Unsuccessful Equity Strategic Alliance
Strategic alliance can be an advantage for companies. However, strategic alliance is hard to be managed as it caused a high number of failures. There are many factors causing the failure of strategic alliance. Different in perception, different in culture, trust issues and many other that cause alliances to fail (Robynhenderson101's Blog 2011).
There are many companies that have failed in strategic alliance, one of them are Suzuki Motor Corporation and Volkswagen AG. These two companies will be discussed more in this part of the report about their alliance. Suzuki Motor Corporation is a Japanese automobile company. Volkswagen AG is a Germany automobile company.
In 2008 to 2010, there are a crisis in the industry of automotive, which cause automotive company to loss billions dollar of money including Volkswagen (Uaw.org 2014). Therefore, to save up the money, Volkswagen and Suzuki combined strategically to reduce the amount of loss and the cost of production. Volkswagen also interested in entering the market to India. Because Suzuki have the strength in the India market for their expertise in small cars, Volkswagen approach them and have goals to compete in India (Indian Express 2009). From this strategic alliance, they also have goals to produce efficient fuel car by hybrid and electric cars. Not only in India, they are also willing to develop in building low cost and fuel-efficient car in Thailand.
However, due to several factors, Volkswagen and Suzuki have failed in strategic alliance. The main factor why they ended the strategic alliance is the different of demands. According to the news, in the press conference the Chief executive vice president said that they have different in demands (Business.nikkeibp.co.jp 2011). Which means their goals are different. According to the Chief executive vice president, it seems the technology that Volkswagen have no purpose in the eco-friendly project. Which is one of the reason why Suzuki wants to end their partnership. Their different demands have caused the conflict and Volkswagen does not seems to have an equal partnership with Suzuki. Suzuki does not see that the technology Volkswagen have could move Suzuki forward in Eco-friendly project. Volkswagen also failed to make the partnership into a win-win situation both for them and Suzuki. According to Forbes, one of the reason why alliances fail is they did not discuss clearly of the win-win situation outcomes (Whitler 2014). The other factors is the conflict in technology sharing. From the partnership, Volkswagen benefits by gaining many information about the small cars while the Suzuki does not gaining much from the eco-friendly information They disagree in the technology sharing where Volkswagen does not allow Suzuki to buy the engineering product from Fiat. This shows that Volkswagen does not want to share their technology much to Suzuki. However, Suzuki have spoiled too many information to Volkswagen. Their disagreement on sharing cause them to split their alliance. Which means they have the lack of trust between both companies. Volkswagen does not trust Suzuki with their technology and also Suzuki did not trust Volkswagen with the information. From Suzuki point of view, Volkswagen benefit while Suzuki did not benefited anything from the partnership because of the disagreement. The next factor is the different in Culture. The way Japanese and German does business are completely different, which caused conflict between those two companies in the alliance. Both companies have different way of doing business as they have different culture. Japanese are more slow, decision-making where the Western-culture are more decisive. According to Volkswagen, the progress of the project are going slower than it was expected. The most common factor why strategic alliances fail is the cross-cultural differences. Many Japanese company and the other country company often fail in strategic alliance is...
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