Global strategic alliances Flashcards
what advantages are there for businesses that undertake global strategic alliances?
Rationale for Franchising
ability to rapidly expand into new markets
mininmal capital investment from the franchisor
it allows for local adaptaion and knowledge
benefits of Franchisng as a form of Global Strategic alliance
rapid expansion(new markets,
brand consistency
shared risk and reward
Define Global strategic alliance
a partenship between two or more buisnesses for a project,business venture or long-term business arrangement for mutual benefits
Give me five Global strategic alliances
1.Outsourcing
2.Acquisition
3.Mergers
4.Joint ventures
5.Franchising
what do strategic alliance partners share ?
1.customers,
2. resources, operations,
3. customer databases,
4. target markets,
5. knowledge, contacts,
6. technologies,
7. capital, distribution channels,
8. marketing,
9. brand reputation
10. people.
what is the aim for alliance partners ?
to generate financial benefit for both parties by creating or enhancing competitive advantage
why would New,Small Businesses Enter Strategic alliances ?
Marketing
Brand reputation
Distribution channels
why Large,Established Businesses Enter Strategic Allinces ?
1.Geographic expansion
2.Cost reduction
3.Manufacturing 4.capabilities
what are the Advantages of strategic Alliances?
Access to a new market.
2) Reduction of competition by forming an alliance with competitors.
3) Larger market share.
4) Increased sales and income.
5) Gaining new expertise and technology.
6) Access to research and development for business development.
7) Increase in the range of products and service
what are the Disadvantages of strategic allinaces ?
1) Inherit weaknesses of the partner, e.g. lack of management
2) Less efficient communication
3) Increased conflict over decisions and alloctaion of resources
4) Loss of control over product quality,operating costs and employess
There are four components to being able adress this syllabus point fully
1) Definition
2) Example
3) Rationale for
4) Benefits of
define outsourcing .
when an organisation identifies activities that can be given to another organisation to perform on their behalf.
what benefits do Outsourcing businesses have ?
1.well-trained staff
2.efficienct operations that can perform the function on a contract basis more cheaply than doing it byself
3.lower costs by using labour in developing countries
4.business can remain focused on what they do best
5.access local knowledge & expertise in new market
examples for outsourcing
Game development
Engineering and technical design
Mobile app development
Human resources and payroll.
what is the Rationale for Outsourcing ?
1.It has the ability to Reduce costs,
2.can access specialised skills or tech
3.focuses on core competencies while leveraging external expertise
Acquisition
The process of one company purchasing another company,either partially or wholly,to gain full control over its operations ,resources and market presence
example of Acquisition
Facebook’s acquisition of Instagram in 2012 for approximately $1 billion. This acquisition allowed Facebook to expand its social media dominance by acquiring a popular photo-sharing platform with a growing user base, enhancing its market position and diversifying its offerings.
what is the rationale for Acquisition?
to seek immediate access to new markets,technologies or resources without building them from scratch
Benefits of Acqusition
1.Rapid market entry
2.access to specialised resources
3.competitive advantage
4.access to customer base
what does Acqusition allow for
it allows for the acquiring company to quickly gain control and integrate the acquired firm’s assets,expertise ,and** customer base into its own operations**
What are Mergers?
When 2 or more companies combine to form a single entity,pooling resources and operations to achieve common strategice goals.
an example of a merger
the merger between Disney and 21st Century Fox in 2019, valued at approximately $71.3 billion. This alliance allowed Disney to expand its content production capabilities and access new markets, while also integrating Fox’s assets into its existing portfolio.
what is the rationale for Mergers
**Companies choose mergers] to achieve **economies of scale,increase market share,and diversify their offering **
By merging companies can……..?
1.consolidate resources **
2.reduce competion**
3.enhance their competitive advantage
and position in the global market
Benefits of Mergers
1.Increased Market Power
2.Increase Synergies (cost savings ,Complementary product offerings and enhanced innovation
3.Rapid Expansion(quickly enter new markets)
what are joint ventures ?
two or more companies forming a new entity to pursue a specifc business opportunity or project together ,sharing risks and rewards
what is the rationale for Joint ventures ?
gives companies
1.access.new markets or technoligies while sharing risks and costs with a partner.
2.** allow for leveraging streghts of each partner,combining resouces and market access**
3.Increased competitive markets(usually the companies are independent)
Benefits for Joint ventures
- Risk Sharing(e.g. financial risks, making ventures more feasible)
2.Access to New Markets (e.g. leveraging the local knowledge and networks)
3.Technology and knowledge sharing (improving competitive advantage)
Define Franchising (in business terms)
it is where a FRANCHISOR grants a FRANCHISEE the rights to use it brannd name,business model,and processes **in exchange for ongoing fees and royalties
Example of Franchising
McDonald’s Corporation is a prime example of a global business that extensively uses franchising.
As of 2022, McDonald’s had over 38,000 locations worldwide, with around 93% of them franchised.
The value of McDonald’s franchise system is estimated to be in the billions of dollars.
what is the Rationale for Franchising ?
to expand into new markets rapidly with minimal capital invstment from the franchisor and franchisee
2. local adaptation and knowledge ,reducing risks associated with cultural and regulatory differences
benefits of this for Franchising
Rapid expansion
Brand consistency
Shared risk and reward
