Chapter 7 Global Alliances and Strategy Implementation

1. Chapter 7 Global Alliances and Strategy Implementation Presented by: Group 7

2. Names & ID: 5411… • Karim Mohamed Farag 055 • Bassem Amr 515 • Ahmed Salem 504 • Ahmed Maghraby 502 • Mina Adel

3. Intended learning outcomes Opening Profile: Haeir Group: Growth through strategic alliances, Acquisitions, and Global Networks. Strategic Alliances Comparative Management in focus Strategic implementation E-commerce Impact on strategy implementation

4. Opening Profile: Haeir Group—Growth Through Strategic Alliances, Acquisitions, and Global Networks • Chairman & CEO Zhang Ruiman took the reins of Chinese government-controlled Quigdao refrigerator Plant 1984. • He took over a company with 100 employees & poor quality products. (they were on the verge of bankruptcy) • Zhang had founded HR management strategy (they rank employees daily on results & Managers are evaluated monthly on performance) • This system is highly differentiated from HR practices used in other Chinese companies

5. Opening Profile: Haeir Group—Growth Through Strategic Alliances, Acquisitions, and Global Networks (Cont’d) • Haeir Group is the fourth-largest white goods (refrigerators, washing machines, and other appliances) manufacturer in the world. • Haeir has established an extensive sales network around the globe, primarily through strategic alliances with key partners in prospective global markets. • Zhang believes that people must be connected to the world during the information era.

6. Strategic Alliances(Cooperative Strategies)

7. Categories of Strategic Alliances

8. Joint Ventures • Joint Ventures is a new independent entity jointly created & owned by two or more parent companies. • The JV form for a firm may comprise a majority JV (Where the firm has more than 50 % equity) • A minority JV (less than 50% equity) • A 50-50 JV (where two firms have equal equity)

9. Equity Strategic Alliances • Two or more partners have different relative ownership shares (equity %) in the new venture in an equity strategic alliance. • As do most global manufacturers, Toyota has equity alliances with suppliers, sub-assemblers, & distributers; most of these are part of Toyota's network of internal family and financial links.

10. Non-Equity Strategic Alliances • Agreements are carried out through contract rather than ownership sharing in a non-equity strategic alliance. Such contracts are often with a firm’s suppliers, distributers, or manufacturers, or they may be for purposes of marketing & information sharing, such as with many airline partnership. • UPS, for example, is a global supply-chain manager for many companies around the world, such as Nike, which essentially do not touch their own products but contract with UPS to arrange the entire process from factory to warehouse to customer to repair, even collecting the money.

11. Global Strategic Alliances • Working partnerships between companies (often more than two) across national boundaries & increasingly across industries are referred to as global strategic alliances. • Alliances are also sometimes formed between a company & a foreign government, or among companies & governments. In addition, changing regulations & policies by governments & institutions lead to new opportunities for alliances with national industries abroad.

12. Global and Cross-Border Alliances: Motivations and Benefits Some of the typical reasons behind cross-border alliances are as follows:

13. Global and Cross-Border Alliances: Motivations and Benefits

14. Challenges in implementing Global Alliances • Effective global alliances are usually tediously slow in the marketing but can be among the best mechanisms to implement strategies in global markets. In a highly competitive environment, alliances present a faster & less risky route to globalization. It is extremely complex to fashion such linkages, however, especially where many interconnecting systems are involved, forming intricate networks. Many alliances fail for complex reasons. Many also end up in a takeover in which one partner swallows the other.

15. The Dual Role of strategic Alliances

16. Implementing Alliances Between SMEs and MNCs: Strategies for Dancing with Gorillas

17. Guidelines for Successful Alliances

18. Comparative Management in Focus: JVs in Russian Federation

19. Comparative Management in Focus: Guidelines for Establishing JVs in Russian Federation

20. Comparative Management in Focus: Guidelines for Establishing JVs in Russian Federation

21. Strategic Implementation

22. Strategic Implementation

23. Implementing a Global Outsourcing Strategy

24. Managing Performance in International Joint Ventures

25. Three Complementary Dimensions of IJV Control

26. Knowledge Management in IJVs EXHIBIT 7-4 Knowledge Management in IJVs

27. Government Influences on Strategic Implementation • Unpredictable changes in governmental regulations • China’s new restrictions on foreign investors • Caterpillar and tax breaks • Ousting of Indonesian President Suharto in 1998

28. Cultural Influence on Strategic Implementation

29. Dimensions of National and Corporate Culture Affecting Alliances • Organizational formality • Participation in decision making • Attitudes toward risk • Systemization of decision making • Managerial self-reliance • Attitudes toward funding and gearing

30. Management in Focus: Mittal’s Marriage to Arcelor Breaks the Marwari Rules • In June 2006 Mittal Steel of India merged with Arcelor of Luxembourg to create the world’s largest steel company. • Resistance in Europe and by Arcelor: • Arcelor had outdated views of Mittal • Concerns about losing control of a European multinational

31. Management in Focus: Mittal’s Marriage to Arcelor Breaks the Marwari Rules • Resistance in India: • Concerns about breaking Marwari rules • Mittal put family interests behind industry and shareholder interests. • LakshmiMittal gave up half of his 90 percent share in Mittal, will share chairmanship.

32. Comparative Management in Focus: Decision Making in Japanese Companies EXHIBIT 5-9 Decision Making Procedure in Japanese Companies