©2004 Prentice Hall13-1 Chapter 13: International Strategic Alliances International Business, 4 th Edition Griffin & Pustay

©2004 Prentice Hall13-2 Chapter Objectives_1  Compare joint ventures and other forms of strategic alliances  Characterize the benefits of strategic alliances  Describe the scope of strategic alliances

©2004 Prentice Hall13-3 Chapter Objectives_2  Discuss the forms of management used for strategic alliance  Identify the limitations of strategic alliances

©2004 Prentice Hall13-4 Lukoil is building a tanker fleet to haul oil to Asian and American refineries

©2004 Prentice Hall13-5 Figure 13.1 Benefits of Strategic Alliances Potential Benefits of Strategic Alliances Ease of Market Entry Shared Risk Shared Knowledge and Expertise Synergy and Competitive Advantage

©2004 Prentice Hall13-6 Map 13.1 Namibia and Joint Ventures

©2004 Prentice Hall13-7 Scope of Strategic Alliances  Significant variation –Comprehensive alliance –Narrowly defined alliance  Degree of collaboration depends upon basic goals of each partner

©2004 Prentice Hall13-8 Figure 13.2 The Scope of Strategic Alliances

©2004 Prentice Hall13-9 Types of Alliances  Comprehensive  Functional –Production –Marketing –Financial –Research and Development

©2004 Prentice Hall13-10 Comprehensive Alliances  Participating firms agree to perform together multiple stages of the process by which goods or services are brought to the market  Functional areas are intertwined between firms  Organized as joint ventures  Achieves greater synergy through sheer size and total resources

©2004 Prentice Hall13-11 Functional Alliances  Involve only a single functional area of the business  Integration is less complex  Does not typically take the form of a joint venture

©2004 Prentice Hall13-12 Implementation of Strategic Alliances  Selection of partners  Compatibility  Nature of potential partner’s products or services  Relative safeness of the alliance  Learning potential of the alliance

©2004 Prentice Hall13-13 Asahi Video Products Company: A Joint Venture between Corning and Asahi Glass  Asahi Glass’s expertise in large television bulb technology complemented Corning’s strength in other bulb sizes  Joint venture would benefit from Asahi Glass’s ongoing business connections  Combined strength of the two firms would help both stay abreast of technological innovations

©2004 Prentice Hall13-14 Asahi Video Products Company: A Joint Venture between Corning and Asahi Glass  Asahi Glass would benefit from Corning’s technology and marketing clout in U.S.  Corning had successfully operated another joint venture with Asahi Glass

©2004 Prentice Hall13-15 Form of Ownership  Corporation  Limited partnership  Public-private venture

©2004 Prentice Hall13-16 Joint Management Considerations  Shared management agreements  Assigned arrangements  Delegated arrangements

©2004 Prentice Hall13-17 Shared Management Agreement (Figure 13.3) Partner 1Partner 2 Alliance Both partners participate actively

©2004 Prentice Hall13-18 Assigned Arrangement (Figure 13.3) Partner 1Partner 2 Alliance One partner takes primary responsibility

©2004 Prentice Hall13-19 Delegated Arrangement (Figure 13.3) Partner 1Partner 2 Joint Venture Both partners delegate management to the joint venture’s executives

©2004 Prentice Hall13-20 Figure 13.4 Pitfalls of Strategic Alliances Pitfalls of Strategic Alliances Incompatibility of partners Access to Information Distribution of Earnings Loss of Autonomy Changing Circum- stances

©2004 Prentice Hall13-21 Beijing Jeep – A joint venture between American Motors Company (part of Daimler Chrysler) and Beijing Auto Works