Global Business 2e
C ha p t e r 12
Making Alliances and
Acquisitions Work
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Define alliance and acquisition.
2. Articulate how institutions and resources influence
alliances and acquisitions.
3. Describe how alliances are formed.
4. Outline how alliances are evolved and dissolved.
5. Discuss how alliances perform.
6. Explain why firms make acquisitions.
7. Understand why acquisitions often fail.
8. Participate in two leading debates on alliances and
acquisitions.
9. Draw implications for action.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DEFINING ALLIANCES AND
ACQUISITIONS
Strategic alliance
Voluntary agreement between firms involving
exchange, sharing, or co-developing of products,
technologies, or services
Contractual (non-equity based) alliances
Associations between firms that are based on
contracts and do not involve the sharing of
ownership
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DEFINING ALLIANCES AND
ACQUISITIONS
Equity-based alliances
Alliances based on ownership or financial interest
between the firms
Strategic investment
One firm invests in another as a strategic investor
Cross-shareholding
Both firms invest in each other to become crossshareholders.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DEFINING ALLIANCES AND
ACQUISITIONS
Acquisition
Transfer of the control of operations and
management from one firm (target) to another
(acquirer), the former becoming a unit of the
latter
Merger
Combination of operations and management of
two firms to establish a new legal entity
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
RESOURCES AND
ALLIANCES
Real option
An investment in real operations as opposed to
financial capital
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
RESOURCES AND
ALLIANCES
Relational (or collaborative) capabilities
Ability to manage interfirm relationships
Learning race
Situation in which alliance partners aim to outrun
each other by learning the “tricks” from the
other side as fast as possible
? What types of things would a firm seek to learn
in a learning race?
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
RESOURCES AND
ALLIANCES
Acquisition premium
Difference between the acquisition price and the
market value of target firms
Strategic fit
Effective matching of complementary strategic
capabilities
Organizational fit
Similarity in cultures, systems, and structures
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
EVOLUTION AND
DISSOLUTION OF ALLIANCES
Firms can combat the threat of
opportunism by:
 Walling off critical capabilities, or
 Swapping critical capabilites through
credible commitments.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLIANCE DISSOLUTION
Initiator
Party who begins the process of ending
the alliance
? Can you think of other ways in which an
alliance is like a marriage?
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
MOTIVES FOR ACQUISITIONS
Hubris
Over-confidence in one’s capabilities
Managerial motives
Managers’ desire for power, prestige, and
money, which may lead to decisions that
do not benefit the firm overall in the long
run
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.