International Business: A Managerial

Perspective
Ninth Edition

Chapter 13
International Strategic Alliances

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Learning Objectives
13.1 Compare joint ventures and other forms of strategic
alliances.
13.2 Characterize the benefits of strategic alliances.
13.3 Describe the scope of strategic alliances.
13.4 Discuss the forms of management used for strategic
alliances.
13.5 Identify the limitations of strategic alliances.

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International Corporate Cooperation (1 of 2)

• Strategic Alliances
– Cross-licensing of proprietary technology
– Sharing of production facilities
– Co-funding of research projects
– Marketing of each other’s products using existing
distribution networks
• Joint Venture (J V)
– Firms Share Management
– One Firm Takes Responsibility
– Independent Managers Are Hired

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International Corporate Cooperation (2 of 2)

Strategic Alliance Purpose Scope Duration

Joint Ventures Broader Broader Longer

Non-Joint Narrower Narrower Shorter

Ventures

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Figure 13.1
Benefits of Strategic Alliances

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Ease of Market Entry
• Overcome Entrenched Competition
• Deal with Hostile Government Regulations
• Get Economies of Scale and Scope
• Manage Costs of Doing Business

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Shared Risk
• New Market/New Product
• Strategic Alliances
• Reduce/Control Risks

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Shared Knowledge and Expertise
• Strategic Alliances
• Gain Knowledge and Expertise

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Synergy and Competitive Advantage
• Market Entry
• Risk Sharing
• Learning Potential

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Figure 13.2
Scope of Strategic Alliances

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Comprehensive Alliances
• Comprehensive Alliances
– R&D
– Design
– Production
– Marketing
– Distribution

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Functional Alliances
• Production Alliances
• Marketing Alliances
• Financial Alliances
• R&D Alliances

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Implementation of Strategic Alliances
• Selection of Partners
• Form of Ownership
• Joint Management Considerations

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Selection of Partners
• Compatibility Between Partners
• Nature of Products and Services
• Relative Safeness of the Alliance
• Learning Potential of the Alliance

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Forms of Ownership
• Corporate Form
• Limited Partnership

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Forms of Ownership: Public-Private
Venture
Opportunities Challenges
• New Market • Investment Lost
• Government Support • Assets Seized
• Reduced Competition • Operation Closed

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Joint Management Considerations
Figure 13.3 Managing Strategic Alliances

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Figure 13.4
Pitfalls of Strategic Alliances

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Review Questions (1 of 2)
• What are the basic differences between a J V and other
types of strategic alliances?
• Why have strategic alliances grown in popularity in recent
years?
• What are the basic benefits partners are likely to gain from
their strategic alliance? Briefly explain each.
• What are the basic characteristics of a comprehensive
alliance? What form is it likely to take?
• What are the four common types of functional alliances?
Briefly explain each.

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Review Questions (2 of 2)
• What is an R&D consortium?
• What factors should be considered in selecting a strategic
alliance partner?
• What are the three basic ways of managing a strategic
alliance?
• Under what circumstances might public and private
partners undertake a strategic alliance?
• What are the potential pitfalls of strategic alliances?

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