The Various Issues That around the World Has to Consider in Establishing an Alliance - Case Study Example

Case Study The various issues that Around the World has to consider in establishing an alliance in this case are (Shenkar & Reuer, 2006 Access toLocal Market: the alliance company must be an important player and must have major market share. Local Market Image: Local market image of the alliance company. Channel Access: Access of the alliance company to the various channels required for the business. Local Laws: Local laws with respect to formation of alliances need to be considered. Competency and Value of the Alliance Company: Competency of the alliance company and the value that it adds to the alliance is key to a successful alliance. The alliance must take the form of an international joint venture. International joint venture is an economically and legally separate organizational entity that has been created by 2 or more parent organizations with the objective to achieve strategic objectives. Parent companies invest both financial and other resources at disposal into the alliance (Schuler et al., 2004). A joint venture alliance has various advantages and is best suited in the current case. The major challenges for Around the World in establishing an international joint venture is shareholdings, human resource management, skills sharing and knowledge transfers. These challenges can be overcome by effective and early planning. Share holdings and control structures of the partners need to be established and agreed upon before the alliance materializes. There are various ways to effectively manage the HR issues and, the knowledge and skill management issues. A four stage model of formation, development, implementation and advancement can be used to effectively to handle the challenges (Schuler & Tarique, 2004). Case Study 2 Following are the discussion points for the three questions at the end of the case study: 1. Aditya Birla Group adopted a growth strategy that made great business sense. The group exited from any business that did not offer them greater presence in the global market or the business which had registered losses. The group diversified and adopted businesses whose operations gave the group global presence and lead to acquiring of competencies in the market. The company built a business portfolio which is not limited to a single industry. The portfolio demonstrates the group’s ability to run different businesses efficiently and also has contributed to various revenue generating sources which has made the group immune to economic downturn in certain market or industries. 2. Various initiatives were taken by the group under the leadership of Kumar Mangalam Birla which has contributed to the group’s success. Gyanodaya was a great initiative which helped in the transfer of best practices. Appointment of new managers gave rise to a new dimension in the group’s leadership. Continuous learning and developing of human resources was one of main motive behind many of the initiatives. 3. Aditya Birla Group has addressed its second part of the mission – “Indian Values” by actively involving and contributing to the development of the country. It is presently working in 3700 villages. It is concentrating on health care, sustainable livelihood, infrastructure, education, social causes, etc through its Aditya Birla Centre for Community Initiatives and Rural Development. It is running around 18 hospitals and 14 schools. Case Study 3 In order for Aston Restaurant to extend their business to China, they have to consider various factors and the two important factors are the market and the localization. Market No two markets are same and there are numerous differences that have to be looked into. The following various issues/factors have to be addressed or considered for Aston to successfully expand to China: Language: Language is a primary barrier here and Aston has to ensure that language i.e., communication must not hinder the business. Chinese is the primary language used in China. Customs and Practices: The customs and practices in China are different from those in other countries. In order to attract the customers, the native customs and practices need to be respected, followed and integrated into the strategy. Political factors: legal and political factors in a market are vital for the success of a business. Operational costs, requirements of supply chain, government policies, legislation, competition, employment, administrative barriers, etc in China need to be considered and the expansion strategy must be designed as per the above. China being a communist nation there can be various differences if laws and legislation, and foreign investment is strictly monitored. Political authoritarianism in the country needs to be considered seriously (Lunn et al., 2006). Economic Factors: China has seen rapid economic growth in the recent years. The country is one of the leading economies in the world. The various economic issues that need to be addressed are currency conversions, the banking system which is owned by the state, the rural and urban income gap, etc. Social and Cultural Factors: Chinese society believes in collectivism and this need to be considered in designing strategies. As mentioned above the customs and practices need to be studied. The eating behavior and style of Chinese population must be understood and the menu must be designed to attract the customers. Localization Localization is the process of creating or adapting a service or a product to the particular needs of a specific country or a market (Fawzy & Dworski, 2010). Hence localization is a very important for any company considering expansion to a new market. For Aston restaurants to be successful in their expansion plans to China they need to understand the local flavor and then integrate it into their business plan. Chinese food habits are a lot different from those in other countries. The Chinese customs and practices related to food are unique and different. Hence, the menu needs to be designed keeping in my mind the local flavor and taste. There is a need to carry out a detailed research to understand the customer behavior and then act accordingly. The various ethical issues in China need to be considered. Corruption in the system has been present in the China and this has caused a lot of dissatisfaction among the Chinese middle class. The various local government regulations are vital in setting up a restaurant in China. The laws and regulations is not consistent and varies across the country. Hence, the laws and regulations of the local governing body need to be considered. There are various approvals and licenses that have to be obtained before an application can be submitted to the local municipal body or the responsible body. The various critical factors that have to be considered are solid waste, sewage, discharge of smoke, the possible influence on the neighboring residents, etc. The permission of the Public Security and Environment Bureau must be obtained. The officials from respective bodies need to inspect the site before the final decision is made on getting an agreement with the landlord. Public and food hygiene licenses must be obtained before the official opening of the restaurant. Permits have to be obtained for using water and electricity. Special industry and sale of alcohol licenses have to be obtained. Even though except for a few local regulations there are no major liquor laws but licenses have to be obtained for serving liquor (Foster et al., 2008). Consumer rights, workers rights and labor standards all have gone through various changes and Aston needs to understand and be updated on these and various other policies to make the expansion plan successful (Rothlin, 2008). References Fawzy, L. & Dworski, L. (2010). Emerging Business Online: Global Markets and the Power of B2B Internet Marketing. NJ: FT Press. Foster, S., Lin-Liu, J., Owyang, S., Pham, S., Reiber, B. & Wing-sze, L. (2008). Frommers China. NJ: Wiley Publishing, Inc. Lunn, J., Lalic, M., Smith, B. & Taylor, C. (2006). A Political and Economic Introduction to China. House of Commons Library. Research Paper 06/36. Available at: http://www.parliament.uk/documents/commons/lib/research/rp2006/rp06-036.pdf. Accessd on 21st Jan, 2011. Schuler. R. & Tarique, I. (2004). Alliance Forms and HR Issues, Implications and Significance. Online. Available at: http://www.rci.rutgers.edu/~schuler/mainpages/AllianceFormsHRMNov04.pdf Accessd on 21st Jan, 2011. Schuler, R., Jackson, S. & Luo, Y. (2004). Managing Human Resources in Cross-border Alliances, New York, NY: Routledge Publishing. Shenkar, O. & Reuer, J. (2006). Handbook of strategic alliances. Thousand Oaks, CA: SAGE Publications. Rothlin, S. (2008). Business Ethics in the Chinese Context. [Online]. Available at: http://www.scu.edu/ethics/practicing/focusareas/business/china-update.html. Accessed on 21 Jan, 2011. Read More