Description
1. Suppose that you are hired as a consultant for a small domestic firm that is planning to expand its business into international market. You are preparing to provide an initial international expansion training seminar to the managements team of the firm.
PART A. Taking insights from the concepts and content in the course, suggest, in your own words and using full sentences, the twenty most critical content/concepts that should be covered in the seminar.
NOTE: Incorporate at least one item from each chapter from the textbook, and provide one informative and substantial concept description per item.
PART B. Conduct research on global corporate social responsibility, and using the insights obtained, suggest one Corporate Social Responsibility initiative that the firm could implement. Provide at least five sentences to describe its importance and implementation suggestions.
PART C. Share one interesting article on ‘Global Corporate Social Responsibility’ (provide the URL/link, or attach it to the response), and provide at least five sentences to describe its relevance/significance.
PART D. Respond to one peer posting by providing insightful comments that could enrich the discussion.
2. Suggest twenty-five specific and actionable ideas regarding how the insights from the course materials (textbook/Canvas notes) could be applied to a current or recent issue, threat, or opportunity being faced by an international organization (profit, nonprofit or political/government; small, medium or large; private, family owned, or public).
Follow these instructions to prepare your assignment:
Make sure to provide the name of the organization and a brief description of the issue.
Identify corresponding Chapter for each idea.
Each chapter could be used for no more than four ideas/items.
Each idea/item will be worth 2 points. (You can earn 0-50 points on the assignment, based on the number of ideas submitted.)
Provide 2 insightful sentences per idea. Provide your insights in your own words, using full sentences.
Do not cut and paste phrases verbatim from the reading materials. Use insights from the materials apply the concepts to specific organizational situations.
CITE REFERENCES.
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Purpose and Perspectives of Chapter 1
This chapter serves as an introduction to global strategy, utilizing real-world companies
such as Zoom, LEGO, and more, to emphasize the application of the strategies being
discussed. Updates include examples of how global strategy has been affected by the onset
of a world-wide pandemic.
Purpose and Perspectives of Chapter 2
This chapter serves as an introduction to global strategy, utilizing real-world companies
such as Zoom, LEGO, and more, to emphasize the application of the strategies being
discussed. Updates include examples of how global strategy has been affected by the onset
of a world-wide pandemic.
This chapter dives into what defines an industry and the competition within and between
industries. Porter’s five forces framework clarifies the industry-based view of strategy and
looks at how rivalry, threat of entrants, bargaining power of suppliers and buyers, and the
threat of substitutions influence the best strategy for a firm to pursue. A look at the three
generic competitive strategies—cost leadership, differentiation, and focus—helps form an
understanding that, in addition to the five forces, the dynamics of an industry create
endless possibilities, even where none might be immediately obvious.
Purpose and Perspectives of Chapter 3
Resources and capabilities provide the foundation of this chapter. Because of their
importance to every organization, strategists must use available tools to assess and make
use of those capabilities and resources. Using SWOT analysis and VRIO helps managers
determine strengths and weaknesses and how to convert them to competitive advantage.
The chapter also addresses the options of offshoring and its benefits, drawbacks, and
strategic implications.
CHAPTERS 1-3 DISCUSSION
1. Why are negative attitudes toward globalization growing in some parts of the
world? How can strategists make sure that the benefits of their various
actions outweigh their drawbacks?
Costs associated with globalization include:
• The loss of domestic jobs as companies move their manufacturing and
distribution facilities to other countries in order to reduce costs and improve
profit margins
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The loss of some ability to control quality as companies outsource
manufacturing, which may lead to product liability problems if defects are not
caught and fixed before products are sold to end users
Unanticipated costs, such as those associated with gaining access to foreign
distribution channels or finding local suppliers of necessary raw materials,
natural resources, or other supplies
Increased exposure to political risks, such as war, government takeover of
foreign assets, bribery of government officials, etc.
Lack of familiarity with the needs of foreign customers that may require
increased expenditures in market research
Employment laws, product liability, tax policies, and environmental regulations
that differ from one country to another. Companies may incur increased costs as
they try to figure out how various laws impact their business
Additional costs incurred to coordinate and monitor performance across units
when companies have business units scattered around the world
Exposure to more competition—companies may become distracted by trying to
win the battle in foreign markets—as a result, their position at home may
deteriorate
Differing laws to protect consumers in different countries. If a company sells
products that harm customers in another country, there may be a negative
reaction in the home market and demand may decline
Difficulty in monitoring actions and decisions across many countries to ensure
that they are in line with corporate goals and objectives
Some things that companies can do to ensure the benefits of their actions outweigh the
drawbacks are as follows:
• Identify ways to develop new products/services and/or production processes
that have a minimal adverse impact on the environment
• Hire local residents to be managers, as well as serve in other positions, which
helps to gain local knowledge and avoid blunders
• Develop and follow a code of ethics—incorporate that code of ethics into
performance evaluation processes
• Develop strategic alliances with firms from different countries, learn how to
cooperate effectively to satisfy customer needs
• Develop products and services that people can afford, regardless of whether
they live in a poor, emerging economy or a rich, developed one
• Increase the standard of living and improve working conditions in foreign
factories;
• Ensure that people have adequate health care, regardless of where they live
• Find ways to be profitable and behave ethically at the same time
• Increase efficiency and reduce waste that is conceptually close to the cost and
efficiency savings from automation (e.g. fewer inputs, same, or even greater,
output)
2. Why do price wars often erupt in certain industries (such as the automobile
industry), but less frequently in other industries (such as the diamond
industry)? What can a firm do to discourage price wars or be better prepared
for price wars?
Price wars usually erupt when firms cannot easily differentiate their products from one
another. As in the PC industry today, or along certain airline routes, price wars are
common as most firms are not able to convince customers that their products are
different from the competitors’. In addition, in a slow growing market, firms are more
likely to compete for market share to emerge as one of the top two or three firms. To
solve this problem, firms should not assume that their products are destined for
commoditization; they may be able to add new features and functions to differentiate
from lower end products. For example, Swatch was able to add fashion and a broader
range of product offering to differentiate from the low-priced commodity watches that
Swatch was (initially) targeted against. To better prepare for price wars, it is important to
get costs down. This is not only cost cutting (which is a day-by-day process), but also
doing other things consistent with a low-cost strategy. This would include trimming the
product line, minimizing product variation and customization, selling through
distributors that can push the product, thus reducing promotion expenditure, and
selling the products in quantity (bundling) whenever possible or feasible.
3. You have just purchased your fourth apartment complex, which has nearly
doubled the number of tenants. Each apartment complex has their own
manager, but two have decided to move on to other things. Managing the
tenant complaints and questions, issues with facilities and tracking rent
payments has become overwhelming and you are considering outsourcing
some of the responsibilities. Discuss the pros and cons of keeping these
activities in-house or outsourcing it: Apartment Manager; Maintenance;
Groundskeeping; Accounting
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In-house: Pros could be: better customer service if the apartment manager is onsite and easily accessible; maintenance could be handled quicker if a maintenance
person is on-site; possible hiring of a tenant for groundskeeping with a discount on
rent; financials may be done more easily because the accountant would know the
tenants and any expenses incurred for maintenance, etc. Cons: your business
would incur the cost of four employees for each position; tenants could become too
close to the manager, causing some bending of rules; tenants could take advantage
of having management and maintenance on-site; financial data would be on-site
and could be at risk of being stolen.
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Outsource: Pros: Overall, money is saved; relationship between management and
tenants would remain professional; maintenance could be scheduled so all
residents can be serviced in order of receipt or grouped so that fewer maintenance
people are needed; professional groundskeeping can be handled, possibly at
bundled pricing (with other services); one accountant/bookkeeper could handle all
payment and bill processing. Cons: it is never pleasant to cause people to lose their
job; tenants could decide not to stay if they liked the manager/maintenance person
and don’t like the changes with the outsourced work; some people work better
when they are more invested in the location – so an on-site manager may take more
care with the property and customer service than a property manager who comes
once a week or so; your reputation could be harmed by not having control over
what the outsourced people are doing if issues are not realized or addressed
quickly.
4. Integration versus Outsourcing describes Japan’s technique of keiretsu to
enable their manufacturing processes to be cost effective and of high quality.
Since then, Japan has been pressured to become more “American-like.”
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Discuss the benefits of American automakers becoming “more
Japanese-like?” Are there any drawbacks?
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Discuss the benefit of Japan firms becoming more “American-like”? Are
there any drawbacks?
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American benefit: Using the methodology Japan used in the 1980s and 199s,
American automakers could produce a more-efficient and less wasteful process of
producing cars. Quality could go up, but a drawback is that it could possibly
increase costs and time to complete in order to ensure the quality.
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Japanese benefit: Using the American process, Japan could pull some activities inhouse and possibly save time and money by being able to control the work more
closely. New relationships with vendors could be established with less friction or
rigidity that was seen in earlier years. The Japanese companies would also be
exposed to vendors with new or emerging technology, which could help the
company’s competitive offerings. A drawback is that the relationship with the
vendors may not be as close, which can lead to consistent changes in vendors and
quality that is not consistent.
5. Understanding an industry inside and out is an important way to start any
business. Using the five forces framework, what might be different in your
analysis if your endeavor is taken on a global scale as opposed to local?
Other countries may have businesses that are more established and larger in your
industry, making work competitive; added costs to advertise and convince
customers in other countries to buy your product; ability to offer something unique
could be challenging; ability to get your product overseas quickly could be an issue if
you do not have a location overseas to produce the product; using vendors in
countries could offer environmental issues not encountered in the U.S. (monsoons,
tsunamis, etc.); quality could be an issue that you have little direct control over;
insuring the confidentiality of your data or product could be harder to achieve;
cultural differences may have effects on your business (ex. Restrictions based on
what a country/company may find offensive; religious beliefs may hinder some
items from being produced, etc.).
6. Compare and contrast the five forces affecting the cruise industry, the fashion
industry, the airline industry, and the automobile industry. Which industry
holds more promise for earning higher returns?
Cruise Industry
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Entrants – The barriers to entry are high, so the industry has few large
organizations.
Rivalry – High. This industry is quite competitive and successes are rare.
Suppliers – Low. Shipbuilders are eager to bid.
Buyers – Low to moderate. It is a highly popular vacation option with 3.5% of U.S.
and Australian populations taking a cruise each year.
Substitute products. High. It faces many competitors as a vacation service
provider, and mass tourism has its limits.
Fashion Industry
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Entrants – Low. High fashion dominated by the big three.
Rivalry – Moderate to high. Virtually all firms pursue a differentiation strategy
and a smaller number of them engage in a focus strategy.
Suppliers – Low. These suppliers were also hard-hit by the 2008 recession and
were eager to make deals.
Buyers –Moderate. Customers can be fickle. The recession of 2008 affected
sales, and many younger buyers showed less label consciousness.
Substitute products. Fairly insignificant.
Airline Industry
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Entrants – Moderate. There are a number of secondary airports in the U.S.
looking to expand and attract passenger jets to land. Easy to build a fleet by
leasing planes.
Rivalry – High. This is a product that is still hard to differentiate. The frequent
flier programs helped a little, but people joined multiple programs, so they are
not a big edge anymore.
Suppliers – Low. Sometimes the oil suppliers cause trouble for the airlines, but
they do it to everyone, and usually only temporarily. The aircraft manufacturers
are not that powerful; they compete fiercely for new business. Airline labor is
very powerful in the U.S.; they regularly bid away an airline’s profit in new
contracts, and have driven airlines to the brink of bankruptcy.
Buyers – Moderate. Travel agents are a lot weaker today and passengers have a
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lot of choice and can switch, but not on all routes.
Substitute products. Low to moderate. Some substitutes possible on short
routes (less than 400 km), mostly on the U.S. east coast and along the west
coast. High-speed regional trains, though planned, will not be built in the near
term.
Automobile Industry
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Entrants – Moderate. Recent entrants include Tesla, Google, and Uber.
Rivalry – High, but mostly stable until recently with the emergence of ridesharing options and EVs and AVs. Incumbents are beginning to experiment with
new business models.
Suppliers – Mostly low, no major component supplier has undertaken forward
integration to become a viable automaker.
Buyers – Moderate, despite being almost a rite of passage to autonomy, car
ownership has become less attractive: some estimate that the average car
ownership for an American family that stands at 2.1 vehicles in 2020 will be
down to 1.2 by 2040..
Substitutes – Low. Although individual ownership may give way to ride-sharing
services and rentals, this mode of transportation is not going away, it will just
look different.
Purpose and Perspectives of Chapter 4
This chapter looks beyond the industry-based and resource-based views of strategy to the
institution-based view and how the wider influences of governments, cultures, and ethics,
as well as the rules of the game unique to various institutions, affect strategy options and
choices. The text explores transactional costs, hybrid organizations, institutional logic, and
formal and informal constraints. Hofstede’s five dimensions of culture and a framework of
strategic responses to ethical issues are also addressed as part of the institution-based
view of strategy.
Purpose and Perspectives of Chapter 6
Firms enter foreign markets for a variety of reasons. Such a move requires strategies
geared toward managing the industry conditions, the competitive repertoire, and the
institutional uncertainties in the host countries. Entering foreign markets is crucial for
global strategy, so this chapter develops a comprehensive model for such a move based on
the strategy tripod. In that development, we focus on three crucial dimensions: where,
when, and how—known as the 2W1H dimensions.
CHAPTERS 4 & 6 DISCUSSION
1. Taxes are one aspect of formal institution that Americans are familiar with.
Can you think of other examples of formal institutions that affect individuals
and businesses?
Possible answers can include: Individual: speed limits; laws concerning behavior
(violence, drugs, threatening others, etc.). Business: regulations for approved business
transactions; rules governing non-profits; rules for medical research or environmental
companies; safety regulations; rules for stock offerings, etc.
2. How does the institution-based view complement and differ from the industry
based and resource-based views? Why has the institution-based view become
a third leg in the strategy tripod?
The institution-based view is a leading perspective of strategy that argues that in
addition to industry-and firm-level conditions, firms also need to take into account wider
influences from sources such as the state and society when crafting strategy. The
industry-based view suggests that the strategic task is mainly to examine the
competitive forces affecting an industry, and it focuses on the external opportunities
and threats. The resource-based view concentrates on the internal strengths and
weaknesses of the firm. This view posits that it is firm-specific capabilities that
differentiate successful firms from failing ones. The institution-based view combines
both the industry-based and resource-based views and further argues that in addition to
industry-level and firm-level conditions, firms also need to take into account the impact
of governmental rules, economic reforms, and even the cultural codes that govern an
organization. The five dimensions of culture proposed by Hofstede would be useful to
understand the institution-based view.
To answer the question of how firms behave, the three leading perspectives lead to the
formation of the strategy tripod. The industry-based view and the resource-based view
represent the two legs of the strategic tripod with the institution-based view as the third
leg.
3. List one example of institutional transitions from developed economies and
one example from emerging economies. What are their similarities and
differences?
Though countries make different political choices—communism or capitalism—their
economic policies have been quite similar. All governments are interested in market
development and economic growth. Initially, in all emerging economies, competition
was virtually nonexistent. Markets were closed and industries were protected.
Institutional transitions are economies that are moving from central planning to market
competition. Examples include countries like Russia, China, and Poland. An example of
an institutional transition from a developed economy would be IKEA, which entered the
Russian market. An example of institutional transition from an emerging economy
would be China’s investments in Central and Eastern Europe, in the fields of
infrastructure, new technology and renewable energy.
4. ON ETHICS: Assume you work for a New Zealand company exporting a
container of kiwis to Haiti. The customs official informs you that there is a
delay in clearing your container through customs and it may last a month.
However, if you are willing to pay an “expediting fee” of US$200, he will try to
make it happen in one week. What would you do?
At present, the U.S. Foreign Corrupt Practices Act (FCPA), which is a U.S. law enacted in
1977 that bans bribing corrupt foreign officials, makes exceptions for small “grease”
payments to get goods through customs abroad. If the payment is not too big (probably
less than $1000 dollars and the lawyers thought it was okay), a person would probably
not be against paying that “tax” to get his or her goods through. This problem comes up
quite a lot in the developing world. Customs officials often hold up perishable and timesensitive items (parts, seasonal products) for days and weeks at a time unless they get
paid, so the person may have to pay a little. But if the requested payments started to
rise, then the firm would have to take some action, such as speaking to the customs
officials’ superiors, or even thinking about cutting back operations in that country or
shipping through different ports. If every country criminalizes bribery and every investor
resists corruption, their combined power would eradicate it. However, this will not
happen unless FCPA-type legislation is institutionalized and enforced in every country.
5. Pick an industry in which firms from your country are internationally active.
What are the top five most favorite foreign markets for firms in this industry?
Why?
According to Credit Suisse, one of the top five growth industries in China is the personal
computer industry. The foreign markets to explore would be India and other countries
from Southeast Asia. This region is attractive because of its enormous potential. For
example, India has a huge population with upwardly mobile aspirations and has been
impacted by the Internet revolution. Students could refer to Lenovo’s strategies to
conquer the Indian market.
Any company targeting a new and critical market must learn from its experiences. It
must remember that every country is unique and must suitably modify its strategies. It
must forge partnerships with retail outlets, multibrand format stores, and regional
distributors. It must target smaller cities and towns. Strategic tie-ups with local and
regional bodies/agencies would certainly help these foreign industries.
6. From institution-based and resource-based views, identify the liability of
foreigners confronting MNEs from emerging economies interested in
expanding overseas. How can such firms overcome them?
Institution-based views suggest that such MNEs might encounter not only regulatory
risks from their home government but also hostility and suspicion from those countries
they wish to enter. Recent examples include Middle Eastern companies that sought to
invest in aspects of U.S. infrastructure. Furthermore, as relations between countries
change, the policies toward such companies could change.
Resource-based views include the possibility that the emerging economy may not
provide the firm with access or the environment that would enable the firm to develop
some of the key resources needed. It may have valuable firm-specific resources and
capabilities that enable success in its home country, but they may not leverage
overseas where market needs are different.
7. ON ETHICS: By definition, entering foreign markets means not investing in a
firm’s home country. What are the ethical dilemmas here? What are your
recommendations as (1) MNE executives, (2) labor union leaders of your
domestic (home country) labor forces, (3) host country officials, and (4) home
country officials?
Clearly there are several stakeholders (those affected by the decision to enter the
foreign market) who have different interests. Those who benefit will likely see the
decision as good, while those adversely affected may feel that the decision was
unethical.
MNE executives are likely to see the decision as one involving economics, not ethics.
Their reservations about the decision to invest in foreign countries may involve the
impact of a negative perception on the part of the public in their home country. They
could reason that investing in the foreign country would be more economically
rewarding than investing at home. The profits thus generated would ultimately benefit
even the company’s operations in the home country.
Host country officials are likely to also view it as an economic issue unless they are
concerned that the MNE could create competition for companies already in the market.
However, the entrance of a new foreign competitor could also help domestic
companies improve their quality and efficiency in order to compete with the new
entrant.
Home country officials and unions may view the decision as one in which the company
lacks loyalty to either its employees or its country. They could also analyze the reasons
for the shift into the new country and figure out how they can change existing
regulations or labor practices in order to make their country more appealing for
investment.
8. Entry timing refers to whether there are compelling reasons to be an early or
late entrant in a particular country.
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What are some benefits to first-mover firms? Provide a specific example of
benefits enjoyed by a firm that has chosen to be a first-mover firm in a foreign
market.
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What are some benefits to late-mover firms? Provide a specific example of
benefits enjoyed by a firm that has chosen to be a late-mover firm in a foreign
market.
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Benefits enjoyed by first-mover firms include proprietary technology, preemptive
investments, the ability to erect entry barriers for late entrants such as high
switching costs, avoidance of clashes with dominant firms at home and
opportunities to build precious relationships with key stakeholders such as
customers and governments. Some examples of first-mover firms are Japanese
multinationals that have cherry-picked leading local suppliers and distributors in
Southeast Asia as new members of the expanded keiretsu networks and prevented
late entrants from the West from accessing these local firms; American, British,
French, German, and Russian aerospace firms that competed intensely for Poland’s
first post-Cold War order of fighters; Matsushita, Toyota, and NEC were leaders in
their respective industries in Japan, but Sony, Honda, and Epson all entered the
United States ahead of the leading firms; Citigroup, JP Morgan Chase, and
Metallurgical Corporation of China entered Afghanistan, earning a good deal of
goodwill from the Afghan government eager to woo more foreign investment.
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Benefits enjoyed by late-mover firms include getting a free ride on first movers’
pioneering investments, resolution of technological and market uncertainties and
first mover’s difficulty to adapt to market changes. Some examples of late-mover
firms are Amazon who hoped to get a free ride on some of Flipkart’s earlier
investments; After some uncertainties were removed by the release of the world’s
first electric vehicle (EV), the Leaf, Tesla as well as BMW, GM, and Toyota recently
joined the market with their own EVs; Greyhound, the incumbent in intercity bus
service in the United States, is financially struggling, but Megabus, the new entrant
from Britain, adapted by using curbside stops (like regular city bus stops), making
travel by bus more appealing to a large number of passengers.
Purpose and Perspectives of Chapter 7
Because the proliferation of strategic alliances and networks can now be seen most
industries and countries, the fact that 30%–70% of all alliances and networks reportedly fail
deserves attention. What are strategic alliances and networks? How are they formed? What
does their evolution and their performance look like? The chapter addresses these
questions and at the same time describes a comprehensive model for strategic alliances
and networks that draws on the strategy tripod.
Purpose and Perspectives of Chapter 9
A key aspect of corporate strategy happens through diversification, which adds new
businesses to the firm that are distinct from its existing operations. Diversification is
probably the single most researched, discussed, and debated topic in corporate strategy. It
can be accomplished along two dimensions: (1) product diversification (through entries
into different industries) and (2) geographic diversification (through entries into different
countries). This chapter focuses on acquisitions. After developing a comprehensive model
for diversification that draws on the strategy tripod, we will look closely at acquisitions:
their forms, the motivations for them, and what to expect from them.
Purpose and Perspectives of Chapter 10
Multinational enterprises (MNEs) such as McDonald’s must strategically manage growth
around the world so that they can be successful both locally and internationally. Deciding
on and implementing strategy requires that MNEs learn country tastes, global trends, and
market transitions in order to improve the odds for better innovations. This chapter dives
into these issues, focusing on relatively large MNEs. Part of the discussion includes the
crucial relationship between four strategies and four structures. As with previous chapters,
we present a comprehensive model, drawing from the strategy tripod. In a section on
worldwide learning, innovation, and knowledge management, we consider tacit knowledge
and the inflow and outflow of knowledge.
CHAPTERS 7, 9 & 10 DISCUSSION
1. Some argue that at a 30%–70% failure rate (depending on different studies),
strategic alliances and networks have a strikingly high failure rate and that firms
need to scale down their alliance and network activities. Others suggest that this
failure rate is not particularly higher than the failure rate of new entrepreneurial
start-ups, new products launched, and M&As. Therefore, such a failure rate is not
of grave concern. What do you think?
As with so much in strategy, the situation and other conditions matter a great deal.
Although fraught with problems, strategic alliances have proven useful for the
exploration of new opportunities. These opportunities include the development of new
products, working with firms with complementary assets or otherwise unusual
resources, and exploring an opportunity in a new geographic market. The alliance can
allow the firm to make a number of small “bets” in different areas, while figuring out
whether they can work with that firm or learn the new product-market. In addition, an
alliance may be essential in developing markets where the alliance partner’s ties with
the central (or more likely local) government officials will be indispensable to doing
business in that region.
2. What is an example of one of the longest-running alliance relationship?
Hewlett-Packard and Disney share one of the longest-running alliances. It began in the
year 1938, when Disney bough eight oscillators to use in the sound design of its
ambitious animated film Fantasia. Disney has relied on HP technology for various
projects: feature film development and wireless translation devices for the hearingimpaired and non-English speaking people. In 2002, Disney wanted to develop and
build a virtual attraction called Mission: SPACE. HP’s IT architecture, servers and
workstations were used to create Disney’s most technologically advanced attraction.
The secret behind the longevity of HP and Disney lies in the fact that HP has always
delivered and enabled Disney to translate its vision into reality. This is an example of a
successful collaboration between creative designers and technical engineers.
3. What are the similarities and differences between human marriages and
interfirm alliances? How can the lessons behind the success and failure of human
marriages enhance the odds of alliance success?
As much as alliances represent a strategic and economic arrangement, they also
constitute a social, psychological, and emotional phenomenon: words such as
“courtship,” “marriage,” and “divorce” often surface. Given that the interests of partner
firms do not fully overlap and are often in conflict, managers involved in alliances live a
precarious existence, trying to represent the interests of their respective firms while
attempting to make the complex relationship work, just as in marriage. The logic behind
an alliance (human marriages and interfirm alliances) is to collaborate and create a
potentially new and exciting life/enterprise. In the case of a firm, it would be to enter
new markets and access new customers. In the case of a marriage, it would also be
acquiring new relatives and friends, though that is not, of course, the primary purpose
of marriage. Similar to the institutions governing human marriages, formal regulations
and contracts can only govern a small (although important) portion of alliance/network
behavior, and the success and failure of such relationships, to a large degree, depend
on the day-in-day-out interaction between partners influenced by informal norms and
cognitions. Given the difficulty for individuals in unhappy marriages to improve their
relationships, it is not surprising that firms in unsuccessful alliances (for whatever
reason) often find it exceedingly challenging, if not impossible, to organize and manage
their interfirm relationships better.
The similarities between the two are:
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Selecting a partner to suit your needs. You need to think of a long-term alliance and
you need to do some preliminary research or investigation to ensure that there is
high probability of this relationship working.
Drafting an agreement to lay the foundation of the relationship. Clearly define what
is expected from this arrangement.
Making it work to understand that it is difficult to work together and the differences
have to be ironed out.
Sharing ideas to treat your partner as an equal and not to keep secrets from them.
Putting it in writing to ensure that you have common goals and objectives.
There are probably more similarities than differences. One might argue an interfirm
alliance is a complex collaborative effort not unlike a marriage.
4. Product-unrelated diversification (conglomeration) is widely discredited in
developed economies. However, in some cases it still seems to add value in
emerging economies—think of Tata and Wanda. Is this interest in conglomeration
likely to hold or decrease in emerging
