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Global Strategic Alliances 2

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Global Strategic Alliances 2
International
Business

Environments & Operations

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Copyright © 2015 Pearson Education Ltd.

15-1

COLLABORATIVE
STRATEGIES
(GLOBAL STRATEGIC
ALLIANCES)

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15-2

Introduction
• Companies choose an international operating mode to achieve their objectives • When exporting and importing is not possible, firms must explore other options DNA_2015

Copyright © 2015 Pearson Education Ltd.

15-3

Introduction
Factors Affecting Operating Modes in International Business

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15-4

Introduction
Foreign Expansion: Alternative Operating Modes

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Non-Collaborative Foreign Equity
Arrangements
• Why do firms want control?

• Internalization
• choose the lower cost between conducting operations internally and contracting to another party
• it may be cheaper to handle operations internally

• Appropriability
• do not transfer vital resources to another company to avoid having competitive position undermined

• Freedom to pursue a global strategy

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15-6

Non-Collaborative Foreign Equity
Arrangements
• There are two ways to invest in a foreign country
• Acquisition of existing facilities
• Greenfield Investment – Building new facilities Copyright © 2015 Pearson Education Ltd.
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Collaborative Arrangement via Global
Strategic Alliances
cross-border alliances and

partnerships between two or more firms from different countries who pursue mutual interests through resource and capability sharing.

Dr. Noryati Ahmad

8

Types of GSA
 Equity Joint Ventures (EJV) form legally and

economically separate organizations,
 created by two or more parent organizations that invest financial and other resources (like land, facilities, equipment, materials, intellectual property, or labor).
 These can be 50/50 or any other percentages of ownership

Dr. Noryati Ahmad

9

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