I mplementing

Strategy
Small Businesses,
Global Alliances,
Emerging Market Firms

Group 8 Cross Culture

 Group 8
1. Thomas Alan 141210277
2. Maritza Aurelia Hesa Purwadi 141210299
3. Kevin Mikelson Edward 012023022012
Strategic
Alliances

01
Strategic Alliances in Global
Market
Definition & Purpose: Strategic alliances are collaborative partnerships allowing companies to combine
resources to achieve shared goals, adapt to dynamic markets, and expand more quickly.

Types of Alliances: Includes joint ventures, equity partnerships, and non-equity arrangements, offering
advantages like technology access, market entry, and cost-sharing.

International Strategic Alliances (ISAs): Vital for overcoming global market challenges by reducing entry
barriers and increasing adaptability, particularly through cross-border collaborations.

M&As vs. Alliances: M&As involve full integration into a single entity, while alliances remain partnerships.
Both aim to grow operational scope but differ in structure and commitment level.

Challenges: Managing cross-cultural integration, governance, and alignment of strategic goals. Economic
downturns, such as in 2008–2009, revealed the need for flexibility in such strategies.
 Joint Ventures
Definition: JVs are strategic alliances where parent companies form a new, jointly-owned entity to
leverage shared resources, expertise, and investment.

Purpose: JVs facilitate entry into new markets, technologies, or products, often used for international
expansion by sharing costs and risks with local partners.

Types of JV Ownership:

● Majority JV: Firm holds >50% equity

● Minority JV: Firm holds <50% equity
● 50-50 JV: Equal equity and shared decision-making (e.g., Starbucks & Tata in India)

Benefits of IJVs: Access to local knowledge and regulatory insights from the local partner, combined
with global branding and technical expertise from the foreign partner.

Example Cases:

● Starbucks & Tata: Equal partnership aiding Starbucks’ market entry in India.
● Peugeot & Toyota: 50-50 IJV for cost-sharing, lean manufacturing insights, and increased
production in Europe.
Equity Strategic Alliances
Definition: Partnerships where firms mutually invest in each other’s companies, creating
shared ownership, resources, and risk, leading to closer collaboration than in non-equity
(contract-based) alliances.
Purpose: Equity alliances align strategic goals, enhance competitive advantage, and
deepen partnership commitment through financial stakes.
Example Cases:

● Heinz & Kraft: Created a leading North American food company with Heinz holding
a controlling 51% and Kraft 49%, showing how differing ownership levels affect
control.
● Chrysler & Fiat: Fiat gained a 35% stake in Chrysler to reintroduce its brands to
the U.S., supporting Chrysler’s survival plan during restructuring, with additional
U.S. and Canadian government financing.
 Non-equity Strategic
Alliances
Definition: Partnerships without shared ownership, formed via contractual
agreements.

Structure: Defined roles and contributions, allowing flexibility and lower financial
risk.
Examples:

● Ride-Hailing Industry: Uber's global competitors collaborate to expand reach

and compete without merging equity.
● Logistics and Supply Chain: UPS manages Nike’s supply chain, optimizing
operations without equity involvement.

Advantages:

● Resource, technology, and market sharing without ownership commitments.

● Structured collaboration with autonomy in decision-making.
Global Strategic Alliances
Definition: Partnerships spanning national borders, uniting companies from various countries
and industries to achieve shared strategic goals in competitive global markets.

Types of Alliances:

● Cross-National Partnerships: Firms collaborate across borders to enhance

competitive advantage (e.g., U.S. airlines in the Star Alliance for global connectivity).
● Collaborations with Governments: Alliances with foreign governments to navigate
regulations, establish market entry, and gain local support, fostering long-term growth in
politically complex regions.
● Long-Term Comprehensive Alliances: Broad collaborations for global leadership
(e.g., Airbus Industrie consortium combining expertise from multiple nations in
aerospace).
● Niche and Functional Alliances: Target specific functions like production or marketing
(e.g., Covisint electronic marketplace revolutionizing car production and distribution).

Benefits: Global strategic alliances enable resource sharing, risk reduction, enhanced market
reach, and adaptation to diverse global demands.
 Global Strategic Alliances:
Motivations and Benefits
Avoid Trade Barriers: Partnerships help bypass import restrictions.

● Example: Toyota partners with GM to produce in the U.S., avoiding quotas.

Share R&D Costs and Risks: Reduces expenses in high-cost industries.

● Example: Intel collaborates with Samsung for memory tech development.

Access Regulated Markets: Enables entry into restricted markets.

● Example: Partnerships for entry into China, Russia, and the EU.

Reduce Political Risks: Local alliances mitigate risks in new regions.

● Example: Disney’s partnership with China for Hong Kong Disneyland.

Rapid Market Entry & Synergies: Accelerates entry and tech access.

● Example: Disney enters Asia’s mobile content market through alliances.

 Challenge In Implementing
Global Alliance
Strategic alliances enable rapid market entry, access to new technologies, and
resource sharing. Technology developments have heightened the need for
alliances, especially across traditional and digital sectors (e.g., partnerships in
telecommunications and tech). Companies like Apple and Disney leverage
alliances for data analysis and regional expansion, gaining access to local
expertise, customer bases, and competitive technologies.

Challenge: Cross-border alliances often face slow implementation, cultural clashes,

and governance issues. Some alliances fail due to misaligned objectives or power
imbalances
The Role of
Strategic
Alliance
 Implementing Alliance Between
SME’s And MNC’s
Collaborative Opportunities:

Small and Medium-sized Enterprises (SMEs) can benefit from

alliances with Multinational Corporations (MNCs) by providing
unique products or local insights. MNCs often look for SMEs to
support localized innovation or expand into niche markets. For
example, collaborations between Unilever and The Kenyan
Company "Farmer's Market.

Strategies for SMEs:

To succeed, SMEs should seek partnerships that complement

MNC strengths and focus on balanced relationships to avoid being
overshadowed. SMEs can benefit from MNC resources, such as
financing, technological support, and network access, which help
SMEs scale up globally.
 Guideline For Successful Alliance
Strategic alliances can enhance corporate performance by providing access to new
resources and markets, achieving economies of scale, reducing costs, sharing risks,
and boosting flexibility. However, these partnerships can be complex and frequently
unsuccessful—around half fail—often due to poor initial partner selection or
mismanagement of the alliance. Successful alliances require effective value-creation
and value-capture strategies to optimize the benefits and avoid risks, particularly from
partners with greater bargaining power.

Value-Creation and Value-Capture Strategies

● Value-Creation involves leveraging network resources to gain new skills and

capabilities.
● Value-Capture emphasizes selecting partners carefully, avoiding direct
competitors with superior bargaining power to prevent imbalance.
Guidelines for Effective Alliance Management

1. Partner Compatibility: Choose partners with aligned strategic goals and

complementary resources to create synergies.
2. Balanced Contribution: Both partners should bring unique skills to minimize
competition within the alliance and foster a balanced relationship.
3. Protect Sensitive Information: Define clear terms for handling proprietary
technology and competitive information to build trust, supported by
contractual agreements.
4. Manage Alliance Duration: Recognize that alliances often last only a few years
and may dissolve when one partner has learned enough to operate
independently. Managers should focus on rapidly assimilating skills and
processes to maximize alliance value.
 Implementing Strategy
The strategic implementation phase, also known as functional-level strategy, transforms global alliance
plans into actionable operations. This phase is crucial as it requires the organization to establish policies,
allocate administrative roles, and create schedules that integrate the new strategy throughout the entire
company. This process is especially complex in mergers or international joint ventures (IJVs) due to the
need to merge different procedures, systems, and structures from multiple companies.

Key Elements of Successful Implementation:

1. Orchestration of Structure and Processes: For the strategy to function effectively, a cohesive system must
align with the company’s goals. This includes reviewing and, if necessary, adjusting the organizational
structure to support the strategy, ensuring seamless coordination between global locations and
headquarters.
2. Resource Allocation: Adequate allocation of resources (funds, equipment, and personnel) is critical. A
unified technological infrastructure also plays a vital role in linking diverse global operations and providing
timely data, enhancing strategic advantage.
3. Leadership: Strong leadership is essential for guiding employees and operations towards strategic goals.
Leaders need the right mix of experience and skills to implement specific strategies.
 Implementing Strategy For
SMEs
For small businesses (SMEs) entering international markets, exporting is often the first
step, but it can be challenging due to limited resources and experience. SMEs looking to
expand beyond exporting typically aim to identify a market niche that sits between larger
multinational corporations (MNCs) and local competitors, allowing them to compete
effectively.

Key Strategies for SMEs Expanding Internationally:

1. Identifying Niche Opportunities

2. Alliances With Local Partners
3. Cautious Growth Approach
 Implementing Global Sourcing
Strategy
Global sourcing involves outsourcing functions abroad for cost efficiency, but recent trends show
a shift towards (next-shoring), which emphasizes sourcing closer to demand markets. Nowadays
companies are moving from traditional offshoring due to rising labor costs overseas and growing
risks in extended supply chains. Automation and technological advancements, like the Internet of
Things, now allow firms to operate near target markets without

Guideline Implementation Steps:

1. Examine the reasons for outsourcing

2. Evaluate the best outsourcing models
3. Gain the cooperation of your management and staff
4. Consult alliance partners
5. Invest in the alliance
 Implementing Strategies For
Emerging Economy Firms
Emerging market firms often take aggressive global expansion routes to compete
with established firms, seeking resources like technology, branding, and skilled
labor. Companies such as Lenovo and Natura are examples of firms that used
acquisitions and alliances to expand into developed markets, where competition and
consumer demand drive rapid adaptation.

Emerging firms face a dilemma between achieving global reach and upgrading
capabilities. Entering developed markets is crucial for competitive growth but
requires a balance between expanding geographically and strengthening firm
competencies. This balance can determine whether a company’s international
presence is sustainable in the long term.
 Market
Analysi
s
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in case you need it 02
Challenge In
Implementing
Strategies In
Emerging
Markets
Key challenges at this point include
● Infrastructure: Poor infrastructure, supply chains, and distribution networks can make it
difficult for foreign companies to navigate, especially when compared to local companies
with established relationships and experience.
● Regulations: Complex and frequently changing regulations can be a significant barrier for
foreign companies, while local companies are more familiar with local bureaucracies.
● Personnel: Finding and retaining qualified local talent can be a challenge for foreign
companies, as local employees may prefer to work for domestic companies that are
perceived as more invested in the local market.
● Cultural differences: Understanding and adapting to local cultures and consumer
preferences is critical to success in emerging markets. Failure to do so can lead to
misunderstandings and missed business opportunities.
 Example at this point:
● IKEA: Despite its global success, IKEA takes a cautious approach to expansion, conducting
extensive research and taking years to open new stores in developing markets. This
strategy allowed them to successfully adapt to local markets and build strong customer
relationships.
● LinkedIn: In order to enter the Chinese market, LinkedIn had to compromise on freedom of
expression principles and form a partnership with a local venture capital firm. This strategy
allowed them to gain access to the Chinese market but also faced criticism from Western
users.

Taken together, these points highlight the importance of thorough research, local
partnerships, and cultural sensitivity for foreign companies looking to expand into
emerging markets.
Managing Performance In
International Joint Venture

● What is an International Joint

Venture (IJV)?
● Why are IJVs important?
● Challenges in Managing IJVs
● Key Factors for IJV Success
● Examples of IJV Success and
Failure
 What is an International Joint Venture (IJV)?
An IJV is a business arrangement where two or more companies from different countries join forces to create a new
business entity. This partnership allows them to share resources, expertise, and risks to achieve common goals.

Why are IJVs important?

● Access to new markets: IJVs can help companies enter new markets and expand their customer base.
● Shared resources: By pooling resources, IJVs can reduce costs and increase efficiency.
● Shared risk: Risks associated with new ventures are shared between partners.
● Enhanced innovation: Collaboration can lead to new ideas and innovative products.

Challenges in Managing IJVs

Managing IJVs can be complex due to various factors:

● Cultural differences: Differences in language, customs, and business practices can create misunderstandings and conflicts.
● Strategic misalignment: Partners may have different strategic goals, leading to disagreements and inefficiencies.
● Control issues: Determining the level of control each partner has over the IJV can be challenging.
● Communication barriers: Effective communication is crucial, but language and cultural differences can hinder it.
 Key Factors for IJV Success
1. Partner Selection:
○ Choose a partner with compatible goals and values.
○ Assess the partner's financial stability, technical expertise, and reputation.
○ Consider the partner's understanding of the local market and its regulatory environment.
2. Clear Strategic Goals:
○ Define clear and measurable objectives for the IJV.
○ Ensure that both partners agree on the long-term vision and short-term goals.
3. Effective Communication:
○ Establish regular communication channels between partners.
○ Use clear and concise language to avoid misunderstandings.
4. Strong Governance Structure:
○ Develop a clear governance structure that defines roles, responsibilities, and
decision-making processes.
○ Establish effective mechanisms for resolving disputes and conflicts.
5. Cultural Sensitivity:
○ Understand and respect cultural differences.
○ Develop strategies to bridge cultural gaps and promote cross-cultural understanding.
 Examples of IJV Success and Failure

Success: Starbucks' partnership with Tata Group in India has been

successful due to strong communication, mutual respect, and a shared
vision.

Failure: McDonald's has faced challenges in India due to cultural

differences, regulatory hurdles, and disputes with its local partner.
Knowledge Management In IJVs

● What is Knowledge Management in

IJVs?
● Why is Knowledge Management
Important in IJVs?
● Key Knowledge Management Processes
in IJVs
● Challenges in Knowledge Management
● Overcoming Challenges and Promoting
Knowledge Sharing
 What is Knowledge Management in IJVs?
In simple terms, knowledge management in IJVs is the process of sharing, creating, and using information and expertise
between partner companies to achieve shared goals. It's about leveraging the combined knowledge of both partners to drive
innovation, improve efficiency, and gain a competitive advantage.

Why is Knowledge Management Important in IJVs?

● Innovation: By sharing knowledge, partners can come up with new ideas and develop innovative products or services.
● Efficiency: Knowledge sharing can streamline operations and reduce costs.
● Competitive Advantage: A well-managed knowledge sharing process can give the IJV a competitive edge.

Key Knowledge Management Processes in IJVs

● Transfer: This involves sharing existing knowledge between the parent companies and the IJV.
● Transformation: This is about creating new knowledge within the IJV through research, development, and learning.
● Harvest: This involves capturing and sharing the newly created knowledge back to the parent companies.
 Challenges in Knowledge Management
● Cultural Differences: Different cultures may have different ways of thinking and working, which can hinder effective
knowledge sharing.
● Language Barriers: Language differences can make communication difficult and lead to misunderstandings.
● Intellectual Property Concerns: Protecting intellectual property rights is crucial, but it can also create barriers to
knowledge sharing.

Overcoming Challenges and Promoting Knowledge

Sharing
● Strong Leadership: Strong leadership is essential to drive knowledge sharing and create a culture of learning.
● Effective Communication: Clear and open communication channels are vital for sharing knowledge.
● Trust and Collaboration: Building trust and fostering collaboration between partners is key.
● Technology: Using technology tools can facilitate knowledge sharing and collaboration.
 Government
Influences On
Strategies
Implementation
 How Governments Influence Businesses Operating Abroad

This passage explains how governments in foreign countries (host governments) can affect the strategies and success
of companies operating there (foreign firms).

Here's how governments influence foreign businesses

● Taxes and profit repatriation: Governments set tax rates and may restrict how much profit a foreign company
can take back to its home country.
● Ownership rules: Some governments limit how much foreign ownership is allowed in certain industries.
● Labor regulations: Laws dictate things like unionization, hiring practices, and wages.
● Intellectual property: Protection of patents and copyrights varies from country to country.
 Challenges for Foreign Businesses

● Unforeseen changes: Sometimes, governments make sudden changes to policies or regulations, which can
disrupt a company's plans and hurt their business.
● Emerging markets: These markets can be especially difficult because new regulations may appear frequently,
making it hard to predict future success.

Examples
● Vodafone in India: This mobile phone company faced a surprise tax bill and a corruption
scandal after entering the Indian market.
● Foreign investors in China: China recently added restrictions on foreign investors,
making it harder for them to do business there.
● Uber in France: Uber ran into trouble with French laws and regulations, leading to
arrests and protests against the company.
Cultural Influences
On Strategies ● Understanding Cultural Differences

Implementation
● Key Cultural Factors Affecting Strategy
Implementation
● Challenges and Opportunities in
Cross-Cultural Collaboration
● Strategies for Effective Cross-Cultural
Collaboration
● CULTURAL DIFFERENCES in U.K.–
EUROPEAN ALLIANCES
● FRENCH MANAGERS COMMENT ON
THEIR ACTIVITIES IN THE UNITED
STATES
 Understanding Cultural Differences
Cultural differences can significantly impact the success of international business strategies. When companies
from different cultures collaborate, it's crucial to understand and navigate these differences to ensure smooth
operations and achieve strategic goals.

Key Cultural Factors Affecting Strategy Implementation

● Management Style: Differences in management styles, such as authoritarian vs. democratic or individualistic
vs. collectivist, can affect decision-making processes, communication, and team dynamics.
● Risk Tolerance: Cultural differences in risk tolerance can influence the types of strategies pursued, the level of
innovation, and the willingness to take on challenges.
● Time Orientation: Different cultures have varying perspectives on time, which can impact project timelines,
deadlines, and long-term planning.
● Communication Styles: Misunderstandings can arise due to differences in communication styles, such as
direct vs. indirect or formal vs. informal.
 Challenges and Opportunities in Cross-Cultural Collaboration

● Challenges:
○ Communication Barriers: Language barriers and cultural misunderstandings can hinder effective
communication.
○ Trust and Relationship Building: Establishing trust and building strong relationships can take time and effort.
○ Conflict Resolution: Resolving conflicts may be challenging due to cultural differences in negotiation and conflict
management styles.
● Opportunities:
○ Innovation: By combining different perspectives and ideas, cross-cultural collaborations can lead to innovative
solutions.
○ Market Expansion: Understanding local cultures can help companies tailor their products and services to specific
markets.
○ Competitive Advantage: Companies that successfully navigate cultural differences can gain a competitive edge.
 Strategies for Effective Cross-Cultural Collaboration

● Cultural Intelligence: Developing cultural intelligence helps individuals understand and adapt to different cultures.
● Open Communication: Clear and open communication is essential to avoid misunderstandings.
● Active Listening: Pay attention to both verbal and nonverbal cues.
● Empathy: Try to understand the perspective of others.
● Flexibility and Adaptability: Be willing to adjust to different cultural norms and practices.
● Building Relationships: Invest time in building strong relationships with partners and colleagues.

CULTURAL DIFFERENCES in U.K.– EUROPEAN ALLIANCES

● Organizational formality
● The extent of participation in decision making
● Attitude toward risk
● Systemization of decision making
● Managerial self-reliance
● Attitudes toward funding and gearing (financial leveraging)
E Commerce Impact On Strategy Implementation

The Challenge of
Global Trade

E-commerce
Enablers: A Solution
 The Challenge of Global Trade
Global trade is a complex process involving numerous stakeholders and regulations. Companies face significant challenges in ensuring
compliance, efficiency, and customer satisfaction. Some of the key challenges include:
● Regulatory Complexity: Different countries have varying customs regulations, import duties, and export controls.
● Logistics and Supply Chain: Managing the intricate logistics of global shipping, warehousing, and distribution can be daunting.
● Currency Fluctuations: Exchange rate volatility can impact pricing and profitability.
● Language and Cultural Barriers: Effective communication and understanding cultural nuances are essential for successful global
operations.

E-commerce Enablers: A Solution

To address these challenges, many companies turn to e-commerce enablers. These specialized companies provide the technology
and services needed to streamline global trade operations. Key benefits of using e-commerce enablers include:

● Simplified Processes: E-commerce enablers automate many tasks, such as order processing, customs clearance, and shipping.
● Reduced Costs: By streamlining operations and eliminating manual processes, companies can reduce costs.
● Enhanced Compliance: E-commerce enablers help companies stay compliant with complex regulations.
● Improved Customer Experience: Faster shipping times and better customer service can be achieved through e-commerce
solutions.
THANK
YOU