Viewpoints on Strategic Alliances

An Asian Perspective on Cross-Border Alliances: Different Dreams (1997)

This 1997 supplement to the Cross-Border Alliances Viewpoint focuses on strategic alliances in Asia. It examines the critical challenges particular to Asian alliances and identifes critical success factors for doing business in the region.

Multinationals' interest and activity in Asian alliances has increased
dramatically over the past few years, due in part to the realization that alliances are often a necessary vehicle for accessing the Asian market.

There are two critical challenges facing corporations that pursue Asian alliances:

1) Agreeing on objectives: recognizing that the goals of Asian partners are largely driven by the stage of economic development of their home country, as well as by perceptions of strengths and weaknesses relative to Western countries 2) Avoiding implementation pitfalls: the key success factors and even the rationale for the alliance are often lost during the negotiation process because of the urgency to consummate the deal. During negotiations, greater emphasis must be placed on understanding partner motivations than on structuring attractive terms

Both of these challenges are reviewed in relation to China, South Korea, and Japan, to highlight key national variations. Despite these differences, certain basic factors are critical to doing business across Asia:

· The vision thing: success in Asia requires a clearly articulated top-down vision that is consistent with corporate objectives

· Look before you leap: Asia is a diverse portfolio of countries in terms of culture, size,   stage of economic development, and local business systems and styles

· Be a farmer, not a hunter-gatherer: take time to nurture relationships

· Know-who versus know-how: relationships are strategic assets of the corporation

· Build a capability to manage alliances

· Promise only what you can deliver, and deliver what you promise: reputations spread fast   and credibility is critical

· Empower the people closest to the market

· You never know who can play the violin until you ask: search for hidden pockets of   expertise

· A contract may be just the beginning

· Value the ride as well as the destination

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