Deresky Chapter7 PDF

3/6/14
7-1
Copyright ©2014 Pearson Education, Inc.
Chapter 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.
7-2 Copyright ©2014 Pearson Education, Inc.
© 2010 Pearson Pren1ce Hall 1

3/6/14
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.

3/6/14
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
Understand the reasons that firms

seek international business allies
and the benefits they bring.

3/6/14
Strategic Alliances
(Cooperative Strategies)
•  Partnerships between two

or more firms that
combine financial,
managerial, and
Strategic technological resources
and their distinctive
competitive advantages to
Alliances pursue mutual goals
Become familiar with the ways

that SMEs can expand through
alliances with MNCs.

3/6/14
Categories of Strategic Alliances
Joint Ventures: Starbucks and Tata

Global beverages
Equity Strategic Alliances: Daiichi-
Sankyo 51% in Ranbaxy
Non-Equity Strategic Alliances: UPS
and Nike
Global Strategic Alliances
Global and Cross-Border Alliances:

Motivations and Benefits
To avoid import barriers, licensing

requirements, and protectionist
legislation
To share the costs of research and
development of new products and
processes
To reduce political risk while

making inroads into a new market

3/6/14
Global and Cross-Border Alliances:

Motivations and Benefits
To gain access to specific

markets where regulations
favor domestic companies;
China, Russia
To gain rapid entry into a new

or consolidating industry and
to take advantage of synergies
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

3/6/14
Exhibit 7-2
Challenges in Implementing Global

Alliances
  Many alliances fail or end
up in takeover
  Choosing the right form of governance
  The benefits of cooperation versus the

dangers of new competition
Copyright ©2014 Pearson Education, Inc. publishing as

7-14 Prentice Hall

3/6/14
Guidelines for Successful Alliances
Choose a Work out how

each partner Recognize
partner with Seek comple- will deal with that most
compatible mentary skills, proprietary
strategic products, and knowledge or alliances
goals and markets competitively only last a
objectives.
sensitive few years
information
Recognize the changing factors,

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

3/6/14
Comparative Management in Focus:

JVs in Russian Federation

Guidelines for Establishing JVs in Russian
Federation
Investigate whether a joint venture
is the best strategy—acquiring a
Russian business may be better.
Set up meeting with appropriate
authorities well in advance.
Be above board in paying taxes.
Set up stricter controls and

accountability systems.

3/6/14

Guidelines for Establishing JVs in Russian
Federation
Make it clear your firm does not
pay bribes
Assign the firm’s best managers

and given them enough authority
Take advantage of local knowledge

by hiring Russian managers
Designate considerable funds for
promotion and advertising to
establish an image
Focus on how emerging economy

firms can implement expansion
strategies.

3/6/14
Strategic Implementation
•  Involves putting decisions about global

alliances and entry strategies into action
•  Successful implementation requires

creating a “system of fits”
•  Resources must be allocated
•  Leadership is the key
Implementation McDonald’s Style
Form paradigm- Know a country’s Keep pricing low to build

busting arrangements culture before you hit market share. Profits will
follow when economies of
with suppliers. the beach. scale kick in.
Hire locals whenever Tweak the standard

possible. menu only slightly Maximize autonomy.
from place to place.

3/6/14
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 Centers
  Export loans for small businesses
Implementing a Global
Outsourcing Strategy
Gain the
Examine Consult
Evaluate the co- Invest in
your your
best operation
reasons for outsourcing of manage- the
out- alliance
model. ment and alliance.
sourcing. partners.
staff.

3/6/14
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
chains
  Auto industry particularly hard hit
  Control/risk became issues
Exhibit 7-3

3/6/14
Challenges in Implementing Strategies in

Emerging Markets
  “Foreign” firms are often surprised they have
trouble competing successfully with local
firms
  Challenges:
  Poor infrastructure
  Supply chains/distribution networks
  Personal challenges
Understand the complexities

involved in managing
international joint ventures.

3/6/14
Managing Performance in
International Joint Ventures
•  Ensures that the way a joint venture is managed
IJV conforms to the parent company’s interests
Control
•  Suzuki and TVS Motor in India

Choice of
Partner
•  The strategic freedom in choosing suppliers,

Orgznal. product lines, customers, and so on
Design
Three Complementary Dimensions

of IJV Control
IJV General
Manager
Contractual
Autonomy
links with
parents of IJV
IJV
Control

3/6/14
Knowledge 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
Appreciate the governmental and

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

3/6/14
Government Influences on
  Profitability impacted by taxation and
restrictions on repatriation
  Unpredictable changes in
governmental regulations
  China’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
Western Hungarian
Team Orientation Individual Orientation
Consensual
Autocratic Style
Management Style
Future planning
Survival Mentality
mentality

3/6/14
Dimensions of National and Corporate

Culture Affecting Alliances: U.K. vs. Europe
1.  Organizational 4.  Systemization of
formality decision making
2.  Participation in 5.  Managerial self-

decision making reliance
3.  Attitudes toward 6.  Attitudes toward

risk funding and
gearing
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

3/6/14
Management in Focus: Mittal’s Marriage to

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

Arcelor Breaks the Marwari Rules
  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.

3/6/14
E-Commerce on Strategy Implementation
  Outsourcing necessary tasks to e-commerce

  Help companies sort through the maze of
difficult taxes, duties, language translations,
etc.
  Next-Linx: applies technology for strategic
implementation
Conclusion
  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
Copyright ©2014 Pearson Education, Inc. publishing as
7-40 Prentice Hall

3/6/14
All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2014 Pearson Education, Inc.
41

Deresky Chapter7 PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Deresky Chapter7 PDF

Uploaded by

Copyright:

Available Formats

3/6/14

Chapter Learning Goals

1. Realize that much of international business is

7-2 Copyright ©2014 Pearson Education, Inc.

© 2010 Pearson Pren1ce Hall 1

Chapter Learning Goals

5. Focus on how emerging economy firms can

7-3 Copyright ©2014 Pearson Education, Inc.

Chapter Learning Goals

Realize that much of international

7-4 Copyright ©2014 Pearson Education, Inc.

© 2010 Pearson Pren1ce Hall 2

Opening Profile: From BP and Exxon: Beware the Alliance

 Exxon-Mobil and OAO Rosneft: partnership

7-5 Copyright ©2014 Pearson Education, Inc.

Chapter Learning Goals

Understand the reasons that firms

7-6 Copyright ©2014 Pearson Education, Inc.

© 2010 Pearson Pren1ce Hall 3

• Partnerships between two

7-7 Copyright ©2014 Pearson Education, Inc.

Chapter Learning Goals

Become familiar with the ways

7-8 Copyright ©2014 Pearson Education, Inc.

© 2010 Pearson Pren1ce Hall 4

Categories of Strategic Alliances

Joint Ventures: Starbucks and Tata

Global Strategic Alliances

7-9 Copyright ©2014 Pearson Education, Inc.

Global and Cross-Border Alliances:

To avoid import barriers, licensing

To reduce political risk while

7-10 Copyright ©2014 Pearson Education, Inc.

© 2010 Pearson Pren1ce Hall 5

Global and Cross-Border Alliances:

To gain access to specific

To gain rapid entry into a new

7-11 Copyright ©2014 Pearson Education, Inc.

Challenges in Implementing Global

7-12 Copyright ©2014 Pearson Education, Inc.

© 2010 Pearson Pren1ce Hall 6

7-14 Copyright ©2014 Pearson Education, Inc.

Challenges in Implementing Global

 Choosing the right form of governance

 The benefits of cooperation versus the

Copyright ©2014 Pearson Education, Inc. publishing as

© 2010 Pearson Pren1ce Hall 7

Guidelines for Successful Alliances

Choose a Work out how

7-15 Copyright ©2014 Pearson Education, Inc.

Chapter Learning Goals

Recognize the changing factors,

7-16 Copyright ©2014 Pearson Education, Inc.

© 2010 Pearson Pren1ce Hall 8

Comparative Management in Focus:

7-17 Copyright ©2014 Pearson Education, Inc.

Comparative Management in Focus:

Be above board in paying taxes.

Set up stricter controls and

© 2010 Pearson Pren1ce Hall 9

Comparative Management in Focus:

Assign the firm’s best managers

Take advantage of local knowledge

1.  Realize that much of international business is

5.  Focus on how emerging economy firms can

  Exxon-Mobil and OAO Rosneft: partnership

•  Partnerships between two

  Choosing the right form of governance

  The benefits of cooperation versus the

•  Involves putting decisions about global

•  Successful implementation requires

•  Resources must be allocated

•  Leadership is the key

•  Suzuki and TVS Motor in India

•  The strategic freedom in choosing suppliers,

•  Transfer: managing the flow of existing

2.  Participation in 5.  Managerial self-

3.  Attitudes toward 6.  Attitudes toward

  Americans have difficulty accepting

  Resistance in Europe and by Arcelor:

  Outsourcing necessary tasks to e-commerce

  Cross-border strategic alliances are formed for