (cont’d)
7. Measure success.
Have metrics in place to measure e-commerce success. Obvious
output success measures include website hits, number of new e-
commerce customers, e-commerce revenue and number of
customers learning about new products to purchase through
other channels.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
E-Commerce Structure: Integrated or Autonomous (1 of 4)
The company needs to decide how e-commerce fits into its
existing design.
Right mixture of “bricks” and “clicks”
How much to integrate the Internet into traditional business
Brick-and-mortar : traditional, non-virtual business operations
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
E-Commerce Structure: Integrated or Autonomous (2 of 4)
The degree of interaction between brick-and-mortar operations
can occur anywhere in the value chain.
It can range from near seamless operations of an Office Depot
to the mostly independent operations of Barnes & Noble and
Barnesandnoble.com.
Each choice has its benefits.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
E-Commerce Structure: Integrated or Autonomous (3 of 4)
The independent benefits:
Faster and more entrepreneurial
Freed from corporate bureaucracy
The integrated benefits:
Cross-promotion, shared information, increased quantity
purchases, same distribution channels
The choice is seldom clear-cut.
The best option for most firms lies somewhere in between.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
E-Commerce Structure: Integrated or Autonomous (4 of 4)
Additional steps to integrate online and offline operations:
Keep customers informed.
Retailers find it impossible to maintain the same pricing and
inventory on websites and in stores. Customers can be
frustrated, and appreciate being informed.
Share customer data across channels.
Example: Retailers can send tailored product emails based on
store purchases.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 10.5:
Key Decisions in
Web Business Integration
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Additional Operational Challenges for an E-Commerce Business
Finding partnerships and alliances with customers or third
parties
Attracting, retaining, and developing employees in the e-
commerce unit
Inadequate e-commerce training
E-commerce employee retention
Deciding what e-commerce functions to outsource
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
A Pure E-Business Company Can Meet Its Challenges
Develop information and management systems to respond to
growth.
Maintain rapid decision making, creativity, innovation, and
flexibility.
Build relationships with e-commerce support companies and
customers.
Attract and retain e-commerce–capable talent.
Develop an effective management team
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
A Traditional Firm with E-Commerce Can Meet Its Challenges
Build a common vision and commitment to
e-commerce throughout the organization.
Change the organizational structure for quick reconfiguration of
assets and capabilities
Change the organizational culture to create a supporting
environment for e-commerce.
Attract and retain e-commerce-skilled employees.
Alter HR programs to suit the different skill requirements of e-
commerce employees.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 10.6: Organizational Changes in Major Multinational
Companies Building E-Commerce Businesses
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
E-Commerce Security (1 of 3)
E-Commerce Security: the degree to which customers feel that
their private, personal information can be safeguarded in the
hands of online companies collecting such information
Cybercriminals are becoming increasingly sophisticated.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
E-Commerce Security (2 of 3)
Multinationals must protect their Internet security:
Confidentiality: protecting private information
Availability: ensuring information is accessible to authorized
users
Integrity: ensuring that the information collected is accurate and
reliable
Authentication: having systems in place to ensure that persons
using the systems are legitimate
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
E-Commerce Security (3 of 3)
Companies are also under increased pressure to protect the
privacy of individuals.
Experts suggest the use of:
Firewalls and antivirus protection software
Data encryption and several levels of authentication for users
Abiding by privacy rules to address Internet security issues
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Globalizing
Through the Internet
The Internet is enabling the emergence of a new form of
multinational, the born-global firm.
Born-global firms are able to obtain a significant portion of
their revenues from sales in international markets.
Though a website gives the world access to firm’s goods and
services, the internationalization challenges faced by traditional
MNCs remain. The firm must still solve the global – local
dilemma, and deal with national culture and institutional
contexts.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Multinational E-Commerce Strategy Formulation:
The Nature of the Business
What kind of e-business is easiest to take global?
It depends on the types of products or services offered through
e-commerce
E-commerce companies work in 3 areas, and require 3 types of
infrastructure:
Telecommunications infrastructure to move information
Payment infrastructure to move money
Physical infrastructure to deliver products
Most difficult are e-commerce businesses that require a physical
infrastructure.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Basic Opportunities & Threats of Multinational E-Commerce (1
of 3)
The major attractions of e-commerce are:
Cost reduction: It’s less expensive to reach international
customers.
Technology: The technology to reach customers is readily
available.
Efficiencies: Electronic communication can be very efficient.
Convenience: The Web is in operation 24/7.
Speed of Access: Once a website is running, the firm’s products
can be accessed immediately from anywhere in the world.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Basic Opportunities & Threats of Multinational E-Commerce (2
of 3)
The major deterrents to e-commerce include:
The return/receipt burden & cost of delivery: Businesses should
expect a 30-40% return rate for online purchases.
Costs of site construction, maintenance, upgrades: Website
creation in multiple languages, currencies and tax locations is
expensive.
Channel conflicts: Distributors and retailers of a firm’s products
may be in competition with the firm itself.
Easily copied models: Competitors can see and copy the firm’s
website.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Basic Opportunities & Threats of Multinational E-Commerce (3
of 3)
The major deterrents to e-commerce include (cont’d)
Cultural Differences: Understanding global customers and
overcoming cultural barriers can be difficult on the Web.
Traditional cross-border transaction complexities: Issues
include pricing for exchange rates, varying taxes, and
government regulations.
Standard or local websites: Companies must decide whether to
standardize websites or tailor them to local contexts.
Customer trust and satisfaction: Companies must determine
whether customers abroad will trust and be satisfied.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Picking a Market (1 of 2)
Target countries based on two factors:
Countries with market inefficiencies
E.g., formerly state-controlled economies
Countries with attractive demographic characteristics
An Internet population of at least 5%
A high literacy rate
Participation in at least one free trade agreement
A government with a viable legal system
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Picking a Market (2 of 2)
E-commerce potential may be substantial in Latin America
because of the Mercosur trade group.
Potential exists for Southeast Asian countries with membership
in ASEAN.
The open borders and common currency of European Union is
also fertile ground for e-commerce growth.
Not all countries are equally e-commerce ready.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 10.8:
E-Readiness of
Selected Countries
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Multinational E-Commerce Strategy Implementation
Successful implementation of a multinational e-commerce
strategy requires building an appropriate organization and
developing the necessary technical capabilities to conduct
electronic transactions.
The following provides an overview of the options available to
multinational managers.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
The Multinational
E-Commerce Organization
How is a multinational e-business organized? Consider
Amazon.com and Yahoo!. Each has a 3-tiered mix of global &
local functions:
1. Corporate headquarters: The global core provides vision,
strategy, & leadership for worldwide electronic marketing.
2. HQ also provides shared services such as network
infrastructure.
3. Local subsidiaries which deliver the goods, take charge of
functions better done locally.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 10.8:
Organizational Structures of the Multinational E-Corporation
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Technical Capabilities & Implementation Options for
Multinational E-commerce (1 of 2)
Required technical capabilities are:
Software to process pricing in multiple currencies
Systems to calculate & show purchase information on
international shipping, duties, and local taxes
Systems that check compliance with local and international laws
The ability to give support in multilingual service centers
Fraud protection
Electronic payment models in addition to credit cards
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Technical Capabilities & Implementation Options for
Multinational E-commerce (2 of 2)
Also, local realities require implementation decisions.
Many areas of the world do not process data the same way. In
some countries, last names may come first.
Similarly, not all countries use credit and debit cards.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Web Sites:
Localize or Standardize?
A Standardized Web Site: A company’s web sites are fairly
similar in layout and design around the world.
Example: Dell Computer
A Localized Web Site: A company’s websites around the world
are adapted to the local culture in terms of values, appeals,
symbols, and even themes in the communication content.
Example: Chipshot.com
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 10.9:
Major Problems Identified
in Web Site Globalization
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
To Build or Outsource Technical Capabilities?
Two options for a firm’s technical capabilities:
Run all e-commerce functions internally, or
outsource to e-commerce enablers
E-commerce Enablers: fulfillment specialists that provide
services such as Web site translation, and calculate shipping,
value-added taxes, duties, and other charges unique to each
country.
Some MNCs are taking advantage of User-Generated Content
(UGC).
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Summary
Internet and e-commerce are becoming an increasingly
important component of any multinational’s strategy.
Chapter 10 introduced the basic concepts of e-commerce, and
compared traditional and e-commerce companies.
Many of the same challenges are faced by both.
Future trends include the use of User Generated Content (UGC)
by multinationals to their advantage
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
9
International Strategic Alliances: Design and Management
Chapter
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Learning Objectives (1 of 3)
Know the steps for implementing successful international
strategic alliances.
Describe how multinational companies link value chains in
international strategic alliances.
Understand the importance of choosing the right partners for
alliances.
Know the important characteristics to look for in potential
alliance partners.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Learning Objectives (2 of 3)
Distinguish between equity-based international joint ventures
and other types of international cooperative alliances.
Know the basic components of an international strategic
alliance contract.
Understand the control systems and management structures used
in alliance organizations.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Learning Objectives (3 of 3)
Appreciate the unique problems in human resource management
faced by managers in alliance organizations.
Realize the importance of interfirm commitment and trust for
building successful international strategic alliances.
Understand how multinational companies assess the
performance of their international strategic alliances.
Know when companies should dissolve or continue their
international strategic alliances.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Strategic Alliance Issues
Although strategic alliances are a fast and flexible way to break
into new markets, they are inherently unstable, for these
reasons:
They may be poorly designed or managed.
Partnering with a company from a different nation compounds
management difficulties.
Partners may disagree on how to run the business.
Even profitable alliances can be torn by conflict.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 9.1:
Implementing a
Strategic-Alliance Strategy
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Where to Link
in the Value Chain
Many benefits of strategic alliances:
Gain access to local partner’s knowledge of market, meet
government requirements, share risks, share technology,
economies of scale, access lower cost raw materials or labor.
Alliances combining same value-chain activities gain
efficiencies, merge talents, and share risks.
Where to link depends on the firm’s strategic objective.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 9.2:
Examples of Linking Value Chains in Strategic Alliances
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 9.3:
Value-Chain Links in US International Alliances
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Choosing a Partner:
The Most Important Choice?
The success or failure of a strategic alliance depends on how
well the partners get along.
Especially early in the relationship, each party must believe it
has a good partner who can deliver on promises and be trusted.
Picking the wrong partner can have negative major
consequences.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Key Criteria for
Choosing a Partner (1 of 3)
There are several key criteria for choosing an appropriate
alliance partner:
Seek strategic complementarity.
Prospective partners must understand each other’s strategic
objectives, short & long term.
Pick a partner with complementary skills.
Technical complementarity is most important.
Find partners with similar but not identical products.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Key Criteria for
Choosing a Partner (2 of 3)
Seek out companies with compatible management styles.
Seek a partner that will provide the “right” level of mutual
dependency; partners must rely on each other.
Avoid the “anchor” partner:
Anchor Partner: a partner that holds back the strategic alliance
because it cannot or will not provide its share of the funding.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Key Criteria for
Choosing a Partner (3 of 3)
Be cautious of the “elephant-and-ant” complex.
This occurs when two companies are greatly unequal in size.
The large firm may dominate the smaller firm.
Assess operating policy differences with potential partners.
Assess the difficulty of cross-cultural communication with a
likely partner.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 9.4:
International Strategic Alliances for Small Multinational
Companies
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Choosing an Alliance Type
There are three main types of strategic alliances:
Informal international cooperative alliances
Formal international cooperative alliances (ICAs)
International joint ventures (IJVs)
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Informal International Cooperative Alliance
An Informal International Cooperative Alliance is:
A non-legally binding agreement between companies from two
or more countries to cooperate.
They may be agreements of any kind, and may provide links
anywhere on their value chains.
Because there is no legally-binding agreement, managers
usually limit the scope of involvement, and resist revealing
proprietary information.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Formal International Cooperative Alliances (ICAs)
A formal International Cooperative Alliance (ICA)
Calls for high degree of involvement with partners.
Usually, a formal contract specifies what each partner will give
and receive.
May require sharing proprietary information, which makes
backing out of this alliance more difficult.
Sometimes one partner may take an equity share of ownership
of the other.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
International Joint Ventures (IJVs)
An International Joint Venture is a self-standing legal entity
owned by two or more parent companies from different
countries; each has an equity interest.
The venture need not be equally owned.
Contributions may be cash, technology or other resources.
If there are many members, the entity is called a consortium.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 9.5:
Types of Alliances
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Negotiating the Agreement
Both formal ICAs and IJV require a negotiated and signed
contract.
Negotiation issues include:
Products or services of the alliance
Equity contributions (cash or other resources)
Management structure
“Prenuptial” agreements regarding dissolution
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 9.6:
Selected Questions for a Strategic-Alliance Agreement
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Organizational Design
in Strategic Alliances
Design of the organization depends on the type of alliance
chosen.
Informal ICAs often do not require formal design.
Formal ICAs may require a separate organizational unit housed
in one company, with employees from both.
IJVs are separate legal entities, and require a separate
organization to carry out the alliance’s objectives.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Decision-Making Control
There are two major areas of decision making:
Operational decisions (daily running of organization)
Strategic decisions (strategy for long term survival)
Majority owners do not necessarily control both areas.
IJVs’ strategic decision-making takes place at the level of the
IJV’s board of directors or top management.
In non equity ICAs, strategic decisions remain with parent
companies.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Management Structures (1 of 3)
MNCs typically use five management control structures for their
ICAs or IJVs:
1. Dominant Parent: The Dominant Parent controls strategic and
operational decision making.
Often has majority ownership
Treats the IJV as its wholly owned subsidiary
2. Shared Management: both parent companies contribute
approximately the same number of managers to the alliance
organization
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Management Structures (2 of 3)
MNCs typically use five management control structures for their
ICAs or IJVs: (cont’d)
3. Split Control Management: Partners usually share strategic
decision making and make functional decisions independently.
4. Independent Management: Alliance managers act more like
managers from a separate company.
IJVs often recruit managers from outside the parent companies.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Management Structures (3 of 3)
MNCs typically use five management control structures for their
ICAs or IJVs: (cont’d)
5. Rotating Management: Managers from the partners rotate
through the key positions in the management hierarchy.
This structure is popular in developing countries.
It serves to trains management talent and helps to transfer
expertise to the developing country.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Choosing a Strategic Alliance Management Structure (1 of 2)
If partners have similar technologies and know-how, and
contribute equally, a Shared Management structure is preferred.
If partners have different technologies but contribute equally, a
Split Management structure is preferred.
If one partner has a dominant equity position, or is more
important to one partner, a Dominant Management structure is
more likely.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Choosing a Strategic Alliance Management Structure (2 of 2)
For joint ventures in particular:
Mature joint ventures move to independent structures as the
joint venture’s management team gains more expertise.
Joint ventures in countries with a high degree of government
intervention produce IJVs with local partner dominance.
Independent management structures are more likely when the
market is expanding, the venture does not require much capital,
or the venture does not require much R&D input from its
parents.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Commitment and Trust:
The Soft Side of
Alliance Management
Managers from both failed and successful strategic alliances
advise the importance of building mutual trust and commitment
among partners from the beginning.
Commitment: taking care of each other and putting forth extra
effort to make the venture work
Attitudinal commitment: Willingness to dedicate resources and
efforts and face risks to make the alliance work.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Commitment and Trust:
The Soft Side of
Alliance Management
If alliance partners demonstrate these aspects of commitment,
the venture will develop based on the principles of Fair
Exchange.
Fair Exchange: Fair exchange occurs when partners believe that
they receive benefits from the relationship equal to their
contributions.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Calculative Commitment
Commitment also has a practical side:
Calculative Commitment: comes from the evaluations,
expectations, and concerns about the future potential for gaining
rewards from the relationship.
Businesses require tangible outcomes for a relationship to
continue.
A study of commitment in IJVs suggests that commitment
increases when both partners achieve their strategic goals.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Trust
Trust and Commitment go hand in hand.
Credibility Trust: the confidence that the partner has the intent
and ability to meet promised obligations and commitments.
Benevolent Trust: the confidence that the partner will behave
with goodwill and with fair exchange.
The development of trust between alliance partners may take
time.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 9.7:
The Trust/Commitment Cycle
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Why Is Trust Important?
Successful cooperation requires alliance partners to contribute
quality inputs to the organization.
When there is no trust, partners hold back or take unfair
advantage of each other, making failure likely.
Formal contracts can never identify all issues that will arise, so
a trusting relationship is necessary.
Technology and knowledge also include tacit elements that can
only be shared when there is trust.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Building and Sustaining
Trust and Commitment
To build and sustain trust and commitment, Multinational
managers should consider key factors:
Pick your partner carefully.
Know each side’s strategic goals.
Seek win-win situations.
Go slowly.
Invest in cross-cultural training.
Invest in direct communication.
Find the right levels of trust and commitment.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 9.8:
The “Right” Levels of
Trust and Commitment
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Assessing the Performance of an International Strategic
Alliance
If the strategic intent is to produce immediate results, use
standard financial and efficiency measures.
Some strategic alliances provide indirect strategic benefits, but
may never generate profits.
To assess IJV and ICA performance, criteria other than
financials must be included, such as organizational learning,
and subjective measures like alliance satisfaction and harmony.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Exhibit 9.9:
Selected Performance Criteria for Strategic Alliances
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
If the Alliance Does Not Work (1 of 2)
If an alliance does not work, there are two choices:
Improve implementation, or
Negotiate an end
Know when to quit and when to invest more.
Avoid “escalation of commitment:”
Managers continue in an alliance longer than necessary because
of past financial and emotional investments.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
If the Alliance Does Not Work (2 of 2)
Plan the end at the beginning.
Create “prenuptial agreements” at the start of the venture in
which the partners decide how to terminate the alliance.
The advantage of the “prenuptial” is that negotiation takes place
at a positive and friendly stage.
Recognize that death of the venture does not always mean
failure.
Many alliances are short term.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Dedicated
Strategic Alliance Units
Alliances are so common that firms are developing Strategic
Alliance Units to manage their design. They provide processes
and procedures that help managers:
Identify the need for an alliance
Evaluate partners
Negotiate agreements
Structure the alliance organizations
Develop specific performance indicators
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Key Lessons from
Cross-Border Alliances
Understand and appreciate business and cultural differences.
Keep strong executive support
Communicate.
Practice commitment, trust and dedication.
Have “checkpoints” as the alliance is being implemented.
Review the alliance’s viability.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Summary
The use of international strategic alliances continues to grow in
international business.
Chapter 9 provides a solid understanding of the basics and how
to manage strategic alliances.
Strategic alliances are prone to failure and great effort must be
taken to make them successful.
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Management 55
1.) Describe the basic steps for a successful e-commerce
strategy.
2.) Explain conditions under which a firm chooses a
management structure available for a strategic alliance.
3.) If an alliance fails to meet strategic goals, how do top
managers resolve the situation? How can an alliance be
improved?
4.) Compare and contrast the kinds of commitment needed in a
strategic alliance.
5.) What are some of the factors that an MNC manager
considers when picking a country for establishing an e-
commerce business? Why do trading blocs such as Mercosur,
ASEAN (Association of Southeast Asian Nations), and the EU
(European Union) present significant potential for e-commerce
businesses?
6.) What are the main types of strategic alliances? Compare and
contrast them.
7.) What are e-commerce enablers? Why are they becoming
essential to e-commerce? What are the essential services
provided by e-commerce enablers?
8.) Explain e-commerce security. What are the four key aspects
of information security? What can a multinational do to ensure
security of its e-commerce system?
Additional Recycling Data for April, May and June 2016
(Note that the data below may not be in the same order as the
data in the spreadsheet!)
April
May
June
Washington, D.C.
79016
80531
85481
Arlington, VA
85818
55149
60060
Vienna, VA
19873
13058
99381
Chantilly, VA
30195
35997
45091
Leesburg, VA
90631
97541
89520
Ashburn, VA
55012
59072
59408
Oakton, VA
19875
29870
23951
Great Falls, VA
23687
35097
35198
Fairfax, VA
33081
36085
29839
Washington, VA
842
761
750
McLean, VA
29810
27714
28975
Lovettesville, VA
6318
10297
8075
Middleburg, VA
750
525
760
Annandale, VA
12456
17896
23461
Falls Church, VA
34135
14562
14235
Reston, VA
21567
15342
18342
Burke, VA
13564
12236
12256
Centreville, VA
91354
85126
79456
Fairfax Station, VA
12563
10845
9945
Alexandria, VA
12132
12256
17645
Merrifield, VA
15123
15244
17154
Springfield, VA
21456
36456
22912
Manassas, VA
12789
13012
12542
Purcellville, VA
1203
1402
1103
HW #2, Excel #1 – Fall 2017 – Recycling Aluminum Cans –8
pts
Scenario – With several recent environmental disasters (e.g., BP
oil spill, Fukushima Daiichi Nuclear Power Plant, Hurricanes
Katrina, Irene, Sandy, Irma etc.), many metropolitan areas have
been looking for ways to be more environmentally conscious …
AND perhaps to make some money. For several years,
towns/cities in Northern Virginia (NOVA) have been running
trial programs for recycling paper, bottles, and cans. Last year,
twenty three NOVA towns plus the District of Columbia
decided to hold a competition to determine the municipality that
did the best job of recycling, with the focus on aluminum cans.
It is an important program given the outdoor opportunities
around the region, including the Appalachian Trail, the C&O
Canal, the Potomac River, and the Chesapeake Bay, among
others. To make the contest fair, the winning town/city will be
the one that recycles the largest number per capita, (e.g. the
number of cans recycled divided by the number of residents for
that town/city).
Ali Tambor (everyone calls her “Al”) is the competition
coordinator for the recycling project. Al has provided you with
a rough starting point in the spreadsheet “HW2 – Fall 2017 –
Recycling Cans.xls.” She has also provided you with
additional data as identified in the Word document of
“Additional Recycling Data”.
· First, Al would like for you to alphabetize the list of
participating towns/cities in the Excel worksheet according to
the state (with Virginia appearing at the top). This data is for
Jan-Mar 2016. Display the numbers and create the formulas to
compute the total recycling for each city, by the year (for the
data given). This should be a whole number in standard
numerical display. Make sure you break out Washington DC
from the Northern Virginia (NOVA) towns. Include the
additional data provided in Additional Data, Word document (1
pt).
· Determine the per capita recycling value to 1 decimal place.
This will determine the contest winner for the first six months
of 2016 (including Washington, DC). Use conditional
formatting to determine the largest per capita value for the Jan-
June timeframe (e.g. after the six month period, which city
would win? (1 pt).
· In addition, she wants to know a few statistics about the
monthly recycling efforts, including the minimum, average, and
maximum values for the number of cans recycled for each
month, i.e., what was the smallest number of cans recycled, the
average, and the largest for each month). Break this out by
Northern Virginia towns/cities (as the Washington DC numbers
would constitute the smallest, average and largest number for
each month) to one decimal place using formulas (not
conditional formatting). (1.5 pt).
Each town/city also makes some money from these recycling
programs.
· The initial value of each recycled aluminum can is currently
2.72 cents. However, aluminum prices fluctuate. Therefore, in
addition to this basic assessment of a revenue rate of 2.72
cents/can, Al wants you to build/modify the spreadsheet so that
she can compare two additional revenue rates, 2.65 cents/can
and 3 cents/can (1.5 pt). The results for all three rates should
be displayed in the spreadsheet at the same time. Complete this
spreadsheet so that Al can assess the success and value of the
recycling effort (i.e., the potential revenue) for each month (for
all towns/cities combined) and in total for the combined six
months recycling effort. Make sure this is displayed in a
monetary format. [Note: These reimbursement values do
sometimes fluctuate as the recycling market evolves.
Therefore, you should set up the spreadsheet so that the revenue
value(s) and related calculations can be easily and quickly
adjusted/updated to reflect market fluctuations. (Think about
what this means for your design!)].
· Figure out a way to have the spreadsheet automatically mark
or indicate the NOVA city with the highest amount of recycling
by month (1 pt).
· Finally display a column chart showing the NOVA cities
recycling for February and May (1 pt).
Homework Evaluation
· All requested data fields should be used/calculated. Use the
spreadsheet to do the calculations and to fill in the results. (In
other words, just typing in the calculated values is not making
use of the capabilities of the spreadsheet and will result in a
major deduction in points.) Work toward a good layout for the
data (e.g. 20,000 instead of 20000, $14,000 instead of 14000).
Make sure all fonts are the same (size and type). (1 pt)
· Make sure any labels you add are helpful/useful in explaining
the cell content. (Note: Although Al has asked you to do this
work, you should assume that others who are not as familiar
with the contest will also look at the results and will need to be
able to make sense of the output data without a lot of
explanation.)

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Sheet1Recycling Aluminum Cans ContestCityPopulationJanFebMarchTota.docx

  • 1. Sheet1Recycling Aluminum Cans ContestCityPopulationJanFebMarchTotalPer CapitaAshburn, VA43511305503546952765Vienna, VA16370214522265429456Washington, DC658893251013375680761490Leesburg, VA47673558914501199819Fairfax, VA2397312045212132133190Oakton, VA34166247651666726917Reston, VA58404235467623156723Middleburg, VA7519875891000Annandale, VA41008456784712323145Falls Church, VA13508233411356478934Chantilly, VA23039260051993129997Lovettesville, VA1801234154212814Great Falls, VA15427102671567828987Washington, VA842957570890McLean, VA48115113661487020454Arlington, VA224906905868945686701Merrifield, VA15212174231624518754Springfield, VA30484294562645628912Burke, VA594691213645723689256Fairfax Station, VA12030944697125682365Centreville, VA7113511235417512685963Alexandria, VA1488921023098459785Manassas, VA37821121451143212354Purcellville, VA77211019981002 10 Multinational E-Commerce: Strategies and Structures Chapter © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible
  • 2. website, in whole or in part. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (1 of 2) Define the forms of e-commerce. Understand the structure of the Internet economy. Identify the basic components of a successful e-commerce strategy. Know the basic multinational e-commerce business models. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives Identify the practicalities of running a multinational e-commerce business. Understand the function of enablers in multinational e-commerce operations. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Internet Economy Although small in comparison to the traditional economy, the Internet economy is: Growing faster than any other business trend in history; a
  • 3. worldwide phenomenon Drastically changing how international business is done The Internet allows any company to create a virtual and global presence to conduct operations worldwide. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Internet Economy Many of the issues involved in business over the Web are similar to those faced by traditional MNCs. The next generation of Multinational managers must address unique challenges in formulating and implementing multinational strategies for the Internet economy. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What Is E-Commerce? (1 of 2) E-Commerce is the selling of goods or services over the internet, and includes those delivered online (downloaded software) and offline (delivery by UPS). Types of transactions: B2C: Business-to-Consumer transactions Example: buying toys from eToys. B2B: Business-to-Business transactions 75-80% of transactions
  • 4. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What is E-Commerce? (2 of 2) Types of transactions: (cont’d) C2C: Consumer-to-Consumer transactions Anyone selling online eBay facilitates C2C transactions C2B: Consumer-to-Business transactions Example: price comparison websites . © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 10.1: E-Commerce Value Chain © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Measuring The Internet Economy Two indicators of the global presence of e-commerce: Secure Server: an Internet host that allows users to send and receive encrypted data
  • 5. Internet Hosts: computers connected to the Internet with their own IP addresses The extent of e-commerce is difficult to measure. One method is to estimate its contribution to a country’s GDP. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 10.2: Internet Economy as a Percentage of GDP for Selected Countries © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 10.3: Percentage of Households with Internet Access © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Fundamentals of E-Commerce Strategy & Structure
  • 6. E-commerce is evolving quickly. Failures of many start-ups show it’s not without risks. Each layer of the Internet economy has its threats and opportunities. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 10.4: E-Commerce Business Models: Openings and Barriers for Going Global © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Steps for a Successful E-Commerce Strategy Experts suggest seven fundamental requirements: 1. Leadership Successful e-commerce is only possible through dynamic and strong leadership. 2. Build on current business models and experiment with new e- commerce models Use e-commerce to search for ways to reduce costs or enhance the business.
  • 7. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Steps for Successful E-Commerce Strategy (cont.) Experts suggest seven fundamental requirements: (cont’d) 3. Meet the challenge of developing an e-commerce organization. The entire firm (not only top management) must be prepared to embrace the e-commerce model. 4. Allocate resources to the e-commerce business. Commit financial, human, and technological resources to develop e-commerce capabilities. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Steps for Successful E-Commerce Strategy (cont.) Experts suggest seven fundamental requirements: (cont’d) 5. Have an e-commerce strategy. Use strategic management to implement a strong and adequate strategic e-commerce plan. 6. Develop appropriate e-commerce systems. Remove traditional barriers to ensure increased coordination and information flows among the various functional areas. © 2013 Cengage Learning. All Rights Reserved. May not be
  • 8. scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Steps for Successful E-Commerce Strategy (cont.) Experts suggest seven fundamental requirements: (cont’d) 7. Measure success. Have metrics in place to measure e-commerce success. Obvious output success measures include website hits, number of new e- commerce customers, e-commerce revenue and number of customers learning about new products to purchase through other channels. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. E-Commerce Structure: Integrated or Autonomous (1 of 4) The company needs to decide how e-commerce fits into its existing design. Right mixture of “bricks” and “clicks” How much to integrate the Internet into traditional business Brick-and-mortar : traditional, non-virtual business operations © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. E-Commerce Structure: Integrated or Autonomous (2 of 4) The degree of interaction between brick-and-mortar operations
  • 9. can occur anywhere in the value chain. It can range from near seamless operations of an Office Depot to the mostly independent operations of Barnes & Noble and Barnesandnoble.com. Each choice has its benefits. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. E-Commerce Structure: Integrated or Autonomous (3 of 4) The independent benefits: Faster and more entrepreneurial Freed from corporate bureaucracy The integrated benefits: Cross-promotion, shared information, increased quantity purchases, same distribution channels The choice is seldom clear-cut. The best option for most firms lies somewhere in between. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. E-Commerce Structure: Integrated or Autonomous (4 of 4) Additional steps to integrate online and offline operations: Keep customers informed. Retailers find it impossible to maintain the same pricing and inventory on websites and in stores. Customers can be frustrated, and appreciate being informed. Share customer data across channels.
  • 10. Example: Retailers can send tailored product emails based on store purchases. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 10.5: Key Decisions in Web Business Integration © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Additional Operational Challenges for an E-Commerce Business Finding partnerships and alliances with customers or third parties Attracting, retaining, and developing employees in the e- commerce unit Inadequate e-commerce training E-commerce employee retention Deciding what e-commerce functions to outsource © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Pure E-Business Company Can Meet Its Challenges
  • 11. Develop information and management systems to respond to growth. Maintain rapid decision making, creativity, innovation, and flexibility. Build relationships with e-commerce support companies and customers. Attract and retain e-commerce–capable talent. Develop an effective management team © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Traditional Firm with E-Commerce Can Meet Its Challenges Build a common vision and commitment to e-commerce throughout the organization. Change the organizational structure for quick reconfiguration of assets and capabilities Change the organizational culture to create a supporting environment for e-commerce. Attract and retain e-commerce-skilled employees. Alter HR programs to suit the different skill requirements of e- commerce employees. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 10.6: Organizational Changes in Major Multinational Companies Building E-Commerce Businesses
  • 12. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. E-Commerce Security (1 of 3) E-Commerce Security: the degree to which customers feel that their private, personal information can be safeguarded in the hands of online companies collecting such information Cybercriminals are becoming increasingly sophisticated. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. E-Commerce Security (2 of 3) Multinationals must protect their Internet security: Confidentiality: protecting private information Availability: ensuring information is accessible to authorized users Integrity: ensuring that the information collected is accurate and reliable Authentication: having systems in place to ensure that persons using the systems are legitimate © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. E-Commerce Security (3 of 3)
  • 13. Companies are also under increased pressure to protect the privacy of individuals. Experts suggest the use of: Firewalls and antivirus protection software Data encryption and several levels of authentication for users Abiding by privacy rules to address Internet security issues © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Globalizing Through the Internet The Internet is enabling the emergence of a new form of multinational, the born-global firm. Born-global firms are able to obtain a significant portion of their revenues from sales in international markets. Though a website gives the world access to firm’s goods and services, the internationalization challenges faced by traditional MNCs remain. The firm must still solve the global – local dilemma, and deal with national culture and institutional contexts. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Multinational E-Commerce Strategy Formulation: The Nature of the Business What kind of e-business is easiest to take global? It depends on the types of products or services offered through e-commerce
  • 14. E-commerce companies work in 3 areas, and require 3 types of infrastructure: Telecommunications infrastructure to move information Payment infrastructure to move money Physical infrastructure to deliver products Most difficult are e-commerce businesses that require a physical infrastructure. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Opportunities & Threats of Multinational E-Commerce (1 of 3) The major attractions of e-commerce are: Cost reduction: It’s less expensive to reach international customers. Technology: The technology to reach customers is readily available. Efficiencies: Electronic communication can be very efficient. Convenience: The Web is in operation 24/7. Speed of Access: Once a website is running, the firm’s products can be accessed immediately from anywhere in the world. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Opportunities & Threats of Multinational E-Commerce (2 of 3) The major deterrents to e-commerce include: The return/receipt burden & cost of delivery: Businesses should
  • 15. expect a 30-40% return rate for online purchases. Costs of site construction, maintenance, upgrades: Website creation in multiple languages, currencies and tax locations is expensive. Channel conflicts: Distributors and retailers of a firm’s products may be in competition with the firm itself. Easily copied models: Competitors can see and copy the firm’s website. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Opportunities & Threats of Multinational E-Commerce (3 of 3) The major deterrents to e-commerce include (cont’d) Cultural Differences: Understanding global customers and overcoming cultural barriers can be difficult on the Web. Traditional cross-border transaction complexities: Issues include pricing for exchange rates, varying taxes, and government regulations. Standard or local websites: Companies must decide whether to standardize websites or tailor them to local contexts. Customer trust and satisfaction: Companies must determine whether customers abroad will trust and be satisfied. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Picking a Market (1 of 2) Target countries based on two factors:
  • 16. Countries with market inefficiencies E.g., formerly state-controlled economies Countries with attractive demographic characteristics An Internet population of at least 5% A high literacy rate Participation in at least one free trade agreement A government with a viable legal system © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Picking a Market (2 of 2) E-commerce potential may be substantial in Latin America because of the Mercosur trade group. Potential exists for Southeast Asian countries with membership in ASEAN. The open borders and common currency of European Union is also fertile ground for e-commerce growth. Not all countries are equally e-commerce ready. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 10.8: E-Readiness of Selected Countries © 2013 Cengage Learning. All Rights Reserved. May not be
  • 17. scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Multinational E-Commerce Strategy Implementation Successful implementation of a multinational e-commerce strategy requires building an appropriate organization and developing the necessary technical capabilities to conduct electronic transactions. The following provides an overview of the options available to multinational managers. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Multinational E-Commerce Organization How is a multinational e-business organized? Consider Amazon.com and Yahoo!. Each has a 3-tiered mix of global & local functions: 1. Corporate headquarters: The global core provides vision, strategy, & leadership for worldwide electronic marketing. 2. HQ also provides shared services such as network infrastructure. 3. Local subsidiaries which deliver the goods, take charge of functions better done locally. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 18. Exhibit 10.8: Organizational Structures of the Multinational E-Corporation © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Technical Capabilities & Implementation Options for Multinational E-commerce (1 of 2) Required technical capabilities are: Software to process pricing in multiple currencies Systems to calculate & show purchase information on international shipping, duties, and local taxes Systems that check compliance with local and international laws The ability to give support in multilingual service centers Fraud protection Electronic payment models in addition to credit cards © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Technical Capabilities & Implementation Options for Multinational E-commerce (2 of 2) Also, local realities require implementation decisions. Many areas of the world do not process data the same way. In some countries, last names may come first.
  • 19. Similarly, not all countries use credit and debit cards. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Web Sites: Localize or Standardize? A Standardized Web Site: A company’s web sites are fairly similar in layout and design around the world. Example: Dell Computer A Localized Web Site: A company’s websites around the world are adapted to the local culture in terms of values, appeals, symbols, and even themes in the communication content. Example: Chipshot.com © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 10.9: Major Problems Identified in Web Site Globalization © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. To Build or Outsource Technical Capabilities?
  • 20. Two options for a firm’s technical capabilities: Run all e-commerce functions internally, or outsource to e-commerce enablers E-commerce Enablers: fulfillment specialists that provide services such as Web site translation, and calculate shipping, value-added taxes, duties, and other charges unique to each country. Some MNCs are taking advantage of User-Generated Content (UGC). © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Summary Internet and e-commerce are becoming an increasingly important component of any multinational’s strategy. Chapter 10 introduced the basic concepts of e-commerce, and compared traditional and e-commerce companies. Many of the same challenges are faced by both. Future trends include the use of User Generated Content (UGC) by multinationals to their advantage © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 International Strategic Alliances: Design and Management
  • 21. Chapter © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (1 of 3) Know the steps for implementing successful international strategic alliances. Describe how multinational companies link value chains in international strategic alliances. Understand the importance of choosing the right partners for alliances. Know the important characteristics to look for in potential alliance partners. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (2 of 3) Distinguish between equity-based international joint ventures and other types of international cooperative alliances. Know the basic components of an international strategic alliance contract. Understand the control systems and management structures used in alliance organizations.
  • 22. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (3 of 3) Appreciate the unique problems in human resource management faced by managers in alliance organizations. Realize the importance of interfirm commitment and trust for building successful international strategic alliances. Understand how multinational companies assess the performance of their international strategic alliances. Know when companies should dissolve or continue their international strategic alliances. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Strategic Alliance Issues Although strategic alliances are a fast and flexible way to break into new markets, they are inherently unstable, for these reasons: They may be poorly designed or managed. Partnering with a company from a different nation compounds management difficulties. Partners may disagree on how to run the business. Even profitable alliances can be torn by conflict. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible
  • 23. website, in whole or in part. Exhibit 9.1: Implementing a Strategic-Alliance Strategy © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Where to Link in the Value Chain Many benefits of strategic alliances: Gain access to local partner’s knowledge of market, meet government requirements, share risks, share technology, economies of scale, access lower cost raw materials or labor. Alliances combining same value-chain activities gain efficiencies, merge talents, and share risks. Where to link depends on the firm’s strategic objective. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 9.2: Examples of Linking Value Chains in Strategic Alliances © 2013 Cengage Learning. All Rights Reserved. May not be
  • 24. scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 9.3: Value-Chain Links in US International Alliances © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Choosing a Partner: The Most Important Choice? The success or failure of a strategic alliance depends on how well the partners get along. Especially early in the relationship, each party must believe it has a good partner who can deliver on promises and be trusted. Picking the wrong partner can have negative major consequences. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Key Criteria for Choosing a Partner (1 of 3) There are several key criteria for choosing an appropriate alliance partner: Seek strategic complementarity. Prospective partners must understand each other’s strategic objectives, short & long term.
  • 25. Pick a partner with complementary skills. Technical complementarity is most important. Find partners with similar but not identical products. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Key Criteria for Choosing a Partner (2 of 3) Seek out companies with compatible management styles. Seek a partner that will provide the “right” level of mutual dependency; partners must rely on each other. Avoid the “anchor” partner: Anchor Partner: a partner that holds back the strategic alliance because it cannot or will not provide its share of the funding. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Key Criteria for Choosing a Partner (3 of 3) Be cautious of the “elephant-and-ant” complex. This occurs when two companies are greatly unequal in size. The large firm may dominate the smaller firm. Assess operating policy differences with potential partners. Assess the difficulty of cross-cultural communication with a likely partner.
  • 26. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 9.4: International Strategic Alliances for Small Multinational Companies © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Choosing an Alliance Type There are three main types of strategic alliances: Informal international cooperative alliances Formal international cooperative alliances (ICAs) International joint ventures (IJVs) © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Informal International Cooperative Alliance An Informal International Cooperative Alliance is: A non-legally binding agreement between companies from two or more countries to cooperate. They may be agreements of any kind, and may provide links anywhere on their value chains. Because there is no legally-binding agreement, managers
  • 27. usually limit the scope of involvement, and resist revealing proprietary information. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Formal International Cooperative Alliances (ICAs) A formal International Cooperative Alliance (ICA) Calls for high degree of involvement with partners. Usually, a formal contract specifies what each partner will give and receive. May require sharing proprietary information, which makes backing out of this alliance more difficult. Sometimes one partner may take an equity share of ownership of the other. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Joint Ventures (IJVs) An International Joint Venture is a self-standing legal entity owned by two or more parent companies from different countries; each has an equity interest. The venture need not be equally owned. Contributions may be cash, technology or other resources. If there are many members, the entity is called a consortium. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible
  • 28. website, in whole or in part. Exhibit 9.5: Types of Alliances © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Negotiating the Agreement Both formal ICAs and IJV require a negotiated and signed contract. Negotiation issues include: Products or services of the alliance Equity contributions (cash or other resources) Management structure “Prenuptial” agreements regarding dissolution © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 9.6: Selected Questions for a Strategic-Alliance Agreement © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 29. Organizational Design in Strategic Alliances Design of the organization depends on the type of alliance chosen. Informal ICAs often do not require formal design. Formal ICAs may require a separate organizational unit housed in one company, with employees from both. IJVs are separate legal entities, and require a separate organization to carry out the alliance’s objectives. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Decision-Making Control There are two major areas of decision making: Operational decisions (daily running of organization) Strategic decisions (strategy for long term survival) Majority owners do not necessarily control both areas. IJVs’ strategic decision-making takes place at the level of the IJV’s board of directors or top management. In non equity ICAs, strategic decisions remain with parent companies. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Management Structures (1 of 3) MNCs typically use five management control structures for their
  • 30. ICAs or IJVs: 1. Dominant Parent: The Dominant Parent controls strategic and operational decision making. Often has majority ownership Treats the IJV as its wholly owned subsidiary 2. Shared Management: both parent companies contribute approximately the same number of managers to the alliance organization © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Management Structures (2 of 3) MNCs typically use five management control structures for their ICAs or IJVs: (cont’d) 3. Split Control Management: Partners usually share strategic decision making and make functional decisions independently. 4. Independent Management: Alliance managers act more like managers from a separate company. IJVs often recruit managers from outside the parent companies. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Management Structures (3 of 3) MNCs typically use five management control structures for their ICAs or IJVs: (cont’d) 5. Rotating Management: Managers from the partners rotate through the key positions in the management hierarchy.
  • 31. This structure is popular in developing countries. It serves to trains management talent and helps to transfer expertise to the developing country. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Choosing a Strategic Alliance Management Structure (1 of 2) If partners have similar technologies and know-how, and contribute equally, a Shared Management structure is preferred. If partners have different technologies but contribute equally, a Split Management structure is preferred. If one partner has a dominant equity position, or is more important to one partner, a Dominant Management structure is more likely. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Choosing a Strategic Alliance Management Structure (2 of 2) For joint ventures in particular: Mature joint ventures move to independent structures as the joint venture’s management team gains more expertise. Joint ventures in countries with a high degree of government intervention produce IJVs with local partner dominance. Independent management structures are more likely when the market is expanding, the venture does not require much capital, or the venture does not require much R&D input from its
  • 32. parents. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Commitment and Trust: The Soft Side of Alliance Management Managers from both failed and successful strategic alliances advise the importance of building mutual trust and commitment among partners from the beginning. Commitment: taking care of each other and putting forth extra effort to make the venture work Attitudinal commitment: Willingness to dedicate resources and efforts and face risks to make the alliance work. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Commitment and Trust: The Soft Side of Alliance Management If alliance partners demonstrate these aspects of commitment, the venture will develop based on the principles of Fair Exchange. Fair Exchange: Fair exchange occurs when partners believe that they receive benefits from the relationship equal to their contributions.
  • 33. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Calculative Commitment Commitment also has a practical side: Calculative Commitment: comes from the evaluations, expectations, and concerns about the future potential for gaining rewards from the relationship. Businesses require tangible outcomes for a relationship to continue. A study of commitment in IJVs suggests that commitment increases when both partners achieve their strategic goals. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Trust Trust and Commitment go hand in hand. Credibility Trust: the confidence that the partner has the intent and ability to meet promised obligations and commitments. Benevolent Trust: the confidence that the partner will behave with goodwill and with fair exchange. The development of trust between alliance partners may take time. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 34. Exhibit 9.7: The Trust/Commitment Cycle © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Why Is Trust Important? Successful cooperation requires alliance partners to contribute quality inputs to the organization. When there is no trust, partners hold back or take unfair advantage of each other, making failure likely. Formal contracts can never identify all issues that will arise, so a trusting relationship is necessary. Technology and knowledge also include tacit elements that can only be shared when there is trust. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Building and Sustaining Trust and Commitment To build and sustain trust and commitment, Multinational managers should consider key factors: Pick your partner carefully. Know each side’s strategic goals. Seek win-win situations. Go slowly. Invest in cross-cultural training.
  • 35. Invest in direct communication. Find the right levels of trust and commitment. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 9.8: The “Right” Levels of Trust and Commitment © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Assessing the Performance of an International Strategic Alliance If the strategic intent is to produce immediate results, use standard financial and efficiency measures. Some strategic alliances provide indirect strategic benefits, but may never generate profits. To assess IJV and ICA performance, criteria other than financials must be included, such as organizational learning, and subjective measures like alliance satisfaction and harmony. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 36. Exhibit 9.9: Selected Performance Criteria for Strategic Alliances © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. If the Alliance Does Not Work (1 of 2) If an alliance does not work, there are two choices: Improve implementation, or Negotiate an end Know when to quit and when to invest more. Avoid “escalation of commitment:” Managers continue in an alliance longer than necessary because of past financial and emotional investments. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. If the Alliance Does Not Work (2 of 2) Plan the end at the beginning. Create “prenuptial agreements” at the start of the venture in which the partners decide how to terminate the alliance. The advantage of the “prenuptial” is that negotiation takes place at a positive and friendly stage. Recognize that death of the venture does not always mean failure. Many alliances are short term.
  • 37. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Dedicated Strategic Alliance Units Alliances are so common that firms are developing Strategic Alliance Units to manage their design. They provide processes and procedures that help managers: Identify the need for an alliance Evaluate partners Negotiate agreements Structure the alliance organizations Develop specific performance indicators © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Key Lessons from Cross-Border Alliances Understand and appreciate business and cultural differences. Keep strong executive support Communicate. Practice commitment, trust and dedication. Have “checkpoints” as the alliance is being implemented. Review the alliance’s viability. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 38. Summary The use of international strategic alliances continues to grow in international business. Chapter 9 provides a solid understanding of the basics and how to manage strategic alliances. Strategic alliances are prone to failure and great effort must be taken to make them successful. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Management 55 1.) Describe the basic steps for a successful e-commerce strategy. 2.) Explain conditions under which a firm chooses a management structure available for a strategic alliance. 3.) If an alliance fails to meet strategic goals, how do top managers resolve the situation? How can an alliance be improved? 4.) Compare and contrast the kinds of commitment needed in a strategic alliance. 5.) What are some of the factors that an MNC manager considers when picking a country for establishing an e- commerce business? Why do trading blocs such as Mercosur, ASEAN (Association of Southeast Asian Nations), and the EU (European Union) present significant potential for e-commerce businesses? 6.) What are the main types of strategic alliances? Compare and contrast them.
  • 39. 7.) What are e-commerce enablers? Why are they becoming essential to e-commerce? What are the essential services provided by e-commerce enablers? 8.) Explain e-commerce security. What are the four key aspects of information security? What can a multinational do to ensure security of its e-commerce system? Additional Recycling Data for April, May and June 2016 (Note that the data below may not be in the same order as the data in the spreadsheet!) April May June Washington, D.C. 79016 80531 85481 Arlington, VA 85818 55149 60060 Vienna, VA 19873 13058 99381 Chantilly, VA 30195 35997
  • 40. 45091 Leesburg, VA 90631 97541 89520 Ashburn, VA 55012 59072 59408 Oakton, VA 19875 29870 23951 Great Falls, VA 23687 35097 35198 Fairfax, VA 33081 36085 29839 Washington, VA 842 761 750 McLean, VA 29810 27714 28975 Lovettesville, VA 6318 10297 8075 Middleburg, VA 750 525
  • 41. 760 Annandale, VA 12456 17896 23461 Falls Church, VA 34135 14562 14235 Reston, VA 21567 15342 18342 Burke, VA 13564 12236 12256 Centreville, VA 91354 85126 79456 Fairfax Station, VA 12563 10845 9945 Alexandria, VA 12132 12256 17645 Merrifield, VA 15123 15244 17154 Springfield, VA 21456 36456
  • 42. 22912 Manassas, VA 12789 13012 12542 Purcellville, VA 1203 1402 1103 HW #2, Excel #1 – Fall 2017 – Recycling Aluminum Cans –8 pts Scenario – With several recent environmental disasters (e.g., BP oil spill, Fukushima Daiichi Nuclear Power Plant, Hurricanes Katrina, Irene, Sandy, Irma etc.), many metropolitan areas have been looking for ways to be more environmentally conscious … AND perhaps to make some money. For several years, towns/cities in Northern Virginia (NOVA) have been running trial programs for recycling paper, bottles, and cans. Last year, twenty three NOVA towns plus the District of Columbia decided to hold a competition to determine the municipality that did the best job of recycling, with the focus on aluminum cans. It is an important program given the outdoor opportunities around the region, including the Appalachian Trail, the C&O Canal, the Potomac River, and the Chesapeake Bay, among others. To make the contest fair, the winning town/city will be the one that recycles the largest number per capita, (e.g. the number of cans recycled divided by the number of residents for that town/city). Ali Tambor (everyone calls her “Al”) is the competition coordinator for the recycling project. Al has provided you with a rough starting point in the spreadsheet “HW2 – Fall 2017 – Recycling Cans.xls.” She has also provided you with additional data as identified in the Word document of “Additional Recycling Data”.
  • 43. · First, Al would like for you to alphabetize the list of participating towns/cities in the Excel worksheet according to the state (with Virginia appearing at the top). This data is for Jan-Mar 2016. Display the numbers and create the formulas to compute the total recycling for each city, by the year (for the data given). This should be a whole number in standard numerical display. Make sure you break out Washington DC from the Northern Virginia (NOVA) towns. Include the additional data provided in Additional Data, Word document (1 pt). · Determine the per capita recycling value to 1 decimal place. This will determine the contest winner for the first six months of 2016 (including Washington, DC). Use conditional formatting to determine the largest per capita value for the Jan- June timeframe (e.g. after the six month period, which city would win? (1 pt). · In addition, she wants to know a few statistics about the monthly recycling efforts, including the minimum, average, and maximum values for the number of cans recycled for each month, i.e., what was the smallest number of cans recycled, the average, and the largest for each month). Break this out by Northern Virginia towns/cities (as the Washington DC numbers would constitute the smallest, average and largest number for each month) to one decimal place using formulas (not conditional formatting). (1.5 pt). Each town/city also makes some money from these recycling programs. · The initial value of each recycled aluminum can is currently 2.72 cents. However, aluminum prices fluctuate. Therefore, in addition to this basic assessment of a revenue rate of 2.72 cents/can, Al wants you to build/modify the spreadsheet so that she can compare two additional revenue rates, 2.65 cents/can and 3 cents/can (1.5 pt). The results for all three rates should be displayed in the spreadsheet at the same time. Complete this
  • 44. spreadsheet so that Al can assess the success and value of the recycling effort (i.e., the potential revenue) for each month (for all towns/cities combined) and in total for the combined six months recycling effort. Make sure this is displayed in a monetary format. [Note: These reimbursement values do sometimes fluctuate as the recycling market evolves. Therefore, you should set up the spreadsheet so that the revenue value(s) and related calculations can be easily and quickly adjusted/updated to reflect market fluctuations. (Think about what this means for your design!)]. · Figure out a way to have the spreadsheet automatically mark or indicate the NOVA city with the highest amount of recycling by month (1 pt). · Finally display a column chart showing the NOVA cities recycling for February and May (1 pt). Homework Evaluation · All requested data fields should be used/calculated. Use the spreadsheet to do the calculations and to fill in the results. (In other words, just typing in the calculated values is not making use of the capabilities of the spreadsheet and will result in a major deduction in points.) Work toward a good layout for the data (e.g. 20,000 instead of 20000, $14,000 instead of 14000). Make sure all fonts are the same (size and type). (1 pt) · Make sure any labels you add are helpful/useful in explaining the cell content. (Note: Although Al has asked you to do this work, you should assume that others who are not as familiar with the contest will also look at the results and will need to be able to make sense of the output data without a lot of explanation.)