unit 7 reviewguide

unit 7 reviewguide - CHAPTER 7 GLOBAL ALLIANCES AND...

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CHAPTER 7 GLOBAL ALLIANCES AND STRATEGY IMPLEMENTATION I. Strategic Alliances A. Strategic alliances are partnerships between two or more firms which decide they can better pursue their mutual goals by combining their resources—financial, managerial, technological—as well as their existing distinctive competitive advantages. Alliance Types 1. Joint Ventures : Two or more companies create an independent company. An example is the Nuumi corporation, created as a joint venture between Toyota and General Motors, which gave GM access to Toyota’s manufacturing expertise and provided Toyota with a manufacturing base in the U.S. 2. Equity strategic alliances : Two or more partners have different relative ownership shares (equity percentages) in the new venture—such as 25%, 25%, 50% such as that between Chrysler and Mitsubishi Motors. 3. Nonequity strategic alliances : Agreements are carried out through contract rather than ownership sharing. 4. Global strategic alliances : Working partnerships were found between companies (often more than two) across national boundaries and increasingly across industries. B. Global and Cross-Border Alliances: Motivations and Benefits 1. To avoid import barriers, licensing requirements and other protectionist legislation 2. To share the costs and risks of the research and development of new products and processes 3. To gain access to specific markets 4. To reduce political risk while making inroads into a new market 5. To gain rapid entry into a new or consolidating industry and to take advantage of synergies D. Challenges in Implementing Global Alliances 152
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1. All too often, cross-border allies have difficulty in collaborating
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This note was uploaded on 05/04/2008 for the course MGMT 4070 taught by Professor Gordon,ken during the Spring '08 term at Colorado.

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unit 7 reviewguide - CHAPTER 7 GLOBAL ALLIANCES AND...

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