Test 3 cheat sheet

Test 3 cheat sheet - Formation of Alliances: Stage 1...

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Formation of Alliances : Stage 1 – Cooperate? Market transactions OR mergers + acquisitions OR pursue cooperative interfirm relationship. Stage 2 – Contract (Co-marketing, R+D contracts, turnkey project, strategic supplier/distributor, licensing/franchising) OR Equity (strategic investment, cross-shareholding, joint venture). Stage 3 – Specifying relationship Performance of Alliances : Equity (greater equity stake more commitment/higher performance) (learning is abstract, experience is used as a proxy because it is easy to measure) Nationality (dissimilarities in culture strains in alliances) Relational capabilities (firm specific, difficult to codify and transfer, may make/break alliances). 70% of acquisitions fail. Motives of Acquisitions : Synergistic ( Institution-based : Response to formal institutional constraints and transitions that affect a company’s search for synergy. Resource-based : leverage superior resources). Hubristic ( Institution-based : managers join acquisition bandwagon. Resource-based : manager is over-confident). Managerial ( Institutional-based : self-interested actions guided by informal norms and cognitions) Dissolution of Alliances : First phase: Initiation (The initiator is dissatisfied. Reconciliation. Partner may be confused, may respond by committing an error). Second phase – going public (The party that breaks the news first has first-mover advantage and chance to win sympathy of stakeholders. Initiator often moves first.) Third phase – uncoupling (Can be friendly or hostile.) Fourth phase – aftermath Multinational Strategies/Structures : Home-replication/International division (Duplicate home-country strategy, export, license, franchise. Easy to implement, lacks local responsiveness due to focus on home. Foreign subsidiary managers are not given sufficient voice relative to heads of domestic divisions. International division is a silo. Localization/Geographic area (Focuses on a number of foreign countries, each of which is a stand-alone market, maximize local responsiveness, high costs due to duplication of efforts in multiple places, too much local autonomy. Each stand-alone area is managed by a country/regional manager. Being locally responsive is good, but it encourages MNE to fragment into fiefdom). Global standardization/Global product division (Relies on development & distribution of standardized products worldwide to reap maximum benefits from low-cost advantages. Leverages low cost advantages, lack of local responsiveness, too much centralized control, has Centers of excellence – subsidiary explicitly recognized as a source of important capabilities that can be leveraged by and/or disseminated to other subsidiaries. These centers of excellence have worldwide mandates that make each center responsible for one MNE function around the world. Each product division is a stand-alone entity with full worldwide responsibilities. Highly responsive to pressures for cost-efficiencies.
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This note was uploaded on 03/12/2012 for the course ACCT 211 taught by Professor Kamlet during the Spring '08 term at Binghamton.

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Test 3 cheat sheet - Formation of Alliances: Stage 1...

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