The concept of bringing together two companies from headquarters of different nations into partnership is known as strategic alliances. Each partner remains independent legally after partnership while relationship happens to be relatively enduring. The need to the knowledge or resources of the other company has been the main reason why international alliances are common today. And also to enter market that neither would have entered alone. Forming economies of scale, dividing risks, overcoming market competition, setting new technological standards, and enhancing competitiveness are seen to be the other reasons for the alliances. Categorically, the characteristics of international strategic alliances include behavioral and structural characteristics.
Partners attributes such as interdependency, trust, commitment and coordination.
Communication Attributes such as information quality, information sharing, goal setting, and planning participation
Conflict resolution techniques- conflict extent and conflict resolution
Structural attributes- centralization, formalization, and complexity
Control attributes- control mechanisms, focus on control, and extent of control
In general, international alliances have to produce benefits for the partners. Again, they must create new value together instead of just exchanging hat each offers. Alliances require way too deep interpersonal links a well as internal infrastructures, which improve learning. No formal system can control them.
Advantages and disadvantages of international alliances
Problems arise as changes are realized between both organizations. In most cases, only the executives enjoy the attraction as well as rapport. Individuals at other positions may not
Lower level employees my lack the knowhow to deal with people from different cultures
Only few staff will in most cases be dedicated to the relationship full-time.
Resistance of the relationship may arise at certain levels of management
Organizations, however, benefits in the following areas: forming economies of scale, dividing risks, overcoming market competition, setting new technological standards, and enhancing competitiveness
All joint ventures are strategic alliances, but not strategic alliances are joint ventures.
Joint ventures join together to start a new entity that is jointly owned. The reasons for joint ventures are to access knowledge, funds, and assets. Strategic alliances, on the other hand, are an arrangement by to firms to share resources so as to partake a project that is mutually beneficial. Joint ventures are strategic alliances as the join to share resources. Strategic alliances are no joint ventures as they do not create a new entity aside, but work together on a project.
Today, companies prefer to work together rather compete in an adversarial way. Through strategic alliances, companies have the potential to come up with more effective process and grow into a new market. A company is using more assets hence gaining competitive edge is easy. Adversarial competition involves struggling to be the best in the local market and using limited assets against even larger competitors.
a. article summary
According to author, CAT has faced challenges in its life that made many see as if it were going to fall pave way for Japanese company, Komatsu, to dominate the industry. Unlike many other companies, Cat overcome its challenges and still dominates the industry, thanks to its 33year old joint venture Mitsubishi. Among things that helped the company success during the challenging time include a strong brand name, product quality, high machine resale value, flat, leaner, and customer responsive structure, investing in manufacturing operations, and taking advantage of the finance markets. The author feels that companies should value independent dealers as they can easily reach customer and provide important after sale services. If planning to bring a new product to the market, an important thing to consider is the distribution system. U.S companies do better today because they understand distribution better, something the Japanese do not value. To be successful, companies must built real partnerships with their dealers. The following principles are important in strengthening such partnerships:
Caterpillar does not gouge its dealers- as such, a company should not bypass its dealers to gain in the short-term, or turn on them in efforts to avoid pain in the short run.
The offers its dealers extraordinary assistance in the areas or financing customer purchases, inventory control and management, equipment maintenance, logistics, as well as maintenance programs.
Caterpillar ensures that its dealerships are run well. The company evaluates its dealers performance to identify what areas dealers need to work on in the future.
Caterpillar communicates fully, often, and honestly with dealers- there are secrets between the company and its dealers something that builds trust.
The company builds personal relationships with its dealers. It nurtures close personal ties that have created a big family of the company and its dealers.
CAT work towards keeping its dealerships within its family- it believes that continuity strengthens trust, minimizes disputes, improves communication and generates big gains for all.
b. I do agree with the author because it is rather challenging to grow alone without partnership, specifically when it comes to distribution. For instance, a company can have its products sold in various countries, even in regions where nobody knows the company. It is through dealerships that a product can go that far. Customers are among the most important elements of every business. Dealers deal directly with them. Good relationships mean a huge customer base. Poor relationships mean losing dealers to competitors, hence, looing a multitude of clientele.
3. There is a complex relationship between X and FX, and this is where the problem shoots. X owns some assets and others are owned by FX. FX can only sell in the Japanese market while X has access to the U.S market. X owns part of the equity of the venture; however, it has no control over FX’S capabilities. Even though X and FX have a good relationship when it comes to research, development, manufacturing, as well as managerial levels, FX traditionally has some autonomy, something that renders X less power over the venture.
b. the key issues here, which need to be addressed, are as follows:
How FX can expand its market- Though FX is a major contributor to the joint venture, its market is limited to Japan only. The company wants to sell to the wider market; however, the agreement prevents it. This is a big issue that can kill the alliance. FX needs more independence.
An important issue to address is how the group gets to manage its business in the United States market. This is as a result of the growing competition.
Bringing competition from within to an end (between X-FX) – Internal competition is high such that no one looks at canon a threat. This is an important issue to address as such rivalry could be an opportunity for competitors.
Lack of suitable organization of the group- there lacks proper organization, which if addressed would give the organization a better chance to compete within the market.
c. Marketing- involves convincing the customer to buy your product, for instance anticipating their needs, the market prices, and informing the customer of the product.
Research- a process of determining equipment as well as supplies necessary for production
Development & Manufacturing options being considered- using the approaches that are cost and time effective and producing products of the highest quality.
d. pros & cons
Marketing- though it can be costly, it is quite important as it creates awareness of product to customers. Through marketing, customers knows the product’s existence, how to use it, and the benefits of using it over substitute products
Research- quite important as it helps identify what exactly the customer needs. Though it is expensive, it is the only weight to fulfill customer’s requirements.
Development & Manufacturing options being considered- it helps produce the best products at the shortest time possible and low costs. Implementation may be expensive but does not overwhelm the long-run returns.
According to the codes tiny taskforce,:
It is important to collaborate as well as eliminate overlapping activities. Taking, for instance, a product’s nature, a big scope for coordinating efforts of key market activities as well as fine turning specific regional requirements value chain down
Since the product happens to be more technology oriented while it may not require huge customization as far as location is concerned, an integrated research facility can be quite efficient.
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