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Chapter 12 Learning Objectives
After studying this chapter, you should be able to:
1. articulate how institutions and resources affect alliances and acquisitions
2. gain insights into the formation, evolution, and performance of alliances
3. understand the motives and performance of acquisitions
4. participate in two leading debates on alliances and acquisitions
5. draw implications for action
Institutions, Alliances, and Acquisitions
formal institutions – set of formal legal and regulatory frameworks impacting:(1) antitrust concerns(2) entry mode requirements
informal institutions - imitation drives many alliance/acquisition decisions yet some firms rush into
alliances and acquisitions without adequate due diligence and then get burned
RESOURCES AND ALLIANCESVRIO Framework
Value alliances - must create value by reducing costs, risks, and uncertainties
real option - investment in real operations as opposed to financial capital
learning race - competitive situation in which partners aim to outrun each other by learning the “tricks” from the other side as fast as possible
acquisition premium - difference between the acquisition price and the market value of target firms
RESOURCES AND ALLIANCESVRIO Framework
Rarity - ability to successfully manage interfirm relationships—often called relational (or collaborative) capabilities— may be rarerelational (or collaborative) capabilities
relationships that occur within an organization firms must have unique skills to execute strategy
RESOURCES AND ALLIANCESVRIO framework
Imitability - one firm’s resources and capabilities may be imitated by partners- trust and understanding -firms without good “chemistry” may have a hard
time imitating such activities - firms that excel in integration possess
hard-to-imitate capabilities
RESOURCES AND ALLIANCES VRIO framework
Organization - alliance relationships are organized in a way that makes it difficult for others to replicate- whether acquisitions add value boils down to how merged firms are organized to take advantage of the benefits while minimizing costs
PERFORMANCE OF ALLIANCES
Factors that may influence alliance performance:
(1) equity(2) learning and experience(3) nationality(4) relational capabilities
None of these is able to assert an unambiguous, direct impact on performance