Global Alliances and Strategy Implementation - Essay Example

Running Head: Discussion Questions (4) Chapter1: Global Alliances and Strategy Implementation Discuss the problems inherent in developing a cooperative alliance to enhance competitive advantage, but also incurring the risk of developing a new competitor. “Strategic alliances are partnerships between two or more firms which decide they can better pursue their mutual goals by combining their resources – financial, managerial, technological – as well as their existing distinctive competitive advantages”. (Blanchard 2006, 3). The problems inherent in developing cooperative alliances are as follows: (1) the complexity of forming linkages increases the tendency for one partner being taken over or swallowed up by the other; (2) learning new technological breakthroughs become a race for partners thereby facilitating the formation of a new form on competition; (3) creation of mistrust and secrecy in areas of sensitivity even among cross border allies; (4) “in addition to potential loss of technology and knowledge-skill base, other areas of incompatibility often arise, such as conflicting strategic goals and objectives, cultural clashes, and disputes over management and control systems.” (Blancard 2006, 13) 2. Explain what is necessary for companies to successfully implement a global sourcing strategy. For companies to implement a global sourcing strategy successfully, the following guidelines would provide assistance, to wit: (1) “choose a partner with compatible strategic goals and objectives; (2) seek alliances where complementary skills, products, and markets will result; (3) work out with the partner how you will each deal with proprietary technology or competitively sensitive information; and (4) recognize that most alliances last only a few years and will probably break up one a partner feels it has incorporated the skills and information it needs to go it alone” (Blanchard 2006, 16). As noted, the success of implementing a global sourcing strategy lies in compatibility of goals, skills, resources, as well utilization of technology and delicate information for the allies’ operations. There is a need for constant monitoring of these elements to ensure that all variables remain compatible at the span of the companies’ global transactions. 3. Explain how the host government may affect strategic implementation in an alliance or another form of entry strategy. Host governments provide governing rules and regulations which global corporations must comply with. At times, host governments do not share the same interests with global corporations in forming alliances within their national domain. Complicating the matter in the implementation of strategic alliance is the status of political structure currently practiced by the host government. The political risks should be incorporated in implementation of strategies which would influence and affect the operations of the allies. Any risk associated with the political structure would have a drastic influence on the implementation of strategies of the allies. In countries exhibiting political turmoil with the presence of terrorists or civil unrest, the operations of the allies would be endangered and appropriate measures and strategies must be implemented to address the threatening events from the host government. 4. How might the variable of national culture affect strategic implantation? Martires & Fule (2000) defined organizational culture as the atmosphere existing within an organization resulting from its various components like mission, goals, structures, resources, technology, relationships and clientele. Managing corporate culture is a skill which every global corporation should learn since culture change is a complex and long process involving coordinated efforts by the head office which is very visible to host branches. More so, global corporations must recognize that national culture define systems and processes differently. According to the Compendium of Cultural Policies and Trends in Europe (2009), “the national understanding of culture is based upon a high esteem for its fundamental social and ethical role.” Any global corporation seeking strategic alliance in another culture should incorporate the values, norms, beliefs of the host country for successful integration of their strategies. While many practitioners and academicians aver that management theories and principles are similar throughout the world, their application varies from one country to another due to varied cultural systems. Others observe that cultural differences make it inappropriate to take management theories and practices from the cultures in which they were developed and apply them to another culture. Chapter2: Organization Structure and Control System 1.What variables have to be considered in designing the organizational structure for international operations? How do these variables interact, and which do you think are most important? In designing the organizational structure for international operations, the structure should meet both the strategies of the home office and the requirements of the local market. As such, the structure should be “contingency based, taking into account the variables of that particular system at that specific point in time.” The most important variables to consider are the firm’s strategy, size, technology, and environment of those countries in which the country operates. In addition, other relevant variables that affect the company’s operations are: geographic dispersion, time differences, language, culture and business practices. These could actually be classified according to resources (man, materials and market), the processes, the controls and incentives and the culture of the organization as well as that of the host country. These variables interact consistently to ensure that the global company maximizes the utilization of its resources and assure its profitability. Thereby, each and every component or variable is important in defining the success of the firm’s international operations. However, the most critical and relevant variable in the design of the organizational structure is its people or human resources since they are the ones directly involved in the company’s day-to-day operations. 2. Explain the need for an MNC to “be global and act local.” How can a firm design its organization to enable this? Multinational corporations need to be global and act local in terms of creating their strategies for treating the world as one market but recognizing that they should utilize a standardized or local approach to products and markets. Recognition must be made that the primary operating structure is geographic or local in nature. All subsequent local markets eventually report to a centralized office which oversees the global aspects of the corporation, areas in technology, finance, marketing, human resources, and others. A famous company employing this philosophy is Procter & Gamble. It designed its organization utilizing a “Four Pillars” structure: Global Business Units (building major global brands), Market Development Organizations (building local understanding for marketing campaigns), Global Business Services (providing business technology and services), and Corporate Functions (maintaining their place as a market leader). By incorporating both global and local aspects in a company’s strategy, the philosophy of being global and acting local is conformed. (Chapter 8: Organizational Structure and Control Systems 10) 3.What is a transnational organization? Since many large MNCs are moving toward this format, it is likely that you could at some point be working within this structure. How do you feel about it? Transnational organizations exhibit the capability to “manage across national boundaries, retaining local flexibility while achieving global integration. This involves lateral communication across networks of units and alliances rather than in a hierarchy”. (Chapter 8: Organizational Structure and Control Systems 13) This form emerged from technological development accorded by computers, facsimile machines, internet, teleconferencing, and others. Given that this is the thrust of MNCs, I can envision myself working in this structure. As specified, transnational organizations’ location of its headquarters is irrelevant due to the accessibility and availability of resources accorded by technological breakthroughs. This is a welcome development since it would facilitate business transactions regardless of the locations of an employee or colleague is in. 4. As an international manager, what would make you suggest restructuring your firm? What other means of direct and indirect monitoring systems do you suggest? As an international manager, restructuring would be suggested under the following areas: (1) when there are drastic changes in goals, strategies, scope of operations; (2) when there are conflicts among divisions, subsidiaries, personnel; and (3) overlapping of responsibilities, among others. Under direct monitoring systems, the following means could be utilized: “design of appropriate structures; use of effective staffing practices; visits by head-office personnel and regular meetings”. (Blanchard, 2006, 26) For indirect monitoring, on the other hand, the following means are suggested: “sales quotas; budgets; other financial tools; and feedback reports” (Blanchard, 2006, 27). It should be noted however that the success of the monitoring tools depend on a variety of factors such as the type and compatibility of the management information systems applied in global corporations and the comparability of performance data across countries involved. References Blanchard, K. (2006). Chapter 7: Global Alliances and Strategy Implementation. Prentice Hall. Retrieved 03 October 2009 from Blancard, K. (2006). Chapter 8: Organizational Structure and Control Systems. Prentice Hall. Retrieved 03 October 2009 from Chapter 8: Organizational Structure and Control Systems. Retrieved 03 October 2009 From Compendium of Cultural Policies and Trends in Europe. (2009). National definition of culture. Retrieved 03 October 2009 from Martires, C.R. & Fule, G.S. (2000). Management of Human Behavior in Organizations. National Bookstore. Philippines. Read More