© 2010 Cengage Learning. All rights reserved. CHAPTER 11 GLOBAL PENG.
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Transcript of © 2010 Cengage Learning. All rights reserved. CHAPTER 11 GLOBAL PENG.
CHAPTER 11
GLOBAL PENG
Chapter 11 LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1.Define alliances and acquisitions2.Articulate how institutions and resources
influence alliances and acquisitions3.Describe how alliances are formed4.Outline how alliances are dissolved5.Discuss how alliances perform6.Explain why firms make acquisitions and what
performances problems they tend to encounter
7.Articulate what you can do to make global alliances and acquisitions successful
LO1: DEFINE ALLIANCES AND ACQUISITIONS
Strategic alliances – voluntary agreements between firms involving exchange, sharing or co-developing
products, technologies or services.
LO1: DEFINE ALLIANCES AND ACQUISITIONS Acquisition – transfer of the control of operations and management from one firm (target) to another (acquirer) Merger – combination of operations and management of two firms to establish a new legal entity
LO2: INFLUENCE OF INSTITUTIONS
Formal institutions
Antitrust concerns – antitrust authorities more likely to approve alliances than
acquisitions. Entry requirements – many governments
place limitations on foreign firm’s mode of entry
LO2: INFLUENCE OF INSTITUTIONS
Informal institutions
Normative pillar –firms copy other reputable organizations to establish legitimacy.
Cognitive pillar – internalized, taken-for-granted values that guide alliances and
acquisitions.
LO2: INFLUENCE OF RESOURCES
Alliances can create or diminish value
Reduce costs, risks and uncertainties.Access complementary assets and learning opportunities.Use alliances as real options.
Choosing wrong partners.Potential partner opportunism.Risk of helping nurture competitors (learning race).
LO2: INFLUENCE OF RESOURCES
Resources and Alliances
Rarity – relational
(collaborative) capabilities, the
ability to manage inter-firm
relationships, may be rare.
Inimitability – alliances may
make it easier to observe and imitate firm-
specific capabilities.
Organization – some successful
alliances are organized in a
way that is difficult to replicate.
LO2: INFLUENCE OF RESOURCES
Resources and Acquisitions
Do acquisitions create value?
Firms involved must supply rarity to the acquisition.
Successful post-acquisition
integration is hard to imitate.
How are the firms organized to benefit from
acquisition?
LO3: FORMATION OF ALLIANCES
LO4: DISSOLUTION OF ALLIANCES
LO5: PERFORMANCE OF ALLIANCES
Equity
Learning and experience
Nationality
Relational capabilities
It is the combination of these factors that jointly indicates the odds for success of strategic
alliances.
LO6: ACQUISITIONS
LO6: ACQUISITIONS
DEBATE: MAJORITY JV vs. MINORITY JV
Majority: Implementation is difficult. Partners in emerging economies often resent Western dominance. At times, 50/50 management control is granted, even though MNE has majority equity.
Minority: Valuable as real option. Becomes more valuable as conditions become more uncertain. Recommended toehold instruments.
LO7: MAKING GLOBAL ALLIANCES AND ACQUISITIONS SUCCEED