International strategic alliances

Question 1

Why do companies decide for international strategic alliances?

Answer 1

1. To gain knowledge and resources from foreign partners in a complex and unstable environment
2. forming or exploiting economies of scale
3. competitiveness
4. dividing global risks
5. new standards
6. enter rapidly in new markets

Question 2

Which characteristics has the current IB environment?

Answer 2

1. escalating fixed costs (economies of scale as a prerequisite)
2. dynamic consumer tastes
3. rapidly spreading technology
4. growing protectionism

Question 3

Acquiring technological knowledge

Answer 3

One partner has technological knowledge and expertise but needs:
- large distribution system
- marketing expertise
- capital
- credibility

Question 4

Economies of scale

Answer 4

Add parnerts’ resources to achieve greater production volumes (especially for compenies with complementary resources)

Question 5

Enhancing competitiveness

Answer 5

Similar to knowledge acquisition, partners form alliances to fill each other’s skill gaps (avoids costs to develop missing skills in-house)
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Alliances with major established companies can possibly prevent new entrants.

Question 6

Sharing risks and costs

Answer 6

Especially R&D costs and risks

Question 7

Setting new standards for global technology

Answer 7

Standards create new market opportunities and successful ones are very difficult to predict.
Especially high-tech companies must join alliances to collaborate around a proposed standard.

Question 8

Entering foreign markets more rapidly

Answer 8

Distribution systems as well as market-specific knowledge of partners can ensure a faster market penetration
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Legal advising on regulation compliance and contractual stipulation.

Question 9

With which actors do strategic alliances form?

Answer 9

1. Customers
2. Suppliers
3. Financial instituitions
4. Research centers

Question 10

Which are the characteristics of strategic alliances?

Answer 10

1. more frequent in industrialized countries
2. more focused on creation than distribution
3. often short-term

Question 11

Why and in which sectors are strategic alliances the only option? Which is the consequence of these restrictions’ elimination?

Answer 11

Because of restrictive regulations on foreign ownership in some sectors (airline and communications), SA are the only available option

The consequence of its elimination refers to a full-scale global integration

Question 12

Main disadvantages of strategic alliances

Answer 12

• cooperation –> competition
• loss of competitive knowledge
• incompatibility cultures and objectives

Question 13

Some statistics on the success/failure of strategic alliances

Answer 13

80% are terminated
There is no positive financial impact on performance in the long run

Question 14

Which are the stages of strategic alliance formation?

Answer 14

1. strategy development (feasibility, objectives, resource alignment)
2. partner assessment (SW analysis, selection criteria and complementarity)
3. contract negotiation (litigation dispute settlement)
4. alliance operation (finding balance of resources contribution, change strategic priorities and reward perfomance)
5. alliance termination

Question 15

What is partnerhsip as a business structure?

Answer 15

each partner is an owner and personally liable for all debts of the co-owned business.

Question 16

What is a channel partnership?

Answer 16

A channel partnership in the digital field usually involves a cloud computing provider which provides the platform, which is then adapted to final user needs by the channel partner (ex. Amazon Web Services)