Chapter Twelve Copyright, John Wiley and Sons, Inc. Building and
Managing Global Strategic Alliances GSA: Motorola and Siemens AG
Semiconductor 300 (SC300) is a Global Strategic Alliance (GSA)
operated by Siemens and Motorola. SC300 is a 50/50 GSA that seeks
to build on strategic success in producing 8 semiconductors / Slide
2 Chapter Twelve Copyright, John Wiley and Sons, Inc. Building and
Managing Global Strategic Alliances and produce true state of the
art 12 wafers that will provide vastly more powerful integrated
circuits at truly competitive costs. Siemens has world-class
technology; Motorola provides expertise in logic products and
quality control. Its a good match. Slide 3 Chapter Twelve
Copyright, John Wiley and Sons, Inc. Defining Global Strategic
Alliances GSAs are cross-border alliances and partnerships between
two or more firms from different countries who pursue mutual
interests through resource and capability sharing. Slide 4 Chapter
Twelve Copyright, John Wiley and Sons, Inc. Types of GSA Equity
Joint Ventures (EJV) form legally and economically separate
organizations, created by two or more parent organizations that
invest financial and other resources (like land, facilities,
equipment, materials, intellectual property, or labor). These can
be 50/50 or any other percentages of ownership Cooperative Joint
Ventures (CJV) are contractual arrangements where profits and
responsibilities are assigned through contractual agreement. Most
of these create business activities without creating new
organizations. CJV types: Joint exploration, R&D, production,
marketing, supply, or management Slide 5 Chapter Twelve Copyright,
John Wiley and Sons, Inc. CJV Types Joint Exploration, non-equity
alliances where exploration and development costs are shared,
usually in extraction industries Joint R&D, where R&D
costs, rights, and profits are contractually shared Joint
Production, where production stages are shared, usually in
technology and aerospace Joint Marketing, shares marketing and
distribution channels to reach a larger set of targets / Slide 6
Chapter Twelve Copyright, John Wiley and Sons, Inc. CJV Types Joint
Supply, where supply chain and inputs are shared with an emphasis
on stability and quality of supply Joint Management, cross border
partners share in management functions like HR, production,
organizational design, IT development, or value chain integration
Slide 7 Chapter Twelve Copyright, John Wiley and Sons, Inc.
Rationales for Building GSAs GSAs allow a company to enter
activities that may be too costly or risky to assume alone GSAs
allow the acquisition of partner knowledge and resources that build
competitive strength GSAs allow the enhancement of scale economies
and improve product rationalization GSAs allow the prevention or
reduction of competition with a major rival, whether that
competition is contemporaneous or anticipated / Slide 8 Chapter
Twelve Copyright, John Wiley and Sons, Inc. Rationales for Building
GSAs GSAs help a firm boost local acceptance in the eyes of foreign
consumers GSAs help firms bypass entry barriers in target countries
Slide 9 Chapter Twelve Copyright, John Wiley and Sons, Inc. GSAs
involve complex relationships and expectations. They can be
difficult to manage especially when firms have different strategic
interests and objectives, different cultures, divergent
expectations, and incongruent structures. / Challenges Facing GSAs
Slide 10 Chapter Twelve Copyright, John Wiley and Sons, Inc.
Challenges Facing GSAs Loss Of Autonomy And Control Risk Of
Technology Or Property Leakage Differing Strategic Goals Chance
That Partners May Become Global Competitors Slide 11 Chapter Twelve
Copyright, John Wiley and Sons, Inc. Building Global Strategic
Alliances It is important to effectively: Select Local Partners who
have compatible goals, resources, cultures, commitment, and
capabilities Negotiate Alliance Contracts that are workable,
involved and understood. This is a difficult cross cultural
negotiating exercise Structure Global Strategic Alliances to ensure
effective and representative ownership, sharing of resources, and
equity distributions / Slide 12 Chapter Twelve Copyright, John
Wiley and Sons, Inc. Managing Global Strategic Alliances It is
important to be able to manage inter-partner learning, exercise
effective managerial control, accentuate cooperation and trust, and
establish effective exits. Slide 13 Chapter Twelve Copyright, John
Wiley and Sons, Inc. Managing GSA Learning When firms get together
in a GSA, both firms have to come up to speed and learn about one
another in order to effectively operate. Creating operational and
managerial synergy and effective relationships requires a degree of
openness that is difficult to obtain. Firms will seek to protect
their intellectual and proprietary rights and technologies, write
safeguards into contracts, agree on specific skills to be shared
(and not shared), and mitigate leakage risk by avoiding undue
dependence. Slide 14 Chapter Twelve Copyright, John Wiley and Sons,
Inc. Managing GSA Managerial Control Managerial control is achieved
through equity ownership. Controlling entities will nominate and
appoint key personnel, set agendas of the Board of Directors,
establish major managerial policies and procedures, retain budget
control, set contract stipulations, allocate resources, and shape
interpersonal relationships. Slide 15 Chapter Twelve Copyright,
John Wiley and Sons, Inc. Managing GSA Cooperation & Trust This
is performed by accentuating personal attachment and reducing
conflicts, Personal attachment is accentuated through personal
contact, socialization, longer appointments, and careful selection
of people and expatriates Conflicts are reduced through pursuing
mutual understanding of actions and positions, having alliance
executives jointly set milestones, clearing the alliance of parent
goals and strategies, maintaining flexibility, and promoting
understand and empathy among HR groups Slide 16 Chapter Twelve
Copyright, John Wiley and Sons, Inc. Managing GSA Exit There are
many reasons for exit. When goals are not being met, this is a good
reason for alliance exiting. Among chief reasons for exit:
Differences In Strategic Or Operational Objectives Differences In
Managerial Styles Differences In Conflict Resolution Styles
Inability To Meet Shifting Targets Inability To Meet Financial
Requirements Acquisition Of One Or More Of The Partners Bankruptcy,
Termination, Dissolution Of Liquidation Of One Or More Of The
Partners
