If you do choose (or have no other options and still want to pursue the venture) a partner who has a drastically different corporate culture than your own, then of course it is essential to take that culture into consideration. Open and clear communication with the partner company will be essential when creating and defining the new, blended culture. You must take into consideration what aspects of your own, as well as your partner's culture, are essential to your company and its continuing success and write them into the plan for the overall atmosphere and goals of the alliance. As stated by Walters, ignoring the culture of your partner, or the fact that cultural differenes exist, will ultimately destroy any chances the alliance has of succeeding.
I mostly agree with the Walters, et al. argument that there needs to be a cultural blend when entering into an alliance. At times it may be more practical to simply seek out alliances that are already similar to your own existing operation. I also think there are a lot of considerations that need to be taken into account before deciding just how "blended" the corporate atmosphere should be. As stated in the paper, this all begins with selecting the right partner. Not only do you want a partner who is committed to the venture and who brings useful skills and strenghts to the parnership, but as with creating new foreign expansions, it may be best to choose a partner with many of the characteristics described in the CAGE model. Sharing a language, social norms and having similar political values can all help to reduce the need to drasically change alter corporate culture, allowing for a smooth transition into the venture and saving some money along the way.
I'm definitely on board with Khanna. I think the idea of a company addressing the "institutional voids" that exist in the emerging marketplaces they're looking to enter makes more sense than some of the other strategies. As an example, I think it's more important in most instances to understand if a country has the necessary infrastructure to support your business, than what the country's national goals are. It is also essential to know and understand the types of skilled employees that exist in the area you'll be moving into, and also understand the culture and preferences of the people in the community as well. I also appreciate that Khanna also addresses the major reasons why companies entering foreign countries are NOT successful, instead of merely analyzing potential profits.
I definitely could not agree more. I don't think a national strategy is something that you should give a great deal of weight to. Take the US for example, as a country their is certainly no official national strategy in place. (Lisa makes a great example when citing the change that comes with every election season). Though it certainly doesn't hurt to understand the general direction a developing country may be heading in, I wouldn't place the brunt of my decision-making on what I consider to be a vague theory.
Here is a link to a report from the USDA regarding the costs and other implications associated with food borne illness associated with foreign produce. One direct finding was that "Outbreaks of foodborne illness in the United States associated with imports of fresh produce affect not
only consumers and the growers of the contaminated product, but also frequently other suppliers to the U.S. market, including U.S. producers." I am not trying to say that NAFTA doesn't and can't work. I'm merely trying to point out that can often be many additional unintended costs associated with trading with less developed countries that must also be taken into account.
http://ageconsearch.umn.edu/bitstream/33647/1/ai0...
The main focus of these threads seems to be that cultural differences will be the main hurdle to overcome before the EU becomes a powerhouse. I feel that economic problems also cannot be ignored. The most recent and relevant crisis revolved around Germany's bailout of Greece. Beginning in February of this year, German Chancellor Angela Merkel began facing heavy pressure from the EU to offer support for Greeece's flailing economy. Greek Prime Minister George Papandreou said he would go to the IMF for an emergency loan if the EU couldn't come to an agreement. This move would greatly affect the strength of the euro, potentially effecting all member countries. In addition, Merkel, who was never keen on the idea of supporting Greece, was supported in her reluctance by the German people. Merkel even went as far to state that EU members using the euro should be able to kick out another country if that country's actions threatened the welfare of everyone else in the future. Though Germany eventually approved a bailout plan in May, it was made clear that the decision was only made in order to protect the euro and the EU. This is just one glaring example of what are sure to be future economic hurdles.
I think you make an excellent point when you discuss the problem with the dispute settlement mechanisms and their limitations. While as Peng points out, it is great than an increasing number of disputes are being taken to the WTO instead of those countries potentially declaring war, it is still only a recommendation, not an official ruling. It's almost like asking your parents for advice because you respect their experience and knowledge, yet you're still ultimately going to do what you want and think is right.
In regards to the many comments concerning the difficulties in coming to consensus based on the sheer size of the WTO, I also could not agree more. If there were some way to have the smaller organizations work on behalf of their member countries as representation during the WTO talks, I think significantly more ground could be made. Though it is tough for the smaller regional organizations to have the amount of clout as the larger EU and BRIC nations, it is still better to have one unified voice, which would reduce a lot of the "noise" that takes place during these negotiations.
Though I do feel that international trade is both necessary and can often be quite beneficial, I think that there are some very legitimate arguments against NAFTA. The main issue that I have with NAFTA is the difficulty in competing with a country that doesn't have to meet many of the the same standards our domestic companies do. There are significant costs associated with meeting the higher environmental, safety, labor, and other requirements which are necessary in the US (and Canada as well). When you factor in these costs, along with the practically non-existent tariffs that are a result of NAFTA, it's no surprise many US corporations choose to relocate their businesses south of the border, regardless on the local impact.
I feel that the DP World case is one in which the "concerns" the senators and representatives claimed to have were more a matter of getting votes than having legitimate fears. I think it's worth noting that P&O was originally a foreign-held company, not a domestic one DP World was trying to acquire. It's interesting that, as the article points out, most of our ports have been foreign owned and operated for some time. Only when ownership could potentially be transferred to a country less similar to our own do politicians begin to raise a fuss. I think this is based on the fear that existed (and still does) in this country post-9/11. As the article also states, both the Department of Homeland Security and the Pentagon analyzed any implications that could result from the deal, and found it to be safe. So, though I feel that there could be many legitimate concerns when it comes to the security of America, and especially its many major ports, I don't find that the case of DP World supports this theory at all.
I don't find it surprising at all that foreign companies are still exploring new oil reserves. Though the world is attempting to trend away from oil dependence and more toward alternative energy sources, it will be a long time until its use is extinct. In addition, you have to consider that though "Big Oil" companies will have to develop new technologies/strategies in the future in order to stay in existence, they will certainly exploit any remaining resources they can. It's a tough business model to get away from. In addition, the Nigerian government has made a dramatic effort not only to change its image, but its policies as well. In the last half-decade this has led to a significant increase in the amount of opportunities for foreign investors both through increased privatizaion and the "liberalization" of trade policies.
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Ruckus