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An Analysis of the Role of Cultural Differences in Creating Issues for Strategic Alliances: An Assessment of the Alternative Approaches in Dealing with these Cultural Problems Background Strategic alliances and international joint ventures always show promise of providing better opportunities and results for the parties undertaking them…
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Download file to see previous pages John and Gilles (1996) cite the case of the 1990 merger of the French-owned Renault and Swedish-owned Volvo which ended up in a disaster. The shareholders of Volvo got very upset about the happenings and trends and led to a revolt which resulted in Volvo abandoning merger talks in December 1993 (John and Gilles, 1996: 255). In another twist, the Dutch-Belgium banking merger collapsed in 1989 and this led to several losses in rebuilding (Cartwright and Cooper, 2012). Clearly, these two incidents show that mergers of businesses from two national jurisdictions have some fundamental problems. In trying to explain these issues, Arns identify that before these mergers and strategic alliances can be carried out, there is the need to delineate priorities, goals and motives before these joint legal activities can be carried out (2005). These adjustments come with major structural problems which are sometimes never resolved. In other situations, there are major cultural differences which fuel the dissatisfactions of the key players. These cultural disparities are usually at the corporate and national levels (Arns, 2005). Another theory that explains the collapses of mergers and strategic alliances is that these alliances are often due to economic challenges and scarcity (Pahl and Richter, 2009). This induces businesses with extremely different cultural views to come together to attain given ends. These businesses are so different that they work together and achieve the economic goals. Once those goals are attained, the businesses become sensitive to their cultural differences and this leads to major tensions which often leads to the collapse of mergers. In all these situations, it is apparent that cultural differences play some kind of role in the break up of strategic alliances, joint ventures and mergers. This means that culture is very important and vital in these things. Research Problem This paper sets out to identify the main roots and actual effects of cultural differences in the break up of strategic alliances. In this situation, there will be the need to identify the role of culture in strategic alliances and similar ventures. Also, if this is identified, it is necessary to find ways of effectively dealing with cultural situations and problems to provide results that would enable strategic alliances to thrive. Aims and Objectives The aim of the paper is to “identify the extent to which cultural variations contribute to problems in strategic alliances and examination of the best methods of dealing these cultural problems in strategic alliances”. In attaining this end, the following objectives will be explored: 1. The definition of the key concepts and ideas that intervene with culture in strategic alliances. 2. An examination of how these key ideas and concepts in culture affect strategic alliances. 3. Identification of the key approaches to dealing with cultural problems in strategic alliances. 4. An evaluation of the effectiveness of these alternative approaches in dealing with cultural problems through the analysis of three practical cases of strategic alliances. Literature Review This section of the report would examine key issues and pointers that are necessary to attain a meaningful understanding of the ideas and concepts that are being discussed in this project. The section would draw on ideas and concepts that define and describe the key elements and aspects of the paper ...Download file to see next pagesRead More
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