Cross-Border Collaboration

Managing across Corporate Boundaries

The Bigger, the Better

http://www.youtube.com/watch?v=TqqISjfTbJ4

Companies desire multi-dimensionality

Expanding internationally allows bigger business

Must be able to manage assets and resources

Costs and risks associated with managing internationally

Roles of Management

Traditional

Protect profits from competitors or bargain power

Strong control over firm’s activities

New

Develop interdependent and integrated network within company

External relationships with other firms, customers,etc. Caused by rising costs, shortened product life, barriers

to entry

Friendly Competition?

Strategic Alliances

Companies that were once strict competitors have now allied

AT&T and Toshiba

Traditional alliance MNE in industrialized corporation joint ventures with junior local

partner in less-developed country

New alliances can be between two industrialized countries

Motivation for Strategic Alliances are technology exchange, global competition, industry convergence, economies of scale, and alliances as alternative to merger

Partners can pool resources and concentrate activities to raise the scale of activity or rate of learning

Alliances share and leverage strengths

Trading saves high cost of duplication

Risk-hedging since none of the participating firms bears the full risk

Renault-Nissan

Lomptit bloc onigea

Form alliances to compete with other international companies of similar size

Evens out playing field

Symbian alliance of psion, Eericsson, Nokia, Matsushita, and Motorola created as response to Microsoft’s entry into PDA market.

StarAlliance and OneWorld are airline alliances formed to avoid merging into one company

Created because rules against foreign ownership When rules lifted, mergers are created Alliances like Concert and Unisource created

Worldcom, France Telecom and Deutsche Telekom

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Speeds up communication

Breaks boundaries between industries

Increases R&D technology

IT, electronics, pharmaceuticals,, specialty chemicals Material supplies team up with auto

companies to transfer and adapt to market GEC trasferred Ford Xenoy bumper technology

from Europe to U.S.

Producers of computers and telecommunications are merging

Biological and chip technologies intersecting

Develop the complex and interdisciplinary skills necessary in the time frame required

Era of Alliance “Euphoria”

1980s fueled concepts of triad power and stick-to-your-knitting

Triad power emphasized developing significant positions in U.S., western Europe, and Japan

Focus investments, efforts, and attention on only those tasks they have significant competitive advantage Outsource or use alliances for other tasks

Risks of Competitive Collaboration

Assymetry

SonyEricsson Risk could be that one of the partners will learn and

internalize other’s skill while protecting its own

Ajinomoto Japanese food giant allied with General Foods

Also capturing investment initiative to use the partnership to erode other’s position

Possibility that alliance breaks, one partner is made stronger

Strategic and Organizational Complexity

International partnerships represent a mix of different economic, political, social and cultural systems

Creates organizational challenge

Xerox and Fuji Xerox (Japan)

Building Cooperative Ventures

Partner Selection: Strategic and Organizational Analysis Availability of partner Tangible assets Time and distance Strategic capabilities Ongoing process. “Thrill of the Chase”

People are different after the chase is over Strategic capabilities

Simplicity and Flexibility

Managing Cooperative Ventures

Managing the Boundary Start with limited agreement? Always easier to expand

Managing Knowledge Must prevent outflow of any info or knowledge

they don’t want partners to know InterfaceManagers

Well versed in organizational processes Personal credibility

Governing Structure If partners are equal, hard to achieve anything

Conclusion

Alliances don’t have to be permanent

Flexibility is important

Always learn