Introduction: Strategic Alliances
and Multinational Management
Webster's dictionary defines strategic as 'important' and alliance as 'association of interests'. Strategic alliances, then, are associations important to alliance partners and formed to further their common interests. They can involve franchising and licensing agreements, partnership contracts, equity investments in new or existing joint ventures and consortia.
Strategic alliances are well-known tools available to, and used by, multinational business managers. For example, of the more than 167000 foreign-funded investments in China in the mid-1990s, 64% were joint ventures and 15% were cooperative partnerships (Wong et al, 1996). In the auto industry, more than 1000 alliances have been created worldwide; in the airline industry, the number exceeds 300. Strategic alliances have proven to be important to both domestic and multinational businesses, as well as to the economies of the countries involved.
The question appears to be not whether multiple partnerships and joint ventures should be used, but how to develop and manage them effectively (CE Roundtable, 1997; CEO Brief 1997a,b). Jim Kelly, CEO of United Parcel Services (USA), for example, believes that developing a core competency in alliance management is critical to success in multinational business. In his view, UPS' development of such a core competency in strategic alliance capabilities through its many multinational alliances has given his company a major competitive edge (Kelly, 1997).