Jacqueline Cavalier Nelson Week 4 Academic Journal

Thousands of organizations are competing on a global level to increase an organization's brand and gain a competitive edge. In order to compete globally, many organizations form alliances vertically or with foreign governments to expand operations. What makes this difficult, organizations often make critical mistakes when forming a new alliance. According to Gulati (1998), failing to incorporate social aspects of both organizations can result in future constraints in the decision-making processes. This one step can help an organization succeed with an alliance or send it on the path to failure. Moreover, according to Gulati (1998), other factors affecting the future well-being of the alliance can include organizational and social cultural as well as governmental policies differing from the foreign corporation. All of these factors can affect a newly-formed alliance.

One of the most critical aspects of an alliance, is understanding the strategic management practices. Unless both organizations can understand and implement plans to overcome management differences, the alliance could suffer serious and debilitating circumstances. The overall goal is to enter into a successful alliance to compete on a global level or increase brand recognition on a global level. However, a significant number of global alliances end in failure. "Despite increasing popularity and strategic importance, however, the failure rates of strategic alliances lie between 50 and 80 percent (Walter, Lechner, & Kellermans, 2008, p. 530). Considering the strategy behind a global alliance, the failure rates for strategic alliances is extremely high. Given the failure rate outcome, it seems surprising organizations continue to look for alliance partnerships.

According to Walter et el (2008), procedures and policy practices need further study and development before organizations should consider entering into an alliance. "In spite of the broad academic and managerial attention that strategic alliances have received, we have only limited insights into alliance processes in general, and alliance-related decision making in particular" (Walter et el, 2008, p. 531). Moreover, Walter et el (2008), state that procedures in corporate alliance strategies has not been studied or analyzed in theory, or practice, over a long period of time. "Academic research has largely neglected concepts and measures that focus on decision processes as explanatory variables for alliance success" (Walter et el, 2008, p. 531). The lack of research evidence on corporate alliance procedures and restructuring is detrimental to the overall success of all alliance-forming entities. Further, Walter et el (2008), defines alliance-related decision making processes for all organizations to follow. "We define alliance-related decision making as an intra-organizational
process dealing with all the strategic judgments; actions taken, resources committed, or precedents set that a focal organization makes in a cooperation" (Walter et el. 2008, p. 531). What seems most important, the mission statement and values of organizations entering into an alliance must be aligned with each other or similar in structure to increase success rates.

Walters et el (2008), addresses concerns regarding decision making and corporate culture, "Concerning the latter, we acknowledge that alliance-related decision making – as
many other organizational phenomena – does not unfold in an intra-organizational vacuum, but is embedded in the micro-political fabric of the organization" (Walters, 2008, p. 531). Decision making is a fundamental strategic day-to-day procedure in every organization. Without policies in place to maintain organizational control through the alliance process, organizations will likely cross into unknown and foreign areas of cultural discord. "Organizations are comprised of coalitions with different, competing, and, in some cases, conflicting interests. Strategic decisions are assumed to follow the desires and subsequent choices of powerful organizational members and coalitions within the organization" (Walter et el, 2008, p. 531). Alliance-related decision making processes become increasingly essential to ensure successful alliance outcomes.

Critical mistakes can be avoided when forming new alliances. Considering social aspects of alliance-forming organizations will avoid constraints in the decision making process. Furthermore, important factors to consider for a successful alliance include culture and foreign governmental policies. Last, the most important factor in organizational alliances, is having and implementing alliance-forming procedures to avoid conflicts of interest, decision making differences, and competition between organizations.


References

Gulati, R. (1998). Alliances and networks. Strategic management journal, 19, 293-317.

Walter, J., Lechner, C., & Kellermanns, F. W. (2008). Disentangling Alliance Management    Processes: Decision Making, Politicality, and Alliance Performance. Journal Of Management Studies, 45(3), 530-560. doi:10.1111/j.1467-6486.2007.00749.x