Copyright ©2014 Pearson Education, Inc. 7-1. Chapter Learning Goals 1. Realize that much of...

Copyright ©2014 Pearson Education, Inc.

7-1

Chapter Learning GoalsChapter Learning Goals

1. Realize that much of international business is conducted through strategic alliances.

2. Understand the reasons that firms seek international business allies and the benefits they bring.

3. Become familiar with the ways that SMEs can expand through alliances with MNCs

4. Recognize the changing factors, opportunities, and threats involved in joint ventures in the Russian Federation.

1. Realize that much of international business is conducted through strategic alliances.

2. Understand the reasons that firms seek international business allies and the benefits they bring.

3. Become familiar with the ways that SMEs can expand through alliances with MNCs

4. Recognize the changing factors, opportunities, and threats involved in joint ventures in the Russian Federation.

7-2 Copyright ©2014 Pearson Education, Inc.

Copyright ©2014 Pearson Education, Inc. 7-3


5. Focus on how emerging economy firms can implement expansion strategies

6. Understand the complexities involved in managing international joint ventures.

7. Appreciate the governmental and cultural factors that influence strategic implementation; as well as the impact of e-commerce.

5. Focus on how emerging economy firms can implement expansion strategies

6. Understand the complexities involved in managing international joint ventures.

7. Appreciate the governmental and cultural factors that influence strategic implementation; as well as the impact of e-commerce.



Realize that much of international business is conducted through strategic alliances.

Realize that much of international business is conducted through strategic alliances.

Opening Profile: From BP and Exxon: Beware the Alliance with the Bear

Opening Profile: From BP and Exxon: Beware the Alliance with the Bear

Exxon-Mobil and OAO Rosneft: partnership of $500 billion in investments

BP-Rosneft deal: BP’s shareholders blocked the deal; BP’s Moscow offices raided

BP’s executive visas revoked; Deutsche Bank’s Moscow office raided investors are reluctant to invest in Russia

Exxon-Mobil and OAO Rosneft: partnership of $500 billion in investments

BP-Rosneft deal: BP’s shareholders blocked the deal; BP’s Moscow offices raided

BP’s executive visas revoked; Deutsche Bank’s Moscow office raided investors are reluctant to invest in Russia




Understand the reasons that firms seek international business allies and the benefits they bring.

Understand the reasons that firms seek international business allies and the benefits they bring.

Strategic Alliances(Cooperative Strategies)

Strategic Alliances(Cooperative Strategies)




Become familiar with the ways that SMEs can expand through alliances with MNCs.

Become familiar with the ways that SMEs can expand through alliances with MNCs.

Categories of Strategic AlliancesCategories of Strategic Alliances


Global and Cross-Border Alliances: Motivations and

Benefits


Benefits



Benefits


Benefits



Challenges in Implementing Global Alliances


Alliances: faster and less risky route to globalization

Problems with Shared ownership Differences in national cultures Integration of vastly different Conflicts in decision making and

control

Alliances: faster and less risky route to globalization

Problems with Shared ownership Differences in national cultures Integration of vastly different Conflicts in decision making and

control


Exhibit 7-2Exhibit 7-2



Many alliances fail or end up in takeover

Choosing the right form of governance

The benefits of cooperation versus the dangers of new competition

Many alliances fail or end up in takeover

Choosing the right form of governance

The benefits of cooperation versus the dangers of new competition

7-14Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Guidelines for Successful Alliances

Guidelines for Successful Alliances




Recognize the changing factors, opportunities, and threats involved in joint ventures in the Russian Federation.

Recognize the changing factors, opportunities, and threats involved in joint ventures in the Russian Federation.

Comparative Management in Focus:

JVs in Russian Federation

Comparative Management in Focus:

JVs in Russian Federation


Comparative Management in Focus: Guidelines for

Establishing JVs in Russian Federation











Focus on how emerging economy firms can implement expansion strategies.

Focus on how emerging economy firms can implement expansion strategies.

Strategic ImplementationStrategic Implementation


Strategic ImplementationStrategic Implementation



Breaking Down Barriers for Small Business Exports

Breaking Down Barriers for Small Business Exports

National Export Initiative – January 2010 created by President Obama

The number of American SMEs exporting to China; increased 776% between 1992 and 2009, but still room for growth

US Export Assistance CentersExport loans for small businesses

National Export Initiative – January 2010 created by President Obama

The number of American SMEs exporting to China; increased 776% between 1992 and 2009, but still room for growth

US Export Assistance CentersExport loans for small businesses

Implementing a Global Outsourcing Strategy

Implementing a Global Outsourcing Strategy



Global Supply Chain Risks: The Japanese Disaster

Global Supply Chain Risks: The Japanese Disaster

Supply chains have become larger and far more complex to manage

After the March 2011 earthquake and tsunami in Japan disrupted supply chainsAuto industry particularly hard hitControl/risk became issues

Supply chains have become larger and far more complex to manage

After the March 2011 earthquake and tsunami in Japan disrupted supply chainsAuto industry particularly hard hitControl/risk became issues


Exhibit 7-3Exhibit 7-3


Challenges in Implementing Strategies in Emerging Markets

Challenges in Implementing Strategies in Emerging Markets

“Foreign” firms are often surprised they have trouble competing successfully with local firms

Challenges:Poor infrastructureSupply chains/distribution

networksPersonal challenges

“Foreign” firms are often surprised they have trouble competing successfully with local firms

Challenges:Poor infrastructureSupply chains/distribution

networksPersonal challenges



Understand the complexities involved in managing international joint ventures.

Understand the complexities involved in managing international joint ventures.

Managing Performance in International Joint VenturesManaging Performance in

International Joint Ventures


Three Complementary Dimensions of IJV Control

Three Complementary Dimensions of IJV Control



Knowledge Management in IJVsKnowledge Management in IJVs

• Transfer: managing the flow of existing knowledge between parents and from the parents to the IJV.

• Transformation: managing the transformation and creation of knowledge within the IJV through its independent activities

• Harvest: managing the flow of transformed and newly created knowledge from the IJV back to the parents

• Transfer: managing the flow of existing knowledge between parents and from the parents to the IJV.

• Transformation: managing the transformation and creation of knowledge within the IJV through its independent activities

• Harvest: managing the flow of transformed and newly created knowledge from the IJV back to the parents



Appreciate the governmental and cultural factors that influence strategic implementation; as well as the impact of e-commerce.

Appreciate the governmental and cultural factors that influence strategic implementation; as well as the impact of e-commerce.

Government Influences on Strategic Implementation

Government Influences on Strategic Implementation

Profitability impacted by taxation and restrictions on repatriation

Unpredictable changes in governmental regulationsChina’s new restrictions on foreign investors

$2.5 billion tax bill for Vodaphone in India

Profitability impacted by taxation and restrictions on repatriation

Unpredictable changes in governmental regulationsChina’s new restrictions on foreign investors

$2.5 billion tax bill for Vodaphone in India


Cultural Influence on Strategic Implementation: Western ex-pats vs. Hungarian managers

Cultural Influence on Strategic Implementation: Western ex-pats vs. Hungarian managers

Western Hungarian

Team Orientation Individual Orientation

Consensual Management Style

Autocratic Style

Future planning mentality

Survival Mentality


Dimensions of National and Corporate Culture Affecting Alliances: U.K. vs. Europe

Dimensions of National and Corporate Culture Affecting Alliances: U.K. vs. Europe


1. Organizational formality

2. Participation in decision making

3. Attitudes toward risk

1. Organizational formality

2. Participation in decision making

3. Attitudes toward risk

4. Systemization of decision making

5. Managerial self-reliance

6. Attitudes toward funding and gearing

4. Systemization of decision making

5. Managerial self-reliance

6. Attitudes toward funding and gearing


French Managers Comment on the U.S.

French Managers Comment on the U.S.

Americans have difficulty accepting foreign managers

Americans have difficulty developing a world perspective

Americans are very U.S.-oriented; the least international of all people

Americans have difficulty accepting foreign managers

Americans have difficulty developing a world perspective

Americans are very U.S.-oriented; the least international of all people

Management in Focus: Mittal’s Marriage to Arcelor Breaks the

Marwari Rules


Marwari RulesIn June 2006 Mittal Steel of

India merged with Arcelor of Luxembourg to create the world’s largest steel company.

Resistance in Europe and by Arcelor:Arcelor had outdated views of Mittal

Concerns about losing control of a European multinational

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

Resistance in Europe and by Arcelor:Arcelor had outdated views of Mittal

Concerns about losing control of a European multinational



Marwari Rules


Marwari RulesResistance in India:

Concerns about breaking Marwari rules

Mittal put family interests behind industry and shareholder interests.

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

Resistance in India:Concerns about breaking Marwari rules

Mittal put family interests behind industry and shareholder interests.

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



E-Commerce on Strategy Implementation

E-Commerce on Strategy Implementation

Outsourcing necessary tasks to e-commerceHelp companies sort through the

maze of difficult taxes, duties, language translations, etc.

Next-Linx: applies technology for strategic implementation

Outsourcing necessary tasks to e-commerceHelp companies sort through the

maze of difficult taxes, duties, language translations, etc.

Next-Linx: applies technology for strategic implementation

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 7-40

ConclusionConclusion

Cross-border strategic alliances are formed for many reasons: market expansion, cost/technology-sharing, avoiding protectionism, synergies

SMEs can leverage network relationships to accelerate the internationalization process

Alliances take many forms, but can fail in the strategic implementation phase

Emerging economy firms have to move quickly

Successful alliances require compatible partners and the creation of a system of fits

Differences in national culture and changes in the political arena can affect implementation

Cross-border strategic alliances are formed for many reasons: market expansion, cost/technology-sharing, avoiding protectionism, synergies

SMEs can leverage network relationships to accelerate the internationalization process

Alliances take many forms, but can fail in the strategic implementation phase

Emerging economy firms have to move quickly

Successful alliances require compatible partners and the creation of a system of fits

Differences in national culture and changes in the political arena can affect implementation

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