strategic alliances and their cultural aspects ibc 2003 hogeschool arnhem en nijmegen joop vinke m.a
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Strategic alliances and their cultural aspects
Strategic alliances and their cultural aspects
IBC 2003
Hogeschool Arnhem en Nijmegen
Joop Vinke M.A.
Definition of an allianceDefinition of an alliance
1. Open-ended (“incomplete”) agreement
2. Between separate firms
3. With shared control
Arm’s length control
Merger or AcquisitionAlliance
important motives for entering into strategic
alliances
important motives for entering into strategic
alliances
1. Obtaining know-how
2. Entry to (new) markets
3. Increasing efficiency
4. Spreading business risks
5. Offering integrated solutions to clients
6. Increased competition due to liberalisation of markets
7. Growing costs and necessity to bring new products and services to the market
8. Trend to follow the leader
Mergers, Acquisitions and Takeovers
Mergers, Acquisitions and Takeovers
Merger: any transaction that forms one economic unit from two or more previous units
Acquisition: the purchase of a controlling interest in a firm, generally via a tender offer for the target shares
Takeover: a general term which includes both mergers and acquisitions
Kinds of alliancesKinds of alliances
- Tactical and strategic alliances;(Van Gils, 2000)
- Horizontal, vertical (upstream/downstream), diversification, and diagonal alliances;
(Macbeth & Ferguson, 1994; Nooteboom, 1999)
- Strategic alliances: learning, business, and hybrid alliances;
(Koza and Lewin, 2000)
- Scale alliances (horizontal, business) and complementary alliances (learning).
(Garrette and Dussage, 2000)
Advantages of co-operation
Advantages of co-operation
- forming novel combinations of perspectives- stimulates specialization (and through that
economies of scale) - sharing of risks- motivation for survival and continuity (of smaller
firms)- more flexibility and greater diversity of sources
of competence
Polygamy is O.K.!!!Polygamy is O.K.!!!
A single ideal partner seldom exists Complexity demands multiple capabilities
But:
Promiscuity is not……….
From traditional competition
From traditional competition
To group vs. group
Results:Results:
From ………………
Traditionally rivalry Firm vs. Firm Firms advantage Core competence Corporate structure
To…………….
Collective competition Group vs. Group Group advantage Group competence Group structure
How to build strategic alliances?
How to build strategic alliances?
Strategic alliances are formed to unite culturally different partners in pursuit of a common objective.
Successful alliance leaders manage the relationship in the context of the partner’s cultural differences, finding ways to create value from complimentary differences and reduce the impact of those differences that impede alliance success
But remember:The number of successful alliances is still less then
50%
The influence of alliances on the culture
of organisations
The influence of alliances on the culture
of organisationsResults of a survey of 455 CEO’s in 2000:
1. Overly optimistic2. Poor communication3. Lack of shared benefit4. Slow results for payback5. Lack of financial commitment6. Misunderstood operating principles7. Cultural mismatch8. Lack of alliance experience
Spekman, Robert E., Alliance competence, New York 2000
What is CULTURE?What is CULTURE? Symbols:gestures, words, objects etc. of which only the group
members know the meaning Heroes:public figures, dead or alive, real or fictive, who serve as
role models Rituals:acts that, for outsiders, may seem useless but are socially
essential
Norms and ValuesNorms and Values Norm:
What is right? / What is wrong?
Value:What is good / bad?What is beautiful / ugly?What is natural / artificial?What is normal, not normal?Etc.
Explicit culture
Values and Norms
Symbols
Heroes
Rituals
Is culture inborn or learned?
Is culture inborn or learned?
Definitions: “The right way of doing things”” “The collective mental programming of people in
an environment “The collective preference of one decision above
another one”” “Integrated system of patterns of behaviour which
are acquired by all members of a society
Models: 1. HofstedeModels: 1. HofstedePDI - power distancethe extent to which a culture accepts that power in organizations is distributed unequally
MAS - Masculinitythe value attributed to achievement, assertiveness, and material success as opposed tothe stereotypical feminine values of relationships, modesty, caring and the quality of life.
IDV - Individualismthe extent to which people are supposed to take care of themselves and be emotionallyindependent
UAI - Uncertainty avoidancethe degree to which members of a society are uncomfortable with risk and uncertainty
CDI - Confucian dynamismthe extend to which a society exhibits a pragmatic future-oriented perspective rather thena conventional historic or short time point of view
The seven dimensions of cultureThe seven dimensions of culture
universalism vs. particularism
individualism vs. collectivism
neutral vs. affective relationships
specific vs. diffuse relationships
achievement vs. ascription
Sequential vs. synchronic culture
Internal vs. external control
Models: 2. Trompenaar
Universalism vs. particularism
Universalism vs. particularism
Universalism:
“What is good and right can be defined and
always applies!“
What is more important - rules or relationships?What is more important - rules or relationships?
Particularism:
Great attention to the obligations of
relationships and unique circumstances
Individualism vs. collectivism
Individualism vs. collectivism
Do we function in a group or as an individual?
A. “It is more important to focus on individuals so that they can contribute to the collective as and if they wish”
B. “It is more important to consider the collective first since that is shared by many individuals”
Neutral vs. affective (emotional) relationships
Neutral vs. affective (emotional) relationships
“The nature of our interactions
should be
objective and detached”
North European business relationships
“The expressing the emotions
is part of
the relationship and therefore acceptable”
South European business relationships
Specific vs. diffuse relationships
Specific vs. diffuse relationships
When the whole person is involved in abusiness relationship there is a real and personal contact,
instead of the specific relationship prescribed by contract.
Achievement vs. ascription
Achievement vs. ascription
Ascription:
“The status isattributed to you, by
birth, childhood,gender or age, but
also by yourconnections and youreducational record.”
Do we have to prove ourselves to receive status or is it given to us?Do we have to prove ourselves to receive status or is it given to us?
Achievement:
“One will be judgedon what you have
recentlyaccomplishes and on
your record.”
Sequential vs. synchronic culture
Sequential vs. synchronic culture
Is time a line ?
…..or is it a circle?
Past, present and future
Past, present and future
…. Or? How would You draw it??
Past Present Future
Internal vs. External control
Internal vs. External control
Do we control our environment or work with it ?
1. Major focus affecting their lives and the origins of vice and virtue as residing within the person (part of the nature)
2. World is more powerful than individuals. Nature is to be feared or emulated.
Global Literacy Global Literacy
Be effective in doing business and managing with
different culture
This applies equally to: 1. those working where there is diversity in the
work force 2. those travelling and working in different
cultures 3. those receiving business visitors from other
cultures
Don’t………..!Don’t………..!Change your behaviours to try to
emulate the culture(s) you are working with.
orSimply 'Do in Rome as Romans do...
etc.
Try …………Reconciliation
Try …………Reconciliation
In dealing with different cultures, you have several options:
• Ignoring other culture
• Abandon your standpoint
• Compromise or…………
Reconciliation:
Universalism
…We do not want to drown in chaos or lose our sense of central directions so we must…
…Apply rules and procedures universally to ensure equity and consistency although……
..Encourage flexibility by adapting to particular situations. However......
…We do not want to degenerate into rigidity and bureaucracy so we must………
Particularism
Central guidelines with
local adaptations and discretion
Cultural differencesCultural differences How does a company learn and work, Where is it? Whom does it serve
and how?…………..…….are all manifestations of its culture.
How does it deliver knowledge throughout the organization? What is the corporate structure? What practices distinguish its operations? Who are its stakeholders? What are their objectives?
Company-culture is defined by the answers to these questions, but determined by the context in which the
company exists.
Three types of cultures affecting
organizations and alliance partner behaviour
Three types of cultures affecting
organizations and alliance partner behaviour
National / Ethnic CultureIndustry / Organizational CultureProfessional Culture
1. National / Ethnic Culture
1. National / Ethnic Culture
The values and norms that create the society in which the partner
organization is based.
Drives for thinking, communications styles, attitude towards hierarchy, gender roles and
other aspects of individual and group
A model for defining national culture
A model for defining national culture
based on the diversity of European regimes
Rheinic modelGermany, Austria, Netherlands,Scandinavia, France
Anglo-Saxon model UK, Ireland
Latin Rim modelGreece, Spain Southern Italy, Portugal
The “Rheinic” modelThe “Rheinic” model
Social partnership in various forms
Germany, Austria, Netherlands, Scandinavia, France
Juridified industrial relations Work councils Emphasis on social cohesion and social market Welfare as “first resort” Corporatist tradition
The “Anglo-Saxon” model
The “Anglo-Saxon” modelFree marketUK, Ireland
Voluntarist, adversarial industrial relationsFree marketWelfare as “last resort”
The “Latin Rim” modelThe “Latin Rim” model
Greece, Spain Southern Italy, Portugal
Conflictual, antagonistic industrial relations Mixed labour market Rudimentary welfare (church, family support)
2. Industry / Organizational Culture
2. Industry / Organizational Culture
“Reflects the values and norms that permeate the organization”
It is distinguished by: orientation towards risk, collaborative management style, maturity, corporate arrogance, level of centralization market focus, among others.
3. Professional Culture 3. Professional Culture
“the values and norms embodied by professionals of a specific
discipline”
People in different occupations usually incorporate the professional biases associated with their roles within the
organization
Managing cultural differences
Managing cultural differences
Define differences!
Research!
Simplify!
Management!
Building alliance competence
Building alliance competence
The most frequently items that companies miss are:
An “alliance-culture” throughout the organisation
A clear understanding of how and where within the company the alliance issues should be resolved
The know-how to develop internal alliance competences
Five steps to build alliance competenceFive steps to build
alliance competence
1. Embracing the concept2. Identify alliance responsibility3. Allocate dedicated resources4. Adopt a methodology5. Develop an alliance process
Alliance StrategiesAlliance Strategies
“More important than creating strategic alliances is to develop alliance
strategies” B. Gomez-Casseres (2002)
1. Let Business strategy drive alliance decisions
2. Grow relationships; don’t “do deals”
3. Create portfolios of alliances, not stand alones
4. Organize internally to co-operate externally