Trading in Other Places

By Leadbeater, Charles | Management Today, March 1990 | Go to article overview
Save to active project

Trading in Other Places

Leadbeater, Charles, Management Today

Industry is fast resembling a large urban park, criss-crossed by an increasingly complex network of trails, as companies beat paths towards one another to forge new corporate relationships.

Those with technological expertise are looking for partners who might provide access to new markets, especially overseas. Even large companies want allies who will share the risk and research development costs of launching new products more frequently. As products and projects, whether semi-conductors, new vans or suspension bridges, grow more complex, so it becomes more difficult for a single company to be expert in all aspects of its manufacture.

The days of the monolithic corporation which was capable of going it alone are fading fast. In future even large companies ill have to see themselves as the hub of a network of alliances, partnerships and joint ventures, if they are to succeed in increasingly competitive, international markets.

Once large companies might have strived to stand independently; now they have to accept interdependence as a condition of their success. In the past conglomerates might have relied on their power to own and tightly control upstream suppliers and downstream distributors. in the future companies will have to be much more open, flexible and trusting. They will have to rely on independent partners whom they cannot control through ownership.

Yet the growing importance of strategic alliances between partners who retain their independence will put new pressures on companies. The skills needed to develop a set of equal partnerships are very different from those needed to run a set of subsidiaries. How will companies need to change to make the most of alliances where their future is dependent upon an ally whom they cannot control?

There is little systematic evidence that international joint ventures and strategic alliances are spreading faster than cross-border mergers and acquisitions. But a recent survey by KPMG Peat Marwick McLintock's corporate partnership service found that, in the final quarter of last year, 287 partnerships were formed involving West European companies. Dick Porter, a KPMG analyst, says: The mid-1980S saw British companies on the acquisition trail, but now many companies see corporate partnerships as a low-risk, low-cost alternative, and as a way of sharing the high fixed costs of expanding into Europe.'

The capacity to engage in partnerships will become more important in the 1990S. In aerospace even Boeing has sought a partnership with three Japanese, heavy-engineering companies to launch its new 777 plane. Ten years ago British Aerospace was used to working largely on its own in the UK defence business. As the company has Internationalised and diversified, so it has become more dependent on a set of alliances - With Honda of Japan, Thomson of France, Daimier-Benz of west Germany and its other partners in the European Airbus aircraft programme.

The car industry is peppered with collaboration agreements. Even Ford and VW are having to collaborate to develop a new mini van to compete with the Renault Espace. Component makers are becoming used to collaboration not just horizontally with other component manufacturers but also vertically with their customers, the car manufacturers.

Western car manufacturers are seeking to reduce product development cycles from about 7-10 years a decade ago, to 2-3 years in the early 1990s. This means component makers will have perhaps 18 months to develop their components for a new vehicle.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Trading in Other Places


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?