Strategic Alliances the Right Way to Compete in the 21st Century - Assignment Example

International business management affiliation Task Task 2 Strategic alliance remains a vital component between two ormore organizations. The mutual agreement sets in to aid in mutual benefits and understanding that transform the organization’s business activities. With the escalating globalization trend, there is an urgent need for partnerships in a bid to break down the available business complexities. A strategic alliance is similar to a joint venture. From a marketing viewpoint, it remains the foundation of marketing where multinational enterprises desires to venture out and expand its business, strategic alliances comes in handy, fulfilling its intended purposes. Through such collaborative practices, there is an increase in productivity levels. Essentially, such alliances are detrimental to an organization for various reasons. First, they spur out organic growth. Such growth is not enough for an organization to achieve its stipulated mandate. It further speeds up the marketing process for the produced goods. In addition, many businesses are on the verge of embracing diversification of services and goods. No one business can fully be at the dispensation of having all-around skilled human resources. Hence, such alliances bring up elements of skills exchange. Moreover, there is an established trend of research and innovation, making the firm competitive globally. It becomes easier for the business to venture in the market, as its operational base is stronger. Advancement in technology, ICT, and transport makes the entry point easier. Venturing out in the international market may be quite a complicated and expensive process, but there is cost reduction in case of two firms. It is easier to overcome many obstacles such as hostile policies and competition. Shared knowledge and risks add up to become as strength to the firms. Task 3 Decentralized Federation Decentralized Federation applies when companies that are trying to expand in foreign countries are faced with domestic competition. Therefore, they require coming up with multinational strategies with a decentralized federation. Therefore, the requirement to form local production facilities, and to ensure that this local unit becomes increasingly independent. The internal culture of this organization should be able to embrace personal relations rather than formal structures, and economic controls more than technical/operational details. These local units have more functioning independence and strategic freedoms from their headquarters, and they are managed as a collection of an offshore investment instead of a single worldwide business. Coordinated Federation In Coordinated Federation, the headquarters provide formal system controls such as budgeting, planning, imitating the parent corporation administrative systems, and companies delivered mainly information flows back to the HQs in technology systems, processes, and products. Companies embracing coordinated federation tend to feel as if they are not being awarded the required respect, in spite of the amount of duty they managed. They are just treated as extensions of the headquarters, and they are subject to the headquarters demands (OReilly, Matt & McCaw, 2014). Centralized hub Centralized hub is where the competitive strategy emphasized on the quality assurance and cost advantages and needed a tight central control of product manufacturing, procurement, and development. For the centralized hub, the headquarters maintained simple and tight controls in major strategic decisions made centrally, and companies mostly managed the movement of goods. Transnational strategy Organizations that are competing in the international basis need to embrace the transnational strategy. Through transnational strategy, the companies will be able to balance the authority from the central business units and offices, and will be able to accommodate preferences and tastes of the local markets they are operating in, among others. This is because this strategy combines both the elements of multi-domestic and global strategies. Task 4 Multinational Enterprises They are organizations whose headquarters are situated in one state while their operations are spread in various other countries of interest. For Instance, Nestle is a Swiss multinational food and beverage organization, whose headquarters are located in Vevey. Many multinational enterprise organizations outsource raw materials from their preferred sources to maintain their quality, while sourcing for local cheap labor in the states that they choose to invest (Rugman & Brain, 2003). The following are some of the common characteristics of Multinational Enterprises that separates them from other business setups. Almost 90% of all Multinational enterprises draw on a common pool of natural and manmade resources. These resources comprise of Assets (Financial and Non-financial), company logos and trademarks, Patents, royalties and information (Tolentino, 2000). Common big banks such as HSBC and Standard Chartered Bank have similar logos in all their branches. Their company logos are also identical. Global environmental laws govern multinational environmental partially. Therefore, these organizations are always responsive to numerous environmental legislations that seek to protect the environment. Multinational companies such as Shell and BP are governed by UNCLOS and MARPOL (1992 MARPOL amendments to come into effect, 1995) that seeks to protect marine life from oil spills and environmental damages. Multinational corporations link many business establishments and affiliates together, especially individuals with a common business strategic vision and goal. Because of serving a global market, multinational enterprises are highly efficient (Nguyen, 2011). They employ the use of advanced technologies to mechanize and reduce wastages in their lines of production. These companies additionally engage in many research activities. Multinational enterprises in the medical industry and agriculture fall under this category. A good example is GlaxoSmithKline Corporation. Multinational enterprise organizations have a wide reach of their global markets. As a result, they engage in marketing drives and promotions of their products on a wider scale than other smaller companies do. Their distribution networks are well structured, with extensive investments to support distribution and marketing strategies. Courier companies such as DHL fall under these category. Different Multinational corporations have different organizational structures. However, they have a common characteristic in the ownership and the flow of capital. Most multinational enterprises enter into partnerships and mergers with other affiliates in the host countries, with the multinationals taking a bigger share of the ownership. Therefore, ownership remains with these companies, in both parent and host countries. Capital funding is planned centrally from the parent country. In addition, they control systems of operations and the company trademarks. This scenario is common with banks. Multinational enterprises additionally transfer knowledge and expertise in to the smaller host countries. Multinationals tend to operate on a local and a global budget, focusing their operations on the global demand, unlike local companies, who target local demand. Task 5 One of the characteristics of Responsive MNE business model is that it is responsive and sensitive to the needs of the entire immediate stakeholders (Reimann, Ehrgott, Kaufmann & Carter 2012). Examples of firms that have adopted the responsive approach include Heineken and Starbucks. In particular, Heineken has taken a responsive approach in addressing the devastating effect of AIDS in developing countries by providing anti-retroviral drugs to thousands of Africans suffering from the disorder (Pelc, 2012). Some MNEs adapts transformative model, which goes beyond commercial links with their customers and provides their services and products to those who most desperately need them irrespective, of their potential to pay. In addition, those MNEs who adopts transformative model commit to leading initiatives to bring life-improving transformations to their home countries (Pelc, 2012). Private individuals and their foundations have taken a leading role in spearheading transformative initiatives. Examples of these individuals and their foundations include Bill Gates, Bill Clinton and George Soros. They are using funds derived from their global companies to address some of the biggest challenges such as education, poverty and health in developing countries. Transactional MNEs employ a method that tends to be no oppressive and legally compliant while exploitive MNEs adopts a method that is oppressive and not legally compliant in its emerging market dealings (Pelc, 2012). In particular, transactional MNEs respects the law and their behavior tend to be based on transactional attitude. Majority of MNEs who have adopted transactional model tend to make minor service and product alterations in order to meet the preferences and needs of the local customers. Examples of transactional MNEs include KFC and McDonalds while examples of exploitive MNEs encompass Wal-Mart and Nestle. Based on the analysis of the four models, it is the opinion of this paper is that both transformative and transactional models serve MNEs long-term interests. References Gonzalez, M. (2001). Strategic Alliances the Right Way to Compete In the 21st Century. Ivey Business Journal, 66(1), 47. OReilly, F. L., Matt, J., & McCaw, W. P. (2014). Supervisor's Interactive Model of Organizational Relationships. NASSP Bulletin, 98(3), 185-197. 1992 MARPOL amendments to come into effect. (1995). Marine Pollution Bulletin, 30(9), 579. doi:10.1016/0025-326x(95)90280-o Nguyen, Q. (2011). The empirical literature on multinational enterprises, subsidiaries and performance. Multinational Business Review, 19(1), 47-64. doi:10.1108/15253831111126749 Pelc, K.(2012). Changing role of Global Companies. New York: McGraw-Hill Irwin Reimann, F., Ehrgott, M., Kaufmann, L., & Carter, C.R. (2012). Local stakeholders and local legitimacy: MNEs’ social strategies in emerging economies. Journal of International Management, 18, 1-17. Rugman, A., & Brain, C. (2003). Multinational Enterprises Are Regional, Not Global. Multinational Business Review, 11(1), 3-12. doi:10.1108/1525383x200300001 Tolentino, P. (2000). Multinational corporations. London: Routledge. Read More