Which of the following is not one of the problems and risks of strategic alliances between
domestic and foreign fims A. Overcoming language and cultural barriers
B. The amount of time required to build trust, effective communication, and coordination
herween allies C. Developing mutually agreeable ways of dealing with key issues or differences
D. Making it harder to pursue a multidomestic strategy as compared to a global strategy E. Suspicions about whether allies are being forthright in exchanging information and expertise
The Correct Answer and Explanation is :
The correct answer is D. Making it harder to pursue a multidomestic strategy as compared to a global strategy.
Strategic alliances between domestic and foreign firms are partnerships formed to leverage resources, knowledge, and markets. These alliances bring together firms from different countries to achieve goals that might be too challenging or resource-intensive to pursue independently. While they come with several challenges and risks, the statement in option D about making it harder to pursue a multidomestic strategy as compared to a global strategy does not generally align with the typical problems associated with strategic alliances.
Here’s a breakdown of why option D is the correct answer:
- Nature of Multidomestic and Global Strategies: A multidomestic strategy involves a firm tailoring its strategy to each country it operates in, focusing on adapting to local needs and preferences. In contrast, a global strategy involves standardizing operations and products across multiple countries to gain efficiencies. Strategic alliances can actually facilitate both strategies by providing local insights and access to new markets (for multidomestic) and by leveraging economies of scale and shared resources (for global strategies).
- Benefits of Strategic Alliances: Alliances can enhance a firm’s ability to operate in diverse environments by combining different capabilities and resources that are complementary. This can support both global and multidomestic strategies depending on the alliance’s goals and the nature of the partnership. Rather than hindering a multidomestic strategy, alliances can empower firms to be more effective on a local scale through the partner’s understanding of local markets and cultural nuances.
- Misalignment with Common Problems: The more common problems of strategic alliances, as outlined in options A, B, C, and E, relate directly to the inherent challenges of managing and integrating across cultural, communication, and trust-based divides. These are practical, operational challenges that need to be addressed regardless of the strategic orientation (multidomestic or global) the alliance is meant to support.
In summary, strategic alliances can be designed to support various strategic goals, including both multidomestic and global strategies, thus making it inaccurate to claim that they make it harder to pursue a multidomestic strategy.
I’ll now generate an image to illustrate the concept of a strategic alliance between domestic and foreign firms.
Here is the illustration depicting a strategic alliance meeting between domestic and foreign firms. The image shows a diverse group of business executives engaged in a serious discussion, which visually represents the concept of international cooperation and strategic partnerships.
