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Strategy for business collaboration

Good business collaboration has been a vital part of international business. Effective and efficient international joint venture (IJV) requires good corporate strategy that will very much determine the success of the collaboration. Corporate strategy is defined as “the direction an organization takes with the objective of achieving business success in the long term……The formulation of corporate strategy involves establishing the purpose and scope of the organization’s activities and the nature of the business it is in, taking the environment in which it operates, its position in the marketplace, and the competition it faces into consideration. Corporate planning and business plans are used to implement corporate strategy.” [i]

The proposed appropriate corporate strategies to achieve successful IJV are as follows:

  1. To establish clearly the stage of the company developments whether it is on survival, stability or success stages.
  2. To determine the expectation of the company whether to focus on internal or external growth or to balance between both. For IJV, it is more common for the company to pursue on the external growth that will lead on the acquisition, merger or collaboration exercises.
  3. To search potential business partner to be involved in the IJV. It is important due to the fact that both company needs to look for the motivations of the collaboration.
  4. To carry out appropriate analysis for its own business and the potential business partner such as SWOT analysis. The analyses are vital to know the commercial, legal, financial, technical, political and operational positions/implications and their present health before any further strategic decision to be made.
  5. To decide on the form of the collaborations with the potential business partners i.e. strategic alliances, joint venture companies or licensing.
  6. To address the commercial, legal, financial and technical issues in the IJV negotiations with the prospective partner.
  7. To finalize the key operational issues to ensure successful implementation of the project such as the most appropriate organizational structure (e.g. most joint ventures involving fast growing companies are structured as strategic corporate partnerships) and resource management.

The above steps could be summarised in the diagram below [ii]. It shows how the holistic collaboration process may take place.



[[i]] BNET Business Network,  Business Dictionary, Business Definition for Corporate Strategy [online], http://dictionary.bnet.com/definition/Corporate+Strategy.html (April 29, 2008)

[[ii]] Joint Ventures (JVs), Developing Joint Ventures [online], http://www.1000ventures.com/business_guide/jv_main.html (April 21, 2008)

Categories: Business Study
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