Chapter Discussion Questions
1. Discuss the reasons that companies embark on cross-border strategic alliances. What other motivations may prompt such alliances? The text notes five motives for cross border alliances: 1) to avoid import barriers, licensing requirements and other protectionist legislation; 2) to share the costs and risks of the research and development of new products and processes; 3) to gain access to specific markets; 4) to reduce political risk while making inroads into a new market; and, 5) to gain rapid entry into a new or consolidating industry, and to take advantage of synergies. Each firm is faced with its own environmental conditions and this may prompt a strategic alliance for other reasons. The GM-Toyota strategic alliance resulting in NUMMI was motivated in part by the desire of each firm to learn. GM wanted to learn about the Toyota production process, and Toyota wanted to learn about American labor relations. The content notes five thought processes in cross fringe collusions: 1) to evade import hindrances, authorizing necessities and other protectionist enactment; 2) to impart the expenses and dangers of the innovative work of new items and courses of action; 3) to get access to particular markets; 4) to diminish political danger while making advances into another business; and, 5) to addition quick section into another or uniting industry, and to exploit collaborations. Each one firm is confronted with its own ecological conditions and this may incite a key organization together for different reasons. The GM-Toyota key cooperation bringing about NUMMI was roused to some extent by the craving of each one firm to learn. GM needed to look into the Toyota creation methodology, and Toyota needed to research American work relations. 2. Why are there an increasing number of mergers with companies in different industries? Give some examples. What industry do you think will be the next for global consolidation? There are a variety of reasons. In some cases, companies in different industries still can share resources in ways that create operating synergies. In other cases, companies can capitalize on the intangible resources of its new partner—resources like brand names and proprietary processes. Sometimes cross border mergers and acquisitions accompany the deregulation of industry, as it did in telecoms. If so, a likely candidate will be insurance, financial services and banking, all of which are undergoing substantial deregulation in world markets. ………………..
There is an assortment of reasons. Sometimes, organizations in diverse businesses still can impart assets in ways that make working collaborations. In different cases, organizations can gain by the immaterial assets of its new accomplice assets like brand names and restrictive courses of action. Some of the time cross fringe mergers and acquisitions go hand in hand with the deregulation of industry, as it did in telecoms. Assuming this is the case, a possible hopeful will be protection, monetary administrations and managing an account, all of which are experiencing considerable deregulation in world markets. 3. Discuss the problems inherent in developing a cooperative alliance in order to enhance competitive advantage while incurring the risk of developing a new competitor. Technology transfer is inevitable in alliance relationship. An alliance partner can quickly learn all it needs to know about a new technology from its partner. Once that happens, it no longer needs its partner in order to conduct business. In essence, the first of the partners to fully learn the other’s technology or business practices obsoletes the venture. The text calls this the “race to learn.” In order to reduce this risk, firms sometimes “rope-off” certain sensitive areas from their partners. A strategic alliance is a difficult concept in some ways – cooperating with a competitor – and this may requires particular action to avoid strengthening the position of the...
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