International Strategic Alliances and Joint Ventures

A strategic alliance is a long-term partnership between two or more companies to jointly develop, produce, or sell products in the global marketplace. To reach their individual but complimentary goals, the companies typically share ideas, expertise, resources, technologies, investment costs, risks, management, and profits.

A joint venture is a special type of strategic alliance in which two or more firms join together to create a new business entity that is legally separate and distinct from its parents. In some countries, foreign companies are prohibited from owning facilities outright or from investing in local business. Thus, establishing a joint venture with a local partner may be the only way to do business in that country. In other cases, foreigners may be required to move some of their production facilities to the country to earn the right to sell their products there. For instance, the Chinese government would not allow Boeing to sell airplanes in China until the company agreed to move half of the tail-section production for its 737s to Xian.¹⁰

Competitive factors

Major advantage in price, marketing, innovation, or other factors.

Number and comparative capabilities of competitors

Competitive differences by country

Local taxes

There has been growth in globalization in recent decades due to the following eight factors:

Technology is expanding, especially in transportation and communications.

Governments are removing international business restrictions.

Institutions provide services to ease the conduct of international business.

Consumers know about and want foreign goods and services.

Competition has become more global.

Political relationships have improved among some major economic powers.

Date: 2014-12-21; view: 1193