Introduction and Thesis Statement
In the modern day, alliances among companies in an industry have become very popular as a business strategy. A strategic alliance is formed when two or more enterprises come together to work as a single entity for mutual interests or benefits. Quite simply, a strategic alliance is one where a company strives to achieve their own objectives but in conjunction with another or others. In the contemporary business world, various sectors of the economy have witnessed the rise of several enterprises thereby promoting fierce and cut-throat competition. The need to form strategic alliances among companies has consequently increased given the desire of most corporations to have a competitive advantage over their rivals. Strategic alliances have advantages and disadvantages as far as emerging markets are concerned.
Purpose and Overview
The purpose of the paper is to analyze the case of corporations in the oil industry namely BP, TNK-BP and AAR. The paper looks to answer a number of questions for further understanding of the impact of strategic alliances on emerging markets.
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a) From an industry-based view, explain why alliances are a frequent mode of entry for the oil industry in Russia.
In Russia, alliances have become a frequent mode of entry for the oil industry to a variety of reasons. The first reason is for the companies to gain more capabilities. A corporation may desire to gain particular resources from exposure to higher levels of expertise, technology, and knowledge. Such an enterprise derives such capabilities from the firms in the alliance (Kuznetsov, 2013) . That said, the strategic alliance serves to offer corporations the opportunity to accomplish its goals as far as this aspect is concerned.
The second reason is the opportunity for easier access to target markets. Companies in the oil industry in Russia realize that it is both a costly and complicated process to secure a new market. Access to new markets is generally limited by harsh government regulations and hyper-competition. The venture is also costly considering the risk of losses of finances and opportunity costs as a result of improper market research. Selection of a strategic alliance as the mode of entry into the oil industry in Russia offers a leeway for these corporations to avoid most of these challenges.
In addition, strategic alliances help companies in the Russian oil industry to reduce their individual financial risks by sharing it all together. By sharing assets and projects, companies stand to lose a lesser percentage of what they would be they running as one enterprise.
Besides, strategic alliances enable companies to bypass political obstacles. The oil industry in Russia is governed by strict political regulations, especially against foreign firms. However, companies from other countries, have a chance to overcome such challenges if they merge undertake joint ventures with local firms. Through this, the companies are able to reach local markets overseas (Goes, 2013) .
Last but not least, strategic alliances as entry modes into the oil industry in Russia help corporations to achieve synergy and establish a competitive advantage. As the primary elements that foster the overall success of a business, companies are in a better position to acquire them while under a strategic alliance than as individual entities due to economies of scale.
b) From a resource-based view, the complementary resources and capabilities both sides brought to TNK-BP are as follows: Tangible assets are the most straightforward to assess since they are noticeable and quantifiable. Two key inquiries underlie the procedure of what openings exist for conserving on the fund, inventories, and settled resources as well as what the potential outcomes for utilizing existing resources more gainful are (Ekin & King, 2009).
Immaterial Resources
Quite a bit of an organization's worth originates from less characterized resources, for example, notoriety, innovation, or a specific arrangement of social properties inside the organization. BP and the Russian oligarch have effectively ensured their intangibles, while the AAR has more than once over-looked its center resources (Henderson & Ferguson, 2014). The brand is everything for a joint venture and oil-related organizations depend mostly on their innovation and licenses.
Human Resources
Individuals in organizations give aptitudes, information, instinct, and thinking (known as human capital). Also, the way of life inside an association comprises of connections, qualities, and schedules, and organizations that have a solid arrangement of administrative qualities have a key preferred standpoint over those that don't-through workers expanded personality with enterprise, expanded dependability and consistency and additionally a guide for proper conduct.
Center Competences
Core competencies imply to "make a lopsided commitment to extreme client esteem or to the proficiency with which that esteem is conveyed," and “give a premise to entering new markets" (Peng et al., 2007). So the thing to ask for this situation is whether such a thing or such a firm shows improvement over others. The way toward distinguishing center abilities can start from multiple points of view; the two more normal ones are through an order of all capacities as per capacity, or through an esteem chain examination that isolates a firm into little consecutive exercises. Case of a value chain involves innovation (licenses), Product Design (quality), Manufacturing (gathering), Marketing, Distribution (warehousing) and Service (guarantee).
Benchmarking
Benchmarking is critical on the grounds that it brings objectivity into the way toward distinguishing skills. It additionally conveys vain creative impulses down to the ground. To make a benchmark, one must distinguish regions of potential change; recognize world-driving organizations in every region; contact the organizations (visit, converse with directors, examine with specialists); and characterize objectives taking into account the learning done at those organizations (Lunden et al., 2013).
Evaluating Competitive Advantage
A wellspring of the upper hand must be rare, significant, strong, stable, and un-replicable.
Evaluating Resources and Capabilities
Assets and abilities should be evaluated against two key criteria. To begin with is their significance: which assets and abilities are most essential in presenting supportable competitive advantage. Secondly is to whether and where qualities and shortcomings are contrasted with contenders.
c) From an institution-based view, the formal and informal rules of the game governing the oil industry in Russia are as follows:
Russian gas and oil makers confront altogether different and differentiating arrangement situations in the European, CIS, and Asian markets. These are characterized by various advertisement rules; institutional standards; and natural principles. The issue is progressive to distinguish and take after the 'right' rules in every connection (Jelinek & Pettit, 2012). High trust supply relations versus expansion arrangements far from Russia; Vertically incorporated prevailing organizations underweight from EU law and courts; Politically-adapted market section, ideal level of Russian state inclusion; Two-sided strategy versus monetary basis for multilateralism
d) As an ethics consultant to BP, I would advise it to do the following as far as its conflicts with AAR are concerned.
I would first advise it to be more accommodating. By accommodation, I imply that it would be noble to maintain the piece with AAR by viewing the issue at hand as a minor one and working to resolve it. I would also advise BP to collaborate with AAR to eke out a solution that reflects the best interests of both parties. Compromising would also be another alternative for BP. Both AAR and BP would agree to lose a part of their original positions for the sake of an agreeable and acceptable solution.
e) If were an arbitrator in Stockholm, I would support the AAR because Bp had violated the terms of the agreement with TNK-BP VJ by signing a deal with Rosneft.
Conclusion
In conclusion, several benefits can be accrued from strategic alliances. It is also important to note that strategic alliances can be of various forms. The main principle behind a strategic alliance is cooperation through combining technology, skills, and knowledge, sharing production facilities, collective marketing and offering financial support to each other.
Lessons
The lessons learned from the case study is that companies in emerging markets should respect agreements made in strategic alliances regardless of individual interests should profits be realized and good will among partners maintained.
Recommendation
Governments along with other relevant authorities should establish fair rules and regulations that support the growth of businesses but mitigates the risk of foul play in any given industry.
References
Ekin, A. & King, T. (2009). A struggling international partnership: TNK-BP joint venture: International Journal of Strategic Business Alliances , 1 (1), 89. http://dx.doi.org/10.1504/ijsba.2009.023653
Goes, S. B. (2013). Foreigners in the Russian petroleum sector: the cases of Sakhalin-II and TNK-BP.
Henderson, J., Ferguson, A. (2014). Reflections on Partnership at TNK-BP: In International Partnership in Russia (pp. 206-238) Palgrave Macmillan UK.
Jelinek, M., Pettit, J. (2012). The joint venture (JV) handbook: IHS Consulting-Strategic Advisory & Transaction Support, September .
Kuznetsov, A. (2013). Global expansion of Russian multinationals after the crisis: Results of 2011. EMGP Report, April , 16 .
Lunden, L. P., Fjaertoft, D., Overland, I., Prachakova, A. (2013). Gazprom vs. other Russian gas producers: The evolution of the Russian gas sector: Energy policy , 61 , 663-670.
Peng, M. W., Sun, W., & Liu, X. (2007). Global strategy Posts & Telecom Press
