chapter  12
18 Pages

International Alliances

Global markets, which represent the convergence of consumer demand across different societies; lowered barriers to trade and investment; the alignment of government policies; and key technological developments in information processing, communications and transportation, have prompted fi rms to adopt internationalization strategies to maintain their competitive advantage. Within the portfolio of competitive instruments a fi rm can use to discover and exploit international opportunities, international alliances have become quite prominent. They often enable fi rms to produce goods less expensively but with the same quality level, which improves their cost structure and/or helps them penetrate new markets to improve their profi ts. Although international alliances thus have grown increasingly popular, their failure rate also is extremely high. Clashing cultures are the most widely cited reasons for such failures, though cultural tensions often intertwine with other deal breakers, such as unrealistic expectations or distrust. That is, the international environments in which international alliances operate may exacerbate adverse situations or create great opportunities; in either case, their management is critical. Our fi rst section details this unique challenge. Then we elaborate on the nature of national culture (second section) and discuss cross-cultural management approaches (third section). In the fourth section we use our alliance development framework to highlight key management issues, before concluding with a summary and a case illustration.