Sources Of Failure In Strategic Alliance Formulation Commerce Essay

Sources Of Failure In Strategic Alliance Formulation concern EssayToday, brasss face global competition and leave behind on the dogged run and be triumphful if they can successfully exploit their cheer delivery potential of the relationships strategic hampers and attendantships. Organisations that bet together for the purpose of mutual benefit is a concept that is gaining ground in business marts, as market leaders now understand that success from collaboration can be a viable militant advantage. Organisations entering into alignments in the twenty- prototypal century need to size up their prospective partners in exhibition to ensure that they achieve more success than their predecessors. However, identifying the best partner is only the first step in increasing the probably of alliance success. Proper design and coordination are needed to assuage the stability of an alliance and to achieve an effective running(a) relationship mingled with the partners. Trust and comm itment between alliance partners is the final goal. Only then can the true benefits of entering into an alliance be realised.It is really primary(prenominal) for a company that is interested in forming a strategic alliance that the partner chosen countenance the natural capacities needed for the performed activity. In other words, the competencies required to achieve the desired goal. In this sense, small differences in damage of management style and culture between the cooperating firms may end up becoming serious problems that hire it difficult to create synergies. There are a large number of characteristics (honesty, positive disposition, efficacy, etc.) that can only be appreciated after several years in the relationship. It is convenient for a firm to work informally with another(prenominal) company before formalising the strategic alliance. This can help to assess levels of compatibility and its potential evolution, since it is with effortless contact that we can discove r the partners habits and tendencies.INTRODUCTIONIn todays changing and developing business world, strategic alliances puddle become an important tool for the success more business ventures. agree to Ohmae (1989, p 143), last 20 years present been marked an era of worlds development. Some of the evolutions of this period are the globalisation of markets, quick changes in technology, and the expansion of some domestic organizations boundaries. As leave of these rapid motions, strategic alliances have importantly become a competitive necessity. One of the reasons of this necessity is that a single firm is flimsy to have all the re reference books and capabilities to accomplish global competitiveness. Thus, cooperation between companies which has complementary resources is invariably important for survival and growth. (Dussauge, Garrette and Mitchell, 1998) According to Morossini (1999), strategic alliances are change for the firms to reduce risks and share resources, gain kno wledge and technology, expand the existing harvest-festival lines, and opportunity to enter new markets. Strategic alliances provide firms to expand their reach without having to maximise their risk or commit themselves beyond their core business. However, as mentioned above, although strategic alliances bring big opportunities and provide conveniences for many companies, at the same time, there are some challenges that can result with disappointment for the organizations. The percentage of failures of strategic alliances is changeable from a low 30 per cent (Cullen, 2007), to a high 70 per cent (Dacin et al, 2007). aside from the expecting risks of entering into an alliance competition between partners is often pointed as the major reason for alliance failure (Dacin et al, 1997).Throughout this paper, it will be examined, analysed and discussed that the most frequent sources of failure in forming strategic alliances and what can be done to mitigate these problems.OBSTACLES THAT A LLIANS PARTNERS FACEObstacles that alliance partners face can be divided into hard and well-situated issues. Hard factors involve the linking of different financial and control systems and settling legal disputes (The Economist, 1999). On the other hand, fleecy factors are related to quite a little and kind-hearted resource issues, which involve building effective working relationships and desegregation disparate corporate cultures (Hitt et al, 1999). It is usually the insufficient attention to the soft issues that result in the failure of many strategic alliances. Pertinently, culture permeates a company, and differences can poison any collaboration (The Economist, 1999). The more culturally unlike two firms are, the greater the differences in organisational and administrative practices, employee expectations, and the interpretation of strategic issues (Schneider and De Meyer, 1991, p 307). The problem is compounded with cross-border alliances, where linguistic process barri ers create communication problems. Poor communication often leads to coordination problems, managerial conflict and distrust. Without trust, the cost of transferring managerial practices and technologies will be high, because safeguards against opportunistic behaviour are needed (Park and Ungson, 1997, p 279). Therefore, in order to avoid such problems, firms entering into an alliance need to be culturally compatible. Indeed, it has been suggested that cultural compatibility is the most important factor in ensuring the long-term success of an alliance (Lane and Beamish, 1990, p 87).SOURCES OF FAILURE IN FORMING STRATEGIC ALLIANCESThere are al rooms a series of challenges that have to be faced when forming a strategic alliance and the right people need to be recruited in order for the alliance to be a success. Some of these challenges are discussed at a lower straddle (Tetenbaum, 2001)Small differences in terms of management style and culture between the cooperating companies may end up becoming serious problems that will make it very difficult to create a synergy, therefore lede to a poor financial performance or even total dissolution of the alliance. It is essential for the forgiving resources team to be aware of these differences in order for them to by rights formulate and help with the implementation of the organisational strategy within the alliance. I will present some of the differences that help in the success or failures of a strategic alliance and that have to be addressed by the human resource department.Problems that result from human are of import for the implementation of an alliance, and may alone determine its success or failure. For this reason, it is significant that HRM specifies every members ability in the organization, within the management team, and what motivates those skills, in order to place the appropriate individuals in key positions. (Tetenbaum, 2001)The most critical period of a strategic alliance is the set out part whi ch is a period of maximum uncertainty and apprehension for the workers, along that the company has to find a reaction to their logical concerns, giving these employees something better than what they already have, therefore succeeding in establishing stability long enough to guarantee some permanent results. (Tetenbaum, 2001)A strategic alliance usually brings about the accounting entry of a series of changes in the co-operating organisations behaviour. These changes can be a sign a potential source of challenges and conflicts with the companys personnel which may lead to the failure of the collaboration, if they are not properly sorted out. (Tetenbaum, 2001)The Culture Although the organisational change derived from the creation of a strategic alliance is conditioned by the mental attitude of the human resources, this attitude also depends on the personal values and the corporate culture. This brings us to the following subject which gives us another source of problems when imple menting a strategic alliance. (Tetenbaum, 2001)Culture The existence of different cultures is an obstacle that strategic alliances are agonistic to encounter. The resistance to change may arise because the low rank employees may have not been properly informed of what the goals are they might be less experienced than top management at working with people form other culture, or they just do not agree with the new alliance. This is wherefore the human resources team is a key element for the strategic alliance. (Tetenbaum, 2001)Different Types of Culture National and organisational cultures have an impact on the degree of organizational involvement and outcomes. National culture has been defined by Hofstede as, the collective programming of the mind which distinguishes the members of one human group or category of people from another. (Tetenbaum, 2001)WHAT bunghole BE DONE TO MITIGATE THESE PROBLEMS?There are some factors and key point that need to be taken into account by organizat ions when joining into a strategic alliances or a strategic alliance is being formed. Organizations that fit these important points will always be successful. Some of these important factors can be specified as followingsOrganisations entering into alliances in the twenty-first century need to size up their prospective partners in order to ensure that they achieve more success than their predecessors. However, identifying the best partner is only the first step in increasing the probably of alliance success. Proper design and coordination are needed to facilitate the stability of an alliance and to achieve an effective working relationship between the partners. Trust and commitment between alliance partners is the ultimate goal. Only then can the true benefits of entering into an alliance be realised. (Saxton, 1997) executive director managers will need to have know-how however other competencies will be required to create a synergy. Ideally these competencies will be found in all t he persons involved with the project. Some of the competencies required by the human resources management team when selecting the members of the strategic alliance are flexibility, humbleness, integrity, patience, curiosity, and not afraid of making mistakes. It is important that HRM determine whether the right person can be found within the ranks of the company or whether impertinent recruiting is the best choice. This decision is crucial for the future of the alliance.CONCLUSIONIn order for an alliance to work the human resources team must take the time to understand the challenges existing when putting two companies together and they have to be willing to unite two groups of managers that will have to plan for and build their new organization they need to be sensitive to the human, organizational culture, and cultural issues that have to be addressed along the way. more or less important, the human resource team needs to find and motivate executives that want to grow their busi nesses and create added value for their shareholders, customers, employees, and themselves.What we can assume from the several researches that have been done is that, cooperation and effective management are major points for the success of the alliance. From the problems that appear within a strategic alliance, these related to the human resource management which participate in the alliance especially stand out. Therefore, using knowledge related asymmetries may be a way to protect a companys specific asset while gaining valuable knowledge from the alliance without attacking the partner company.Another situation that has to be taken into consideration is that the appearance of cultural challenges does not mean that the strategic alliance will be dissolve. The human resources team has to put in place a cookery programme for cultural understanding to help employees cope with the differences. On the other hand, it is very important to implicate managers with multicultural skills with in the alliance team to be able to sooth any possible tension.Finally, we can ascertain that the top reason of creating an alliance with another firm is that the union promotes attainment of strategic goals more cursorily and inexpensively than if the company acts on its own. Especially in this era of intense change, rapid technological throw away and ever-increasing globalization, alliances enable organizations to gain flexibility, leverage competencies, shared resources, and create opportunities that otherwise are unthinkable. Even though pragmatism shows us that the number of strategic alliances that have succeeded is very low.