Evaluate the ways in which strategic alliances can allow multinational companies to achieve ‘global integration' and/ or ‘local responsiveness'.

INTERNATIONAL BUSINESS STRATEGY Name: Grade Course: Tutor`s Name: (31 March, 2011) International Business Strategy Evaluation of the ways in which strategic alliances can allow multinational companies to achieve ‘global integration` and ‘local responsiveness` Strategic alliance can help multinational firms to be locally responsive as well as to be globally integrated meaning that the localizations strategy usually focus on increasing the profitability of the firm products and services facilitating provision of taste and preferences in various national markets while the firm integration strategy makes the firm sin alliance to be more configurable through the use of common languages as well as protocols amongst the business process as well as their supporting software. Multinationals employ two global strategies when it comes to staying competitive and these include strategies for global integration and strategies for multi-domestic which serve to fore see local adaptation of the companies. As it regards to strategies of global integration the headquarters of such multinationals coordinates all the activities of these companies involved for instance the operations concerned with production, logistics as well as distribution among the subsidiaries which implements the made decisions. Global strategies are targeted at increasing global efficiency as well as reducing the costs incurred by the multinational as whole unit. On the other hand the multi domestic strategies are geared towards the local response focused on foreseeing of the company`s local adaptations as a consequence of the realities that abound in the local markets in which such companies operates in. There exists several determinants of local responsiveness of multinationals has perceived by multinationals subsidiary managers in any dynamic environment. The several factors that affect company`s responsiveness are categorized into structural, environmental as well as organization where the studies have suggested that environmental complexities and the business culture peculiarly heightens the local responsiveness` of such multinationals where as the structural factors including the demand heterogeneity, competition intensity and the component localization serves to elevate local responsiveness. In add to that the orientation of the local market of the subsidiary and the established networks together with the business community an d the governmental agencies process such cop0na local responsiveness also. Finally its has also been found that there exists a stronger relationship between the influential factors ,the environmental factors and the responsiveness of most international firms especially those that are seeking expansion of their markets in local; spheres as compared to those pursuing growth in their exports. Most emerging multinationals often consist of groups of subsidiaries that are geography dispersed with a very wide range of goals to achieve therefore given the globalization of competitive environments duals imperatives of both the local responsiveness and the global integration are increasingly becoming are becoming critical actors when it comes to survival as well as the growth of many multinationals. Global integration is concerned with the coordination of the various companies` activities across the countries it operates in attempting to building efficient operational networks while taking maximum advantages of the similarities across such locations. On the other hand local responsiveness of the multinational are trying to enter into emerging markets is concerned in an attempt to respond to specific requirements and needs with in the various host countries of the multinationals business operations. Thus the foreign operational networks and subunits of such multinationals must be differentiated sufficiently to successfully confront markets, cultures as well as business practices in contrasts of those in their home county`s while at same tie be flexible enough to be accommodated within the structure fostering provision of a maximum contribution to corporate performance. Therefore asymmetrical agreements of the various subsidiaries become very necessary in coordination of the worldwide business within international networks of multinationals. Despite global integration and the local responsiveness can be inversely related their underlying determinants doesn`t have to be homogeneous and this is attributed to the fact that global integration of usually determined by the needs for internalization from the perspectives of the corporate headquarters, the local responsiveness is major influenced by the situational contingencies at the subunits levels. Maintaining the necessary local responsiveness help multinationals in maximizing subsidiary initiatives as well as the proactive pursuit of newer business opportunities in a manner that is consistent with the MNE`s goals and objectives. Such maintenance motivates the subsidiary managers to establishing sustained and solid relationships with its indigenous customers, distributors, suppliers, governmental authorities and competitors who in turn play a critical role of creating a more competitive opportunities or even serve to extenuate hazards both for the parent as well as the subsidiary firms. Local responsiveness becomes very significant part of the organization system for stimulation of the success of the business when the customer responsiveness and the product differentiation are essential in gaining of local competitive advantage. In addition o that for companies to enhance their economic efficiency from the local advantages demand opportunities, factor endowments as well as the local responsiveness becomes very necessary especially when such factors serve as an ante foundation for the formulation as well as implementation of appropriate corporate as well as business-level strategies in a particular international setting. A strategic alliance can be defined as a relationship between two or more parties i.e. companies or organizations to pursue a set of goals that are agreed upon or to meet a critical business need while at same time remaining as independent organizations. Such businesses are often not in competition but rather it`s their products that are directed to specific audience. Such alliances means a cooperation between various groups as it leads to production of better results often gained from transactions and given the fact that cooperative market continuously improve thus affecting what is derived from transactions then alliance must therefore keep on staying ahead of the market through progressive advances (Harzing, 2000). Strategic alliance is basically some cooperative strategies that involve combination of resources and core competences between companies to pursue mutual interests. Many fast growing technology companies use alliances to benefit from more established channels of distribution, brand reputation of better and bigger players and marketing. On the other hand other more traditional players tend to enter into strategic alliances for other reasons like cost reduction, geographic expansion, supply chains synergies and manufacturing (Bleeke, & Ernst, 1993). There are four types of strategic alliances that multinational companies can enter into: these include: equity strategic alliance, joint venture, global strategic alliance and non-equity strategic alliances. Equity strategic alliance is a type of alliance which two or more companies owns different percentages of a company in which they have formed by combining their resources and capabilities enabling them to create a competitive advantage in the market(Hill, 2001) The non equity type of alliance involve two or more firms developing a contractual relationship in which they share some of their resources which are unique to create a competitive advantage. Joint venture is a strategic alliance that two or more firms create a legally independent company that shares some of their resources and capabilities to enhance development of a competitive advantage. finally the global strategic alliance involve partnerships working between companies usually involving more than two in numbers and operates across national borders and industries which sometimes can exits between a company and foreign company or even between companies and governments (Dussauge, 1999). Generally strategic alliances involve arrangements made between two or more entities whose creation is to achieve mutual goals through the element of collaboration. Such alliances take several forms including contractual arrangements for instance license agreements, development agreements and marketing agreements, joint venture normally operated as separate legal entities like the corporations, partnerships and limited liability companies and minority equity investments. Regardless of their form strategic alliances have common features that includes: a defined scope and strategic objectives to achieve, existence of contractual agreement with in the set scope as well as the commitments to achieving a strategic objectives, an independence of the parties involved outside the definite scope of the alliance, specific and definite responsibilities the each of the party involved and finally existence of a fixed time lime by which the set strategic objectives must be achieved by the parties. Contractual agreement form of alliance is the simplest form consisting of short term arrangements deemed necessary and appropriate when no formal arrangement if needed while joint venture is the complex form of alliance that involve creation of separate legal entity by which the business resulting from the alliance is conducted. Joint venture is considered appropriate form if the parties in the alliance requires a significant commitment of resources from both he parties, if the joint venture will demand for unique regulatory issue, if the alliance will in its operation require a significant interaction between the parties involved, if long term alliance is intended, if the alliance demand for a separate structure of management and finally its considered appropriate if the alliance might in the long run be able to function as a separ...