international strategic alliances international business, 5th edition chapter 13 Chapter Objectives • Compare joint ventures and other forms of strategic alliances • Characterize the benefits of strategic alliances • Describe the scope of strategic alliances 13-2 Chapter Objectives • Discuss the forms of management used for strategic alliances • Identify the limitations of strategic alliances 13-3 Strategic Alliances A strategic alliance is a business arrangement whereby two or more firms choose to cooperate for their mutual benefit 13-4 Joint Venture A joint venture (JV) is a special type of strategic alliance in which two or more firms join together to create a new business entity that is legally separate and distinct from its parents 13-5 Figure 13.1 Benefits of Strategic Alliances Potential Benefits of Strategic Alliances Ease of Market Entry 13-6 Shared Risk Shared Synergy Knowledge and and Competitive Expertise Advantage Map 13.1 Namibia and Joint Ventures 13-7 Scope of Strategic Alliances • Significant variation – Comprehensive alliance – Narrowly defined alliance • Degree of collaboration depends upon basic goals of each partner 13-8 Figure 13.2 The Scope of Strategic Alliances 13-9 Types of Functional Alliances Production alliances Marketing alliances Financial alliances R&D alliances 13-10 Issues in the Implementation of Strategic Alliances Partner selection Form of ownership 13-11 Joint management Factors Affecting Partner Selection 13-12 Compatibility Nature of partner services Relative safeness Learning potential Approaches to Joint Management Shared management agreements Assigned arrangements Delegated arrangements 13-13 Figure 13.3a Shared Management Agreement Partner Partner Both parties are active participants Alliance 13-14 Figure 13.3b Assigned Arrangement Partner Partner One partner takes primary responsibility Alliance 13-15 Figure 13.3c Delegated Arrangement Partner Partner Joint venture 13-16 Figure 13.4 Pitfalls of Strategic Alliances Changing circumstances Incompatibility of partners Pitfalls Loss of autonomy Access to information Distribution of earnings 13-17 ... arrangements Delegated arrangements 13- 13 Figure 13. 3a Shared Management Agreement Partner Partner Both parties are active participants Alliance 13- 14 Figure 13. 3b Assigned Arrangement Partner... of each partner 13- 8 Figure 13. 2 The Scope of Strategic Alliances 13- 9 Types of Functional Alliances Production alliances Marketing alliances Financial alliances R&D alliances 13- 10 Issues in... new business entity that is legally separate and distinct from its parents 13- 5 Figure 13. 1 Benefits of Strategic Alliances Potential Benefits of Strategic Alliances Ease of Market Entry 13- 6