Discuss the Motivation for International Strategic Alliances

deal the Motivation for International strategicalal AlliancesDiscuss the want for worldwideist strategical conjunctionsABSTRACTTo establish traditional supranational business in the trade, businessmen do apply different strategies and maven of the most common and emerging strategies that atomic number 18 being utilise presently is the worldwide strategic compact. To study the motivation of international strategic coalescency, it has been feature to systematically define the circumstance motive. This idea argues those studies of motivation of international strategic alliance, their advantages and disadvantages and how they ar becoming beneficial in the ball-shaped commercialize place.This paper is an initial step to understand the definition of motivation in equipment casualty of the international strategic alliance by using the substantials that have use of goods and functiond this strategy.INTRODUCTIONAn alliance discharge be defined as a business to busi ness collaboration. In an alliance two or more than companies agree to fail to startleher to achieve a common intention while non losing their individuality.Strategic alliance helps the two parties to acquire the antonymous strengths. Companies form alliances for colligation merchandising, juncture sales or distribution, spliff production, foundation collaboration, technology licensing and research and development. Strategic alliances have different forms, Contractual (non-equity- based) alliances (Alliances which atomic number 18 based on contracts and which do not involve the sacramental manduction of equity), impartiality-based alliances (Strategic alliances which involves the use of equity), Cross- comp onentholding (Both partners invest in each some other). ( Peng Mike W. Global Strategic Management, uphold Edition, page 219)One form of Equity-based strategic alliances is the joint endanger. The formation of the alliance is rich and fragmented. One of the main reasons tooshie the collaboration is to gain the warlike advantages. harmonize to Williamson Intermediate asset specificity and low uncertainty are conditions that may lead to a preference for hybrid forms of g all overnance structure over twain arms length transactions and internalization (Williamson, 1991).Increasing the strategic alliances is one of the fastest trends in the business today and it is becoming an prerequisite driver to grow for every industry. One of the main goals to form a human relationship with other companies is strategic alliance where they combine the skills and expertise of the both companies and gain the cooperative supposition. Then they enter the international commercialise and share their costs.MOTIVATION for STRATEGIC ALLIANCES in the INTERNATIONAL MARKET PLACEThe increment international tradeing is becoming the norm in this time and these partnerships are leveraging the growth through alliances with international partners, where the both c ompanies merge and gain the competitive advantage. They do it by licensing agreements, cross shareholder deals, cooperative location and joint ventures. Rather than taking risks and wasting their time and investing a big amount on of money for gaining this competitive advantage in business, they are entering the international markets by finding an appropriate alliance which is operating in the same market in some other country. So they enter the market that they desire to enter and the main reason behind this is to share the knowledge, skills and expertise and also to gain the marketing advantage in the world. And its becoming other strategy to defeat the monopoly business in the global business within fraction of time, for example collaboration of Sony and Ericson.In the bring in of traditional industry, firms are independent and empha size of it on maximizing their induce performance. As competition in the market shrinks the profits of firms, they do not rival always against one another. For instance, in 1983 Toyota and GM establish a horizontal alliance on a limited basis to progress to different targets of manufacturing small cars in the US. The intention of Toyota was to gain knowledge of trail business in the Ameri merchantman market. On the other hand, Gms objective was to retard manufacturing small cars profitably.Sometimes high entry barriers discourage individual companies. In that place setting companies can build strategic alliances and networks to con this fence.Firms convert the relationship with suppliers to a mutual assistance and knowledge sharing, previously which was based on hard-bargaining. This liaison is known as upstream vertical alliance. In this cuticle companies do not consider suppliers as threats.In the same way, now, downstream vertical alliances can bind the central firms, buyers and distributors together quite than treating them as possible threats.The market potential pushes the firms on alternative products to e stablish strategic alliance and networks to materialize the commercial prospective of tonic products.According to Resource-based reflexion firms can get benefited from the alliance through value creation.First, alliances may cut out costs, risks and uncertainties. foster, Alliances allow firms to tap complementary assets of partners.Third, alliances facilitate opportunities to learn from partners.Finally, real extract an option is the right, but not obligation, to accede whatever action in the afterlife.Real option gives the opportunity to the firms when they are not sure whether they go out do encyclopaedism or merge. The companies just need to pay a tiny portion of their assets (known as deposit). Through this temporary alliance they leave behind judge its future profitability. If they are not satisfied, they can easily leave. in that respect is no obligation to go on with this alliance or take further actions.institutional based consideration includes two categories F ormal Institutional based consideration and Informal Institutional based consideration.According to Peng Strategic alliances and networks function within formal regulatory and court-ordered frameworks. In some countries, Governments impose restriction on Whole Owned Subsidiaries. In that circumstance international firms have only one option, which is, to stag an alliance with a local firm in order to enter that market.Peng says Informal institutions burden on collective norms supported by a normative and cognitive pillar. When a firm decides to move on its own, it faces pressures and criticisms from peer, analysts, investors, and the media. In that situation firms make collaboration with other firms to enhance or protect its image in the market place.The firms do choose the target market they want to enter. subsequently choosing the target market they come up with a strategic intention which go forth suit in the international market. They use all resources of both companies to exploit the existing resources and explore the new opportunities the main concern for this developing is to increase the productivity and efficiency using the current employed enceinte and assets thought standards.When the both companies are big in size their integrating level is also high which, vise versa, makes the higher level the power point of control. The difference between the integrating and degree of control is making motivation for forming this strategic alliance.The ADVANTAGES of STRATEGIC ALLIANCEMany start-up companies do focus on emerging into the market and gaining a competitive advantage in the international market to beat the monopoly business rough the world for the same products and present tense it is becoming the most useful strategy to gain this competitive advantage. By which a firm can enter the target market faster and with less risk on the investment.Businesses use strategic alliances toscope and bucket along the business processachieve advantage s of scale in international marketincrease market penetration among other companiesincrease the competitiveness in domestic and global marketsenhance product development by sharing the skills, knowledge, technologydevelop new business opportunities through new products and services and make it more competitive in the world market puff up market development fastincrease exportsdiversifycreate new businessesgain completive advantage in costdiversification into new markets amend cash flowAbility to move quicklyThe motivation of forming the international strategy varies from one country to another country.The main focuses of the join venture of the companies are to represent the companies in the various countries. just now as the age passed the definition has changed because of the activities which became more prevalent. Because the international market the alliance can express to the company in a relative advantage in size or by the size which makes the process to go faster or in ot her words it provides compliments to the areas which they are lacking.The motive behind increasing the international strategic alliance is not only gaining profit. The other factor which motive them are thecompetition among the competitorsthe fast changing market placeindustry convergenceFor an example an alliance between Sony (which is Japanese company, it was an electronic consumer company) Ericson (a Swedish telecommunication company) both lusus naturae companies planned to get an advantage in production and development which will prove their marketing skills. So once the joint venture is done with a legal manner it is similar in nature to a partial acquisition in consideration for shares. Because this combination has created the transaction, combining the relative advantages of both parties and ties their future together. They stopped making their own phones. They started to share their expertise and they have a research development teams in United States, Sweden, China, Japan , India, Germany, and the United Kingdom. The both companies were advantageous on the first year but they had to face huge way out because of lack of investment and strategic plan. Once they have injected the money into their joint venture and came up with new idea which was to launch the built-in-digital camera and with high features they started to enter to the market back but it still were a huge loses for them. So having the same strategic plan this joint venture did not work. They were struggling for the first three years. scarce walkman phones make them successful and made the 4th position in the world again.So here it proves that the giant companies do merge to gain competitive advantage but it is not always threat to the other companies which are already leading. It totally depends on the strategy they follow and implement.The DISADVANTAGES of STRATEGIC ALLAINCEAlliances are risky in term of cost, the reason is not due to cash being involved with another company and its n ot being in the companys hands, but it is due to returns from which they will get.First of all the company is to go throw the join venture which involves the investment. When a proper set of contracts, various transfer prices and incentive schemes from the partners to the joint alliance resolve most conflicts, most of the joint venture manages to all told avoid conflicts between its respective parties.Managing the managerial position of both companies and firmness the possible conflict from the both parties due to the location and other factors of international market,Financial blocking is one of the major disadvantages in the international strategic alliance. Because most of the companies do not want to disclose their financing operations. For example, an alliance with SonyEricsson in the area of cellular communications could reduce the likelihood of contracts with Nokia, thereby putting the company at risk that if Ericsson is weakened, so will be all the companies that depend up on it.Alliance between competitors can be risky. Firms can access to the information, technology, business strategy, and database of each other. Therefore they acquire the knowledge of another company. One firm can plan to excel other firm by achieving the knowledge and skills of other firms business tricks. And then it can tramp the other firm and may use the strategy against this firm.Strategic partners are often led by the company which is stronger in the international market. But they should come up with something unique by merging the both companies rather than starting from a start-up. But this strategy dose actually work with the every company depending on the market and company, like SonyEricsson came up with expeditious when they merge but it was a huge loss in the market . They started losing their shares rather then gaining it. And it affected the melodic phrase market. So they later on came up with cyber shoot which was the turning point of their company and also the travel walkman, which was different product then they used to launch. Because their main focus was to make competitive cell phone. But by the cyber shoot they have entered the market and now they are one of the giant companies with 4th position site in the world.Sharing profits is another disadvantage. The revenue is being carve up and goes to different country which does not help the country to bonanza up. But it dose have a great impact on itThe finality is to be made by the both parties so there are always barriers for future financing opportunities.The distraction is the main disadvantage. The top level management is to take decision on behave of the both countries so they are to keep all the time in mind intellection about their own country when ever they are making decision. The both parties do not think alike because of the distraction that they are around by the competitors.As two or more companies are joint in this alliance, the decision is to be taken jointly so the re is always a headache from the other partner. Because of the way they want take the company may not agree. To keep this mutual decision, the companies are to go through all this unexpected disappointments.ConclusionThe strategic alliance is one of the most implemented strategies in the global competitive market. And it is one of the more often than not common used strategies which have an effect in the market to boom up the economy of a country. It has created the bond between the geographical territories. Where they can share their competitive advantages and bring out new polices and products for the consumers and increase the job market in this world. The advantages for this alliance is more then the disadvantages. So peck are coming up of new policies where they can hide the disadvantages compared to the advantage. According to Pekar and Margulis The fundamental purpose of an alliance is to facilitate collaboration and varying degrees of integration between companies without necessitating a merger or an acquisition, though it can often lead to a merger or acquisition.BibliographyHill, Charles (2005), International Business Competing in the Global MarketplacePeng Mike W. 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