Exam 7: Global Alliances and Strategy Implementation

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Lei is quoted in the text, "Perhaps the single greatest impediment managers face when seeking to learn or renew sources of competitive advantage is to realize that cooperation can represent another form of unintended competition, particularly to shape and apply new skills to future products and businesses." The dual nature of strategic alliances provides an explanation for why cross-border alliances have difficulty in collaborating.This is especially true in competitively sensitive areas.The result is mistrust and secrecy which then undermines the alliance.Managers may fear that they will lose the competitive advantage of the firm's proprietary technology or the specific skills that their personnel possess.The cumulative learning that a partner attains through the alliance could potentially be applied to other products or even other industries that are beyond the scope of the alliance, and therefore would hold no benefit to the partner holding the original knowledge.As noted by Lei, the Japanese, in fact have far "out-learned" their U.S.allies in developing and applying new technologies to other uses.Examples of foreign firms that have been able to appropriate knowledge from an alliance are in the power-equipment industry (e.g., Westinghouse-Mitsubishi), the office equipment industry (Kodak-Canon), and in the consumer electronics industry (General Electric-Samsung), (RCA, Sony).

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International joint venture control is defined as the process through which a parent company ensures that the way a joint venture is managed conforms to its own interest.Most of a firm's objectives can be achieved by careful attention to control features at the outset of the joint venture, such as the choice of a partner, the establishment of a strategic fit, and the design of the IJV organization.IJV control is an important issue because at least one parent is headquartered outside the venture's country of operations thus requiring unique measures of control.Lack of attention to specific control requisites of IJVs can limit the parent company's ability to efficiently utilize its resources, coordinate its activities, and implement its strategy.