The Way to Win in Cross-Border Alliances Summary

In order to take advantage of the opportunities provided by new markets, remain competitive, and increase sales, many companies are forming global strategic alliances. Global alliances provide a way for a company to enter a new foreign market, to learn new skills, obtain new technology and also be able to share their fixed costs. Cross-border alliances also have their challenges, many companies that enter into such commitments often face managerial and financial problems in the early stages of the alliance. Based on the finds by the authors, they suggest how companies can maximize their probability of success during their global ventures. It is important to understand the difference between a cross-border acquisition and a cross-border alliance and which one is more suitable for your company. If a company wants to expand its core businesses, both alliances and acquisitions work well. However, if a company plans to expand their existing business into a new geographic area, or if it plans to enter into a related business or industry and compete there, an alliance will work better. Acquisitions should be avoided in these situations because the acquiring company has little direct experience in the new market. Acquisitions work well because the companies can combine their complementary skills and capabilities together.
When entering into an alliance, the companies should be of equal strength. If a strong company partners with a weaker firm, this can cause problems. The weaker company can affect the venture’s competitiveness and also cause friction between the two parties. If these type of alliances are only formed to build the skills of the weaker company, the venture will not receive positive results. The alliance must have a solid business rationale, other than self-improvement. In order for these skills to be