Transcript Collaborative Strategies

Collaborative Strategies
Objectives
• To explain the major motives that guide
managers when choosing a collaborative
arrangements for IB.
• To define the major types of collaborative
arrangements.
• To describe what companies should
consider when entering into arrangements
with other companies.
• To discuss what collaborative
arrangements succeed or fail
• To discuss how companies can manage
diverse collaborative arrangements.
Introduction
• Companies must choose an international operating
mode, many of which are collaborative.
-Collaborative frequently lessens control.
-MNEs with fully global orientation use most of
the operational modes available.
• Strategic alliance-collaborative is of strategic
importance to one or more of the companies.
• Collaborations-provide different opportunities
and problems than do trade or wholly owned
direct investment.
I. Motives for Collaborative
Arrangements
A. General Motives for Collaboration
1. Spread and reduce costs
- sometimes it is cheaper to get
another company to handle work,
especially:
- cooperative ventures may increase
operating costs.
2. Specialize in competencies
- Resource-based view of the firm-holds that each
company has a unique combination of competencies.
- Large, diversified companies realign to focus on their major
strengths.
- licensing can yield a return on a product that does not fit the
company’s strategic priority based on its best competencies.
General Motives for
Collaboration (cont)
3. Avoid competition
- Companies may combined resource to combat
large competitors.
-Companies may collude to raise everyone’s profits.
4. Secure vertical and horizontal links
-Companies may lack competence or resources to
become fully vertically integrated.
-Secure horizontal links-may provide finished
products and components.
5. Gain market knowledge
-learn about a partner’s technology, operating
methods, or home markets.
B. International Motives
for Collaboration
1.
Gain location-specific assets
- Foreign companies may gain operational assets
when teaming with local companies.
2. Overcome legal constraints
- country may require foreign companies to share
ownership.
- Collaboration a means of protecting assets.
3. Diversify geographically
- can smooth its sales and earnings because business
cycles differ.
4. Minimize exposure in risky environments
-reduce base of assets located abroad.
II. Types of Collaborative
Arrangements
• Forms of foreign operations differ in the:
-Amount of resources committed to the operation
-Proportion of resources located abroad
• Type of collaborative arrangement selected may
necessitate trade-offs among objectives
• Companies with difficult-to-duplicate resource have a
wider choice of operating form
• Some Considerations in Collaborative Arrangments
-The greater reliance on collaboration, the greater the
loss of control over decision making
- External arrangements imply the sharing of revenues
III. Problems of Collaborative
Arrangements
1. Collaboration’s importance to partners
-One partner may devote more managerial
attention to the collaboration.
2. Differing objektif
-Partners’ objectives may evolve differently over
time.
3. Control problems
-Company loses some control over assets shared
with others in collaborative arrangement.
-Without control residing with one of the
partners, joint operation may lack direction.
4. Partners’ contributions and appropriations
-Partners’ capabilities to contribute may change.
-Suspicions may arise about what other partner is
taking from the operation.
5. Differences in culture
i) Companies differ by nationality in how they
evaluate the success of their operations.
-differences can mean that one partner is satisfied
while the other is not.
ii) Some companies prefer not to collaborate with
companies of very different cultures
-joint ventures from culturally distant countries
survive at least as well as those between partners
from similar cultures.
iii) Differences in corporate cultures may also create
problems within joint ventures
-compatibility of corporate cultures is important in
cementing relationships.
Thank You