International Strategic Alliances

International strategic alliance is also called "transnational strategic alliance". A

cooperative community of interests established by two or more enterprises in two or
more countries to achieve a strategic goal. It aims to enhance the long-term
competitive advantage of enterprises. Common forms include non equity loose
alliance, equity ownership and joint venture jointly owned by both parties.
1、Alliance definition
There are several different definitions of international strategic alliance:
(1) International strategic alliance is a bilateral or multilateral cooperation agreement
formulated by enterprises to promote the realization of common goals;
(2) Having common objectives, risk sharing and cooperation requirements and long-
term agreements;
(3) Agreements signed between enterprises for product development, production and
marketing that need transnational operation and need to invest a lot of capital,
technology and other resources;
(4) International strategic alliance is a concrete transformation between partners to
maintain a long-term cooperative relationship;
(5) The life and death competition among enterprises has become a method of
solidarity and cooperation to create value together. Through cooperative operation,
enterprises can obtain unprecedented profits and competitiveness. This new enterprise
relationship is called "partnership" or "strategic alliance".
2、Alliance generation
After World War II, with the rapid development of the world's new political and
economic order;The rapid development of high-tech industry and information
industry;The development of economic globalization and economic regionalization
makes the global competition more intense.The main manifestations are:
(1) Expand the scope of global competition, carry out global competition in an all-
round way, and expand from labor-intensive fields to capital and technology intensive
fields;From traditional industries to high-tech and service industries;Develop from
tangible product industry to intangible product field.The difficulty of developing new
technologies is becoming less and more, and the cost is becoming more and more. It
is difficult for a single enterprise to raise such a huge amount of funds.
(2) Great changes have taken place in the content of global competition.From
competing for market to competing for technology, talents and strategic partners.The
competition of marketing strategy extends from price competition to the competition
of marketing integration strategy and service strategy.
(3) Great changes have taken place in the main body of global competition.From a
single enterprise to an enterprise group, the competition among multinational
corporations.
(4) The form of global competition has fundamentally changed from life and death
competition to a win-win strategy of cooperation and competition.For example, since
the middle and late 1980s, the major developed countries and the U.S. government
have relaxed restrictions on the merger and acquisition of enterprises, as well as the
relaxation of antitrust by the U.S. Federal Trade Commission and Congress, which
provide a legal basis for the merger of large and Super enterprises in the United
States.In addition, the U.S. judicial department takes a non-interference attitude
towards inter enterprise M & A, which effectively promotes the wave of U.S.
enterprise merger, which promotes the formation of global strategic alliances or
strategic partners.
Nowadays, the international strategic alliance has expanded from manufacturing to
service industry;From traditional industries to high-tech industries.Such as the
overseas company formed by Daimler Benz Automobile Company and Chrysler
Automobile Company of the United States;Kodak and Canon formed an alliance,
Canon made copiers and sold them under Kodak's brand: Motorola and
Toshiba reached an agreement to manufacture microprocessors using their proprietary
technologies;National Bank of America merged with Bank of America to become the
largest commercial bank in the United States;The two major financial institutions in
Japan and the United States, namely Nikko Securities and American traveler
company, have carried out capital restructuring;At & T of the United States and NEC
of Japan have established a strategic alliance;Intel and Microsoft have formed a
strategic alliance and so on.
In short, the future competition in the international market is no longer the
competition between enterprises, but the competition between strategic alliances.
3、Alliance characteristics
① Flexible organization.
② Independent operation, including equal status, independent operation, market
regulation, etc.
③ Low risk.
4、Alliance form
The difference between international strategic alliance and joint venture is that it
focuses on "strategy", that is, it does not take the pursuit of short-term profit
maximization as the primary purpose, nor is it an expedient measure to get rid of the
plight of the enterprise, but a strategic activity consistent with the long-term plan of
the enterprise.
1) Technology Development Alliance
There are many specific forms of this alliance, such as the technology
commercialization agreement formed between large enterprises and (medium) small
enterprises.That is, large enterprises provide funds and marketing forces, while small
enterprises provide new product development plans and cooperate in technology and
new product development.Another example is the cooperative research group, that is,
all parties focus on research and development, which not only forms economies of
scale, but also accelerates the process of research and development.Similar to this is
the joint manufacturing engineering agreement, that is, one party designs the product
and the other party designs the process.
2) Cooperative production alliance
Cooperative production alliance means that all parties raise funds to purchase
equipment to jointly engage in the production of a project.This kind of alliance can
enable the participating parties to share the benefits of high utilization of production
capacity, because each participant can not only optimize their own production
capacity, but also adjust the production capacity timely and quickly according to the
different comparison between supply and demand.
3) Marketing and service alliance
The partners shall jointly formulate a marketing plan suitable for the market of the
partner's country or a specific country, so that the participating parties can
occupy the market more actively and quickly than other potential competitors under
the favorable conditions of obtaining the assistance of the local government;The
joining parties can also form a new market through this alliance, so that the
competition will not tend to suffocate due to the great difference in strength between
the parties.
4) Multi level cooperative alliance
This alliance is actually a combination of the above-mentioned alliance forms, that is,
the franchisees carry out cooperative business in several fields.Enterprises joining this
alliance can take a gradual approach, from one business exchange to multiple
cooperation.
5) Unilateral and multilateral alliances
It is a strategic alliance differentiated by region and the form of cooperation
network.Marketing and service alliances are mostly unilateral alliances, that is, the
alliance of two countries and two enterprises, because marketing agreements are
always aimed at the consumption and market of a specific country.
5、Alliance classification
According to the different development levels and regional divisions of the
participating countries, international strategic alliances can be divided into
complementary and receiving types.
1) Complementary Alliance：Most of these alliances are formed among enterprises
in developed market economy countries such as Western Europe, North America
and Japan.In order to cope with global competition, they complement and
cooperate with each other in terms of technology, capital and personnel in design
technology, processing process and marketing services. Their main motivation is
to share the cost of product development and production investment;Second,
quickly and effectively enter the marketing and distribution network of the target
market country.
2) Giving and receiving Alliance ： According to different economic systems and
different levels of economic development, such alliances can be further
subdivided into East-West alliances and North-South alliances. The general
characteristics of such alliances are that partners in developed countries transfer
various technologies and operation methods to partners in relatively
underdeveloped countries, while partners in relatively underdeveloped countries
open some domestic markets to each other,Or pay for technology transfer,
personnel training, etc.
3) Equity Alliance ：This alliance is more like a joint venture in form, that is, the
joining parties establish a long-term mutual cooperative relationship by
 purchasing and holding a small amount of shares or holding shares
unilaterally.The purpose of this investment is mainly to maintain a good
cooperative relationship.However, this alliance may breed short-term behaviors
such as pursuing short-term rate of return, sharing more profits and reducing
investment because investors want to accelerate the return on investment.
4) Non equity Alliance : such as technology transfer agreement and production
license agreement, they only involve the exchange and transfer of product
manufacturing, process technology, operation skills and know-how, payment and
other aspects of the participating parties, without the need to pursue short-term
financial performance for equity.
6、Alliance advantage
① International Strategic Alliance helps to shorten the time of new product
development.
② International strategic alliances are conducive to sharing high development
investment costs.
③ International strategic alliances are conducive to the common growth of the
economic interests of participating countries.
④ International strategic alliance is conducive to improving economies of scale
⑤ International Strategic Alliance helps to avoid business risks.
⑥ International strategic alliance is conducive to the establishment of new competition
principles.
To sum up, the purpose of establishing strategic alliance is to work with partners to
accelerate the expansion of market capacity, so as to improve market share.This is
also the idea of strategic alliance to create new markets, that is, it is not to "grab" the
opponent's market, but to create and share a larger market with the opponent.
7、Operational misunderstanding
The reason why the development of strategic alliance is unsatisfactory is that there are
many neglected problems in the process of alliance, so that it is difficult to play its
due role.
① Wrong partner selection.
② Cultural differences hinder the exertion of benefits.
③ The loss of technological advantage disintegrates the strategic alliance.
④ The short-term interest goal is an obstacle in the development of strategic alliance.
⑤ The complicated national contradictions are the constraints on the development of
the strategic alliance.
⑥ Unequal alliances are a precursor to the breakdown of cooperation.