Course:

BA (Hons) International Business

Management

Module:
BLC6004
International Business and Cultural Diversity
Lesson Plan
Lesson Plan
Lesson 1: 20 Sep 2023 12:30-3:30pm Lesson 7: 13 Oct 2023 12:30-3:30pm
Introduction to the module Managing Cultural Differences at Work
Introduction to Culture Lesson 13: 10 Nov 2023 12:30-3:30pm
Lesson 8: 18 Oct 2023 12:30-3:30pm F2F The impact of culture on cross-cultural
Lesson 2: 22 Sep 2023 12:30-3:30pm F2F WRIT 1 review conflict resolution
Culture, national culture and its relevance to
cross-cultural management Lesson 9: 27 Oct 2023 12:30-3:30pm F2F Lesson 14: 15 Nov 2023 12:30-3:30pm F2F
Business activities affected and the impact Managing Strategic Alliance
Lesson 3: 25 Sep 2023 12:30-3:30pm
Globalisation of culture and cultural diversity Lesson 10: 1 Nov 2023 12:30-3:30pm F2F Lesson 15: 22 Nov 2023 12:30-3:30pm
WRIT 1 briefing Guest Lecture Governance
WRIT 2 briefing
Lesson 4: 29 Sep 2023 12:30-3:30pm F2F Lesson 16: 24 Nov 2023 12:30-3:30pm F2F
Cultural groups and levels / types of culture in Lesson 11 3 Nov 2023 12:30-3:30pm F2F WRIT 2 Review
organisations Cross-cultural management and the
emerging need for cultural
Lesson 5: 4 Oct 2023 12:30-3:30pm F2F agility and empathy
Cultural theories and how they apply (1)
Lesson 12: 8 Nov 2023 12:30-3:30pm F2F
Lesson 6: 11 Oct 2023 12:30-3:30pm F2F The impact of culture on cross-cultural
Cultural theories and how they apply (2) business negotiation: communication
breakdowns and barriers
L14 Managing Strategic Alliance
Issues in joint ventures and strategic alliances
https://www.youtube.com/watch?v=OMXQ91AVWi8
Common challenges in forming strategic alliances
https://www.youtube.com/watch?v=ZAx17ksRmag
Strategic Alliances

According to Johnson, Scholes and Whittington (2014), a strategic alliance is where two or more
organisations share resources and activities to pursue a common strategy.

it is a partnership between firms whereby resources, capabilities, and core competences are combined to
pursue mutual interests. (Hitt, Ireland and Hoskisson, 2017)

Alliances are less risky than mergers and acquisitions

- negotiable
- co-operative
- easier to terminate
Reasons for entering into Strategic Alliances

Global market leadership:

● Enter into critical country markets quickly
●Gain inside knowledge about unfamiliar markets and cultures through alliances with local
partners
●Provide access to valuable skills and competencies concentrated in particular geographic
locations

Strong industry position

● Establish a stronger position in target industry / combined force in the marketplace
● Master new technologies and build expertise and competencies
● Open up broader opportunities in the target industry

Collective strategy – how the whole network of alliances competes against rival networks of
alliances. E.g. Microsoft’s Xbox game developers vs. Sony’s PlayStation game developers.

Collaborative advantage – managing alliances better than competitors.

A strategic alliance or partnership is about two businesses intertwining
their efforts in a certain area, such as marketing, supply chain, integration,
technology, finance, or a combination of these.
Such an agreement might exist between a digital marketing agency and a
graphic designer, a web designer and a database management firm, or an
Internet service provider and an email provider, just to name a few of the
many possibilities.

Whether you’re a startup or a growth company, there are many reasons to

consider entering into a strategic partnership agreement. At the very least,
a strategic partnership will add value to your product or service by
expanding what you have to offer. A strategic partnership can even be a
proverbial ‘match made in heaven if the two parties
involved reciprocating each other well enough.
Why a strategic partnership?
First, let’s consider why you would want to enter into a strategic partnership
agreement in the first place.
A strategic partnership is a mutually beneficial arrangement between two separate
companies that do not directly compete with one another.
Companies have long been engaging in strategic partnerships to enhance their
offers and offset costs. The general idea is that two are better than one, and by
combining resources, partner companies add advantages for both companies
through the alliance.

For example:
Some good examples of strategic partnership agreements between brands that you may
have heard of include Starbucks’ in-store coffee shops at Barnes & Nobles bookstores, HP
and Disney’s ultra hi-tech Mission: SPACE attraction, and Nokia and Microsoft’s joint
partnership agreement to build Windows Phones.
Why a strategic partnership?
Virtually everyone who’s anyone is partnering in some way, even if it’s not
obvious to the public. In an ideal partnership, you benefit not only from
adding value for your customers but lowering costs as well. That’s why
every strategic partnership is ultimately an act of leveraging costs versus
return.
Before diving into a partnership, size up the other party and carefully
evaluate the benefits and risks of entering into the agreement. If you can
satisfy your profit goals and customer expectations through the
partnership, then it’s the right call for your business.
Now let’s look at each of the 5 types of strategic partnership agreements.
5 types of strategic partnership agreements.

1. Strategic marketing partnerships

This type of strategic partnership agreement is most beneficial to small businesses
with a limited selection of products and services to offer customers.
Maybe you have a company that provides one service, say logo design. You might
do well to partner with a web developer that will always refer you when graphics
are necessary, and vice versa.
Referral agreements are probably the most basic and informal type of strategic
alliance, but strategic marketing partnerships can be considerably more complex.
5 types of strategic partnership agreements.

Case:
Pharmaceutical company, Abbott India’s agreement to market Zydus Cadila drugs
across India. An agreement like this one allows each company to focus on what it
does best. In this case, Zydus Cadila gets to focus on manufacturing medications
while Abbott India hones in on marketing the drugs.

Marketing partnerships are extremely common in the automotive industry, such as

the Toyota IQ also being marketed as the Aston Martin Cygnet. The idea is that
one company makes a product and another adds its own marketing spin to it in
order to tap into a new market.

The same logic can be applied to a variety of different products, so it’s something
worth considering in many situations. If you’re interested in forming a strategic
marketing partnership, you want to look for either a referrer whom you share a
customer base with or a company operating in a related field that can market your
goods or services to a new audience.
5 types of strategic partnership agreements.

2. Strategic supply chain partnerships

A popular (and extremely valuable) type of alliance is the strategic supply chain
partnership. One of the most obvious places that you can see strategic supply chain
partnerships in action is the film industry. If you’ve ever noticed the opening credits
of most movies list various oddly named companies before the film starts, it’s
because movies are typically made in a supply chain method. A comparatively small
production house will handle the filming and post-production, and a larger studio will
handle financing, marketing, and distributing the film. Think of J.J. Abrams’ Bad
Robot and Paramount Pictures, which maintain such a partnership agreement.
Other examples of supply chain partnerships come to us from the technology
sector. Intel makes processors for many computer manufacturers. Toyota makes
engines for Lotus sports cars. Texas Instruments makes chips for everything you
can think of. These companies are entered into strategic supply chain partnerships
with other companies.

If you make a tangible product that you think could benefit from a strategic supply
chain partnership, the decision to enter into an alliance comes down to cost. If you
can make it for less yourself, then you don’t need a partner. But if you can hand off
manufacturing to a dedicated factory and maintain profitability without sacrificing
quality, then, by all means, do it. For those of us in the service world, it’s often an
even easier decision.

Companies usually enter into supply chain partnerships to cut costs, streamline
processes, or improve quality. Unfortunately, as valuable as they can be, supply
chain partnerships can also be among the hardest types of alliances to maintain.
5 types of strategic partnership agreements.

3. Strategic integration partnerships

Strategic integration partnerships are extremely common in the digital age since it’s
always great to have different applications work together or at least communicate
with one another.
And, both sides get to offer a more streamlined service to our customers. Strategic
integration partnerships can encompass agreements between hardware and
software manufacturers or agreements between two software developers who
partner to have their respective technologies work together in an integral (and not
always exclusive) way.
3. Strategic integration partnerships
For instance, Uber and Spotify partnered together to create their “Soundtrack for
Your Ride” campaign. In this effort, each brand relied on the other’s technology to
create an extraordinary experience for customers. While waiting for their Uber ride
to arrive, passengers can connect to their Spotify accounts and control the playlist
they’ll be hearing during their trip.
On top of providing a pleasurable ride experience for passengers and improved
ratings for drivers, the integration also positioned each brand in a positive light,
likely gaining return customers in the process.

Another fantastic example of a strategic integration partnership is the agreement

between Nike and Apple. Beginning in the early 2000s, Nike and Apple began
pairing their respective products and technology to create what would eventually
become Nike+. Upon buying the specific fitness shoes and apparel, customers can
pair their products with their Apple iPhone or Watch to track fitness progress and
achieve other health goals.
5 types of strategic partnership agreements.
4. Strategic technology partnerships
Another type of alliance is a strategic technology partnership. This type of strategic
partnership involves working with IT companies to keep your business afloat. This
can be a partnership between your web design firm and a specific computer repair
service that you always call in exchange for a discounted rate on services. It could
also include partnering with a cloud-based storage platform to handle all of your file
storage needs.
Basically, any kind of technological expertise that is necessary for your business
that you cannot provide in-house can be relegated to a strategic technology
partnership. Choosing a technology partner has to be based on an assessment of
your needs and the identification of a positive benefit from entering into the
agreement.
You don’t need a monthly retainer on printer servicing if you’d save more money by
moving to a paperless solution. So again, assess the situation before signing up for
any strategic partnership. Never enter into an alliance just for the sake of being able
to say you have a strategic partner.
5 types of strategic partnership agreements.

5. Strategic financial partnerships

Many modern companies wholly outsource their accounting to strategic partners.
Strategic financial partnerships are helpful because when you use a dedicated
company for accounting, for example, they can monitor your revenue with greater
focus than you can do in-house. Because finances are critically important to any
business, strategic financial partnerships are among the most important
relationships you can foster.
Dedicated finance professionals offer rock-solid expertise in managing cash flow
and can report your current revenue position readily and objectively. And that can
be of paramount importance to your business.
Types of legal strategic alliances

Similar to strategic partnerships, legal strategic alliances also provide

businesses with a series of advantages including additional resources,
manpower, and brand power through a legal agreement.

There are 3 main types of strategic alliances:

1. Joint venture

A joint venture occurs when two or more parent companies form a smaller
(child) company together.
Partners can choose between a 50/50 joint venture, in which both parent
companies own an equal portion of the child company, and a majority-
owned venture. In a majority-owned venture, for example, one partner
company could own 80% of the child company, while the other partner
owned the remaining 20%.
2. Equity alliance
For an equity alliance to occur, one company must purchase a
specific percentage of equity in another company.

3. Non-equity alliance
A non-equity alliance occurs when two companies mutually agree on
a contractual relationship that allocates specific resources, assets, or
other means to one another. Many of the previous strategic
partnership examples are also considered non-equity alliances.
Often based on contracts.
-Three common forms of non-equity alliance:
- Franchising
- Licensing
- Long-term subcontracting
What’s in a strategic partnership agreement?

Once you’ve found a strategic partner to work with, you need to

create and sign a proposal or strategic partnership agreement with
them. This type of document can range for relatively simple to utterly
complex, depending upon the scope of the partnership, the terms of
the agreement, and the scale of the businesses involved.
What’s in a strategic partnership agreement?

In all cases, a basic strategic partnership agreement should include the following:
-The parties involved in the agreement;
-The services to be performed by each partner;
-The terms of the agreement (percentages of profit, method of billing, etc.);
-The reporting structure, person of contact, etc.;
-The duration of the agreement;
-The signatures of company officers or their designees.

It can get quite a bit more complex than that, but you’ll always see these types of
things in a strategic partnership agreement. You want to lay everything out in print,
so there are no questions of who does what later. Many companies opt for quality
control and auditing clauses in their partnership agreements to help maintain the
integrity of the products or services that result from the partnership, so that’s
something you might want to consider when creating your agreement.
Some Common FAQ

What is a strategic partnership business model?

A strategic partnership business model is about pursuing partners not only

because they provide value to you, but also because they can benefit from
your company’s products, services, or brand recognition.
When looking to form a strategic partnership business model, always
consider what value you can provide and as well as what resources you
require. The business model should be a mutually beneficial structure, not a
one-sided relationship formed solely out of a desire for additional revenue.
Look for partners you can trust to properly display your brand name and with
which you’d be proud to team up in future endeavors.
Would a strategic partnership help you grow your business?

It seems like every company has at least one strategic partner these days.
That being said, some are certainly still totally insular. (Look at Dell.) The
decision of which way to go with your business comes down to your needs
and goals.
If you can perform every function in-house, maintain quality and make a
profit, then your company might not get much out of a strategic partnership
agreement. But there’s almost always an opportunity to either reduce the
costs column or otherwise increase the bottom line in any business, and
that’s where strategic partners come in handy. If there’s an opportunity for
your company to improve, chances are there’s a partner that can help you
do it.
Risk Involve:
strategic partnerships can also mitigate risk. That means, for example, if you choose a
strategic manufacturing partner that operates a factory and insures its workers, you are
removed from the liability of operating a similar facility yourself.

Likewise, many accountants and financial advisors are bonded and insured. By partnering
to fulfill those roles, you remove the need to incur the costs of operating those types of
businesses yourself. Ultimately, two really are better than one. I guess that’s part of why
marriage is such an enduring institution in our society.

That’s also why the various strategic partnerships mentioned here exist between some of
the biggest names in the business. Joining forces in a strategic partnership has worked for
major players like Nokia and Microsoft, and, with careful planning, it can work for your
business, too. It all comes down to taking the plunge and saying, “I do” to a strategic
partnership agreement.
Learn how to manage alliances and be a good leader
https://www.youtube.com/watch?v=PWmhl6rzVpM
Horizontal Strategic Alliances
• Horizontal strategic alliances are formed between partners operating in the same business area.
• Firms’ goals and the set of common activities are key.
• Antitrust law should be considered in this type of alliance→ market allocation, bid rigging, price fixing,
and monopolies→ competition in the marketplace/protection of consumers
• 2014 Apple and IBM signed an exclusive partnership alliance→ new business apps for mobile devices
• Alliance between Microsoft and Yahoo→ Microsoft’s Bing search engine as a search engine on
Yahoo’s website.

Vertical Strategic Alliances (Equity and Non-equity)

• A vertical strategic alliance is a partnership between a firm and its distributors.
• Larger firm’s network→ customers can benefit from lower prices.
• A complementary vertical alliance is formed when the supplier agrees to work exclusively for the
other.

Diagonal Strategic Alliances are formed among partners form different industries.
• Firms seek to create and exploit new or interdisciplinary markets by achieving synergies.
• Cooperation between information technology firms and banks is an example of this type of alliance.
Drawbacks of Strategic Alliances
- Culture clash and integration problems due to different management styles and business practices
- Anticipated gains do not materialise due to an overly optimistic view of the synergies or a poor fit of
partners’ resources and capabilities
- Risk of becoming dependent on partner firms for essential expertise and capabilities
- Protection of proprietary technologies, knowledge bases, or trade secrets from partners who are rivals.

Key advantages of Strategic Alliances

- They lower investment costs and risks for each partner by facilitating resource pooling and risk sharing.
- They are more flexible organisational forms and allow for a more adaptive response to changing
conditions
- They are more rapidly deployed
- Minimises the problems associated with mergers and acquisitions
- Useful in extending the scope of operations via international expansion and diversification strategies
- Reduces the need to be independent and self-sufficient when strengthening the firm’s competitive
position.
- Offers greater flexibility should a firm’s resource requirements or goals change over time.
- Are useful when industries are experiencing high- velocity technological advances simultaneously
Evolution of alliances
Strategic alliance failure rates range from 50 percent to 70 percent.

Major cause for cooperative failure is managerial, and therefore controllable and potentially
avoidable

Proper preparation (Due Dilligence)

Overestimated market potential
Alliance management and communication.
Differences in culture
Incompatible objectives
Lack of executive commitment
Ineffective governance structure
Poor alliance leadership
How to make strategic alliances work

Two themes are vital to success in alliances

Co-evolution→ need for flexibility and change as the environment, competition and strategies of
the partners evolve.
Trust → partners need to trustworthy throughout the alliance.

BALANCING TRUST AND CONTROL

- Create a system for managing the alliance

- Build trusting relationships with partners
- Set up safeguards to protect from the threat of opportunism by partners
- Make commitments to partners and see that partners do the same
- Make learning a routine part of the management process.
Alliance governance

Alliance Governance as defined by Doz and Hamel (1998) refers to how an alliance is managed, how it is
organised and regulated by agreements and processes, and how the partners control and influence its
evolution and performance over time

A system that manages the risks in alliance performance through a balance of trust and control→ how the
companies work together, how reporting takes place and to who and how often meetings take place.

BALANCING TRUST AND CONTROL

Next lesson

L15 Governance