...Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance in Asia 1. What is the strategic position of Baosteel and what are its motives for negotiating a three-way cross border, cross-shareholding alliance? - Market leader for steel. - Largest Subsidiary of Shanghai Baosteel Group Corporation Motives for negotiating a three-way cross border alliance is to become one of the strongest steel conglomerates in the world. It would also help Baosteel meet the challenges arising from economic globalization and China’s WTO entry. Cross-shareholding is more significant but also more risky than a simple alliance. 2. How does a cross-shareholding alliance differ from a merger or a simple strategic alliance based upon co-operation? Cross-shareholding: A situation in which a publicly traded corporation owns stock in another publicly traded company. So, technically, listed corporations own securities issued by other listed corporations. Cross holding can lead to double counting, whereby the equity of each company is counted twice when determining value. When double counting occurs, the security's value is counted twice, which can result in estimating the wrong value of the two companies. Merger: The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock. Strategic Alliance: SA is a kind of partnership between two entities...
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...Joint venture is a strategic alliance in which two or more cooperating companies (the ‘parents’) create a legally independent company in which they invest and from which they share any profits created. Joint ventures allow companies to establish long-term relationships and transfer tacit knowledge. Many joint ventures have 50–50 ownership and control; however, there is no need for an equal partnership. More important that the partners specify certain aspects of the alliance that are most interested in, and the issue of the respective ownership becomes less critical. Equity alliance is an alliance in which one or more partners assume a greater ownership interest in either the alliance or another partner. Is an alliance in which one or more partners assume a greater ownership interest in either the alliance or another partner? Equity investments increase the stake for companies involved in the alliance. Because one partner has invested in the equity of another as part of the alliance, this company is not likely to cheat on the joint-venture partner. If it does, then its equity in the joint venture partner loses value. Equity arrangements are very common among Japanese companies. These cross holdings (the network is called a keiretsu) reduce the chances for one company to cheat the other for short-term gains. By investing in a separate equity, both companies — parents (or alliance partners) — have a financial interest in the joint venture. If one cheats the other, the joint...
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...operations. Three management human resources techniques: Haier’s service system runs throughout the production process from product design, production, manufacturing, to pre-sale, under sales and after sales service. Three Management actions to further globalization: As they are facing the fierce global market competition, Haier launches the Global Brand Building Strategy and updates spirit “Create resources, worldwide prestige” and work style “Individual-goal combination, swift action and success” with an aim to gain global recognition and sustainable development.” Define. Global alliance: two or more countries joining globally. In February 2 1996, Sprint Corporation, Deutsche Telekom and France Telecom have created a global alliance in telecommunications that offers advance voice and data services to businesses, telephone carriers and consumers around the world. Cross Border Alliance international merger and acquisition with partners. Global Sourcing: describe practice of sourcing from the global market for goods and services across international boundaries. Global sourcing is designed to reduce costs and increase efficiency by buying products and services all over the world. Joint Venture: joint venture is typically a business agreement between two or more businesses for the purpose of a mutually beneficial sales transaction for a product or service. BHPBilliton is a joint venture with a British Company and an Australian company formed to combine the resources...
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...their own boundaries. The concept of strategic alliances has become widely used in the business language to refer to the types of partnerships agreements between two or more companies that pursue a clear strategic collaboration objective, with different levels of possible integration among the members. In today’s competitive global economy strategic alliances are a crucial option for achievement of competitive advantage. By developing strategic alliances, organisations can share their excess or complementary resources and capabilities so as to strengthen their position in the market and gain competitive advantage. When such alliances are effectively and efficiently managed the partnering firms can gain immensely towards mutual profitability. In any cooperative relationship trust is key for success. Where mutual trust and synergies exists, partnering organisations can benefit substantially from opportunities that can be exploited through maximum utilization of combined resources. On the other hand, where there is no trust, extensive monitoring systems become necessary to monitor each partners’ contribution and this results in increased cost of operations that ultimately hamper the competitiveness of the alliance. Definition A strategic alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent. Partners may provide the strategic alliance with resources such as...
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...International Journal of Global Business, 7 (1), 77-94, June 2014 77 Building Global Strategic Alliances and Coalitions for Foreign Investment Opportunities Dr. Balarabe A. Jakada Department of Business Administration and Entrepreneurship Bayero University, Kano, Nigeria. bajakada@yahoo.com Abstract Global strategic alliance and coalition is a diffuse way of effective combination of strengths of companies aiming at entering new markets, exploring new technologies, bypassing government entry restrictions and to learn quickly from the leading firm in the partnership, all in an effort to exploit foreign investment opportunities. Strategic alliances are however, not easy to develop and support. They often fail because of technical errors made by management of member firms. To make it a success, a strong and efficient alliance agreement has to be in place to enable companies to gain in markets that would otherwise be uneconomical. Building alliances requires considerable time and energy from all parties involved with a detailed plan, expectations, limitations and scopes, and the likely benefits drivable from the project. Alliances take a number of forms and go by various labels. Alliances may be contracts, limited partnerships, general partnerships, or corporate joint ventures, or may take less formal forms, such as a referral network. The paper is aimed at exploring and educating prospective and allied businesses or firms the need and significance of across border coalition, and...
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...University of Western Australia Strategic Planning and Strategy Strategic Planning • The process by which a firm’s managers evaluate the future prospects of the firma and decide on appropriate strategies to achieve long-term objectives Strategy • The basic means by which the firm competes., that is, its choice of business or businesses in which to operate and the ways in which it differentiates itself from its competitors 63 How does globalisation, risk, political-legal-ethical and culture affect the value chain that a firm manages and operates to create ‘value’ = strategic planning +strategy = STRATEGIC FIT between ‘inputs’ and ‘outputs’ Porter, M (1985) Competitive Advantage: creating and sustaining superior performance. NY: Free Press The University of Western Australia Steps in Developing International and Global Strategies Mission and Objectives Environmental Assessment and Scanning (PEST, PESTEL, Risk) Internal and Competitive Analysis (SWOT) Global Integrative and Entry Strategy Alternatives (Export, JV, Strategic Alliance, CAGE) Strategic Choice, Implementation, Feedback, and Control (Governance) Copyright ©2014 Pearson Education Realize that much of international business is conducted through strategic alliances. Understand the reasons that firms seek international business allies and the benefits they bring. Become familiar with the ways that SMEs can expand through alliances with MNCs Understand the complexities...
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...is developed in national subsidiaries and diffused Which of the following is not a characteristic of companies with a transnational strategy? Knowledge is developed centrally and adapted locally Isatis CO has successfully transitioned from a global strategy to a transnational strategy Which of the following descried the likely configuration of assets and capabilities that now most likely prevails at isatis C Dispersed, specialized and interdependent Which of the following describes the preferred sequencing of changes associated with implementing the typically more effective emerging change process model a.Change in individual attitudes and mentalities, then change in interpersonal relationships Which of the following strategic approach and strategic capabilities cannot be paired? d. global strategy and national responsiveness Frank is director of technology in an MNE in which most of the R& D Actives are performed The innovation process adoptedby Franks MNE is C .Center for global With responsibly for his company largely centralized R& D actives Frank worries that the center may not understand local market needs. To respond to these concerns Frank priory B. Ensure that several key people in the foreign subsidies are linked to invid at the...
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...Case Study: We can describe Apple’s strategy in terms of product differentiation and strategic alliances. Product Differentiation Apple prides itself on its innovation. When reviewing the history of Apple, it is evident that this attitude permeated the company during its peaks of success. For instance, Apple pioneered the PDA market by introducing the Newton in 1993. Later, Apple introduced the easy-to-use iMac in 1998, and updates following 1998. It released a highly stable operating system in 1999, and updates following 1999. Apple had one of its critical points in history in 1999 when it introduced the iBook. This completed their “product matrix”, a simplified product mix strategy formulated by Jobs. This move allowed Apple to have a desktop and a portable computer in both the professional and the consumer segments. The matrix is as follows: | Professional Segment | Consumer Segment | Desktop | G3 | iMac | Portable | PowerBook | iBook | In 2001, Apple hit another important historical point by launching iTunes. This marked the beginning of Apple’s new strategy of making the Mac the hub for the “digital lifestyle”. Apple then opened its own stores, in spite of protests by independent Apple retailers voicing cannibalization concerns. Then Apple introduced the iPod, central to the “digital lifestyle” strategy. Philip W. Schiller, VP of Worldwide Product Marketing for Apple, stated, “iPod is going to change the way people listen to music.” He was right. Apple...
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...Managing global alliance Name: Professor: Institution: Course: Date: INTRODUCTION The field over which businesses compete is becoming globalized. More firms are becoming multinationals by forming alliances with other firm in other countries. Global competition is now becoming a driving force in organizations throughout the world. Companies are trying to attain competitive advantage, which is easily accessible through international alliance. This form of none equity alliance between firms is increasingly becoming a popular way of doing business on a global scale. Reasons for the occurrence of such alliance have been identified, and include; increased globalization of the world economy brought about by intensified global competition, technology proliferation, and shortening of product lifecycle (Snyder, 1997. pg 45-50). This paper review is about management of the global alliance. MANAGEMENT OF GLOBAL ALLIANCES. "Globalization mandates alliances and makes them unconditionally necessary". (Ohmae,1982 . pg 67). Kenichi Ohmae's point of view, that globalization necessitates alliance as a vehicle for customer oriented value, with four issues facing today’s companies. These issues include; convergence of customers needs technology dispersion and ease of accessibility, importance of fixed cost and danger of equity. Ohmae concludes his argument with the "logic of entente". Here, there are two main points: shift from return on investment to sales return. He likens...
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...Chapter 7: * Merger: a strategy through which two firms agree to integrate their operations on a relatively co-equal basis * Acquisition: a strategy through which one firm buys a controlling, or 100% interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio. After acquisition, management of the acquired firm report s to the management of the acquiring firm * Takeover: a special type of acquisition when the target firm did not solicit the acquiring firm’s bid for outright ownership * Friendly acquisition: the management of the target firm wants the firm to be acquired * Unfriendly acquisition (hostile takeover): the management of the target firm does not want the firm to be acquired (direct negotiations with the firm’s owners; tender offer; bear hug) Explain the popularity of acquisition strategies in firms competing in the global economy * There are seven reasons why acquisitions in firms competing in the global economy work * Increased Market Power: * This is the primary reason for acquisition * If a firm achieves enough market power, it can become market leader * Example: AT&T acquisition with T-Mobile made them in the lead with market share in w-ireless service providers * Also, not only would their market share increase, but their customers would increase by 1/3 and all cell towers and wireless spectrum that t-mobile had would also turn to AT&T ...
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... This case weaves leadership and organizational culture principles into the strategic fabric of a modern firm competing in a global, competitive, high tech industry. The achievements of Atul Jain, founder, CEO, and Chairman of TEOCO, are extraordinary given his limited business expertise, compliant personality, and unconventional belief system – all which he has parlayed into a competitive advantage for the his mid-sized telecommunications software company. The introduction of the case places TEOCO at a major juncture, having recently completed an acquisition which doubles the size of the company and committed to a new ownership structure with a venture capital company’s minority equity investment. Reasons behind the unlikely partnership agreement are discussed before delving into TEOCO’s background and core product categories. The industry landscape and company’s growth strategies are described next. This leads into an explanation of the TTI acquisition, which seriously tests the strength of Atul’s proven business approach. Finally, the case depicts how the shared leadership, employee ownership, and human resource practices at TEOCO are the foundation of the competitive advantage created by Atul. As the company enters a new era, the shaping of its future is already underway. The case analysis is intended to anticipate the likely impact of the TTI acquisition and TA alliance on the strategic elements that have led to TEOCO’s success. It will produce suggestions to prepare...
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...Operations; Management Contracts; International Joint Ventures; Fully-Owned Subsidiaries; e-Business Proactive Reasons Management Focus: Mexico's Cemex Reverses Course to Comparative Management in Focus: Strategic Planning for the EU Market Strategic Choice of Opportunities in South Africa Reasons for Going International Respond to Global Downturn Strategic Formulation Process Steps in Developing International and Global Strategies Mission and Objectives Environmental Assessment Institutional Effects on International Competition Sources of Environmental Information Internal Analysis Competitive Analysis Strategic Decision-Making Models Global and International Strategic Alternatives Approaches to World Markets Global Strategy Regionalization/localization Ali Sulaiman 71859876 aassbk@gmail.com Timing Entry and Scheduling Expansions The Influence of Culture on Strategic Choices Conclusion Summary of Key Points Discussion Questions Application ic Exercises Experiential Exercise Internet Resources Case Study: YouTube LLC: Going Global by Acting Local AUL_KASLIK – MBA Helen Deresky International Management OBJECTIVES 1. To understand why companies engage in international business. 2. To learn the steps in global strategic planning and the models available to direct the analysis and decisionmaking...
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...Lauren Patterson October 7, 2013 Strategic Management 5301 Walt Disney-Pixar Analysis The Walt Disney-Pixar merger carries a number of convincing advantages for Disney, but Pixar shareholders should be less enthusiastic about such a deal. Pixar’s resources and capabilities have set a standard that is extremely difficult to imitate. Through its highly talented employee pool, culture of creativity and collaboration, and proprietary 3D computer animation software, Pixar has created a competitive advantage in the animation film industry that yielded average total box office sales of $538 million with just six movies. Pixar shareholders should be wary of the potential breakdown of these resources and capabilities, which in essence are its core competencies. While a merger could mean more dollar signs for Pixar, it is more likely to result in the end of a firm whose resources and capabilities lend an advantage in the animation film industry. A renegotiated equity alliance that gives Pixar the chance to earn more than 40% of total profits of a film versus Disney’s 60%.would be a better strategic option for Pixar. Following the VRIO framework, Pixar’s capabilities help exploit opportunities to create value or neutralize threats from the environment. Pixar’s human capital is an extraordinarily valuable asset to the company. With an emphasis on hiring the best and the brightest (most of its technical employees have PhDs) and maintaining a close eye on innovations in the...
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...Strategic Alliance Abstract Organizations are facing exciting and dynamic challenges in the 21st century. In the globalized business, companies require strategic thinking and only by evolving good corporate strategies can they become strategically competitive. A sustained or sustainable competitive advantage occurs when firm implements a value – creating strategy of which other companies are unable to duplicate the benefits or find it too costly to initiate. Corporate strategy includes the commitments, decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns. The goals of corporate strategy are challenging not only for large firms like Microsoft but also for small local computer retail outlets or even dry cleaners. I hope to offer a concise description of strategic alliances as well as a picture of who is participating in them and why. The states of affairs that encouraged this “rising era of collaboration” will be reviewed and the necessary steps in formulating alliances. Examples of companies that are or were involved in strategic alliances will be discussed, others of which were thriving and the others of which they were not. This paper is not intended to serve as a comprehensive study of strategic alliances. Introduction Corporate alliances, which are now called “strategic”, are in fact not new. Westinghouse Electric and Mitsubishi were allied for seventy years. The alliance between Ford and Mazda dates...
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...“Renault-Nissan Alliance” Case Report "I pledge on my honor that I have not given or received any unauthorized assistance on this assignment/ examination." 1.What are the strategic reasons for the Renault-Nissan alliance? Strategic alliances are voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services (Rothaermal 244). The most common reasons firms enter into strategic alliances are – * To strengthen competitive position * To enter new markets * To hedge against uncertainty * To access critical complementary assets * To learn new capabilities (Rothaermal 245). The Renault-Nissan alliance was not an exception to the aforementioned reasons. In the late 1990s, Nissan was falling apart, with consistent drop in its auto sales and poor returns. It had been losing market share for 27 years in the Japanese market and by 1999 it had about $20 billion in debts. Analysts attributed Nissan’s bland styling, infrequent model changes, high manufacturing and parts costs, and bureaucratic decision-making to its poor performance. At the time when Nissan was looking for somebody to bail them out of their financials crisis and put the on the profits, Renault came to their rescue. Renault was a maker of small- to medium-size cars with consistent, but slim profit margins. It sold 85% of its automobiles in Western Europe with third of them in France. Renault had...
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