Managing Across Borders Strategic Alliances Facilitate Organizations

Question: Discuss about the Managing Across Borders for Strategic Alliances Facilitate Organizations . Answer: Introduction Joint ventures or strategic alliances facilitate organizations with complementary skills and competence, which enables them to benefit from each others strength. They are familiar regarding technology, and other domains, in the event of a firms desire to be in an expansionist phase by the means of sales and operations, which is governed by a legal agreement between the two entities to access, and share the trademarks, assets, and technology. Nokia and Siemens, took a major step towards strategic alliance in the year 2006, when they entered into a joint venture contract to combine their fixed line and mobile phone network businesses. The chief executive of Siemens, Klaus Klienfeld, had stated that this venture was a significant step to strengthen their position in the market so that they are able to offer best quality services to its customers and earn revenues, tackling the challenges that come with convergence of technologies. Risk Analysis: Although the two companies have come together to mutually benefit from the strategic alliance, still a few risks are involved which can prove to be a potential threat to their growth, if not tackled appropriately. Since Nokia has no business in fixed-line or wire-line, it is now given with the responsibility of running a business in which Siemens has been continuously facing downturns since six years (Cavusgil et al., 2014). This could be a tricky situation for the company. The merging of these two companies can also be risky on the grounds of expense involved and the competition, which is likely to threaten the management to get the real value of the strategic alliance. The shareholders could also suffer in the short term, since this is a long haul contract, in which all the revenue generated will be revolving around the economies of scale and reaping full advantages of the rapidly converging wireless and fixed markets (Ding et al., 2013). Organizational controls: In order to cut off any possibilities of risks that is involved in entering the joint venture with Siemens, conducting a scanning process with respect to its legal, regulatory and accounting practices is a wise idea. This will give Nokia a clear idea if the venture is going to be a successful one. This screening will also ensure that the venture partner, Siemens will be able to deliver on its financial promises. Managing the staff after the companies enter a joint venture or strategic alliance can be a tricky situation as the staff is acquainted with the previous organizational structure and may find it difficult adapting to the change (Ertug et al., 2013). The solution could be a well-planned contract that embodies the structure, roles, rights and responsibilities of everyone working for the company. This will help in reducing the gap and bring the parties from the Nokia and Siemens on the same page. Trust is also a valuable instrument in controlling risks that emanate from global strategic alliances. Trust can act as a gateway to cooperative relationship between the partners. If the respective management of Nokia and Siemens trust each others intentions, they will be able to perform their responsibilities according to their contracts, with minimum conflicts (Sun Lee 2013). Conclusion The global Giants Nokia and Siemens formed a strategic alliance to achieve certain goals, which they could not have achieved individually. They must maintain their status as separate and independent entities, and reap benefits of the partnership until the contract ends. If the management on both the sides appropriately applies the instruments of trust and control, all the possibilities related to risks can be kept at bay. References: Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., Rose, E. L. (2014). International business. Pearson Australia. Ding, R., Dekker, H. C., Groot, T. (2013). Risk, partner selection and contractual control in interfirm relationships. Management Accounting Research, 24(2), 140-155. Ertug, G., Cuypers, I. R., Noorderhaven, N. G., Bensaou, B. M. (2013). Trust between international joint venture partners: Effects of home countries. Journal of International Business Studies, 44(3), 263-282. Sun, S. L., Lee, R. P. (2013). Enhancing innovation through international joint venture portfolios: From the emerging firm perspective. Journal of International Marketing, 21(3), 1-21.