In: Operations Management
1. Discuss the reasons that companies embark on cross-border strategic alliances. What may other motivations prompt such alliances? What are the driving forces for firms in emerging economies to embark on strategic alliances? How can SMEs expand abroad through relationships with MNCs?
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Cross boarder strategic alliance are done by multiple reason, Lets study example of starbucks and TATA strategic alliance at India.
1. To gain access to Indian market by starbucks with TATA brand value associated as consumer dependable.
2. Political risk get mitigated by associating with onsoil company increase here TATA
3. To evade import hindrance and licensing barrier and protectionist legislation set by Indian authorities.
4. To share the expenses of research and new initiatives as well funding.
5. To gain rapid entry to beverage industry by TATA by associating with world renowned Starbucks. Also to take advantage of business synergies
In general, MNCs dominate the market in which SMEs operate. MNCs can provide resources and knowhow to SMEs to develop innovative product to rollout in SMEs host country or worldwide through global licensing. In turn SMEs provide MNCs to gain market in their niche area of operation.