Collaboration between nations can improve business alliances.In order to be able to improve their position in this global reality, organizations in the private or even the public sector should proceed fast to horizontal and vertical collaborations inside and outside their national borders on many levels, otherwise it will be extremely difficult to end up with the desired positive results.
It is a common observation that we have entered an era of turmoil that unfolds in front of our eyes every single day. This turmoil extends into many aspects of the social, political, business and economic life. Regardless of this situation, business life goes on and any organization has to adapt to this new situation and survive if it is to achieve improved results. Everything that happens today is the long term result emerging from a series of alliances on various levels over many decades.
Today more than ever, alliances are a vital goal to be met by business people in various industries all over the world in the advanced, developing or transitional economies, allowing industries to overcome many obstacles related to production, funding, marketing, business knowledge and expansion. Under the new yet transformed “new global normal”, alliances are an extremely important business strategy not only for the developing or under transition countries but for the advanced economies as well. This is because many industries in different nations are facing very similar problems although they may be operating in a completely different political and economic environment.
Strategic alliances are a very common practice in large scale business, in sectors such as banking, technology etc., but so far they have not proved effective among other sectors such as agriculture.
The most common forms of alliances have been between enterprises and are: joint ventures, cross-licensing, co-manufacturing, franchising, sell-through, sell-with, white- labeling, co-operatives, hierarchical relationships, R&D consortia, action sets, mergers and acquisitions etc.
Today we need something more than this. We need alliances and synergies between different national governments, organizations and institutions in order to get ahead of the bottlenecks and build a new form of inter-country economy of scale.
In order to be able to improve their position in this global reality, organizations in the private or even the public sector should proceed fast to horizontal and vertical collaborations inside and outside their national borders on many levels, otherwise it will be extremely difficult to end up with the desired positive results.
This kind of collaboration could solve many problems with regards to natural resources, climate change, poverty, global inequality and create a more stable social and economic environment in the long run.
To proceed to this type of inter-alliance or interstate agreement participating nations should:
- Build strong relationships with each other based on mutual short and long-term benefits and trust.
- Stabilize their political system and create a friendly business regulatory environment to allow collaborations between states.
- Promote mutual respect and understanding of the different national ethics and cultures.
- Help each other to take advantage of the strong points in their economies.
- Proceed to a balanced investment plan that will boost the sum of their economies, improve national weak points and exploit the wealth of each different nation/member.
- Create institutions that will ensure the smooth operation of this type of large scale alliance and make sure that this will work to the benefit of each participating state member.
- Examine carefully the structure of each separate economy to plan and execute a fair and realistic economic convergence.
- Develop a much more open minded way of thinking, focusing on the future.
This alliance between nations is much more important than the usual international collaboration of enterprises that so far has not managed to bring well being and prosperity despite being supported and controlled by a large number of social interest institutions.
The theory of alliances between nations has been primarily studied in the field of politics from the point of view of defense and foreign policy whereas the economic theory of alliances has been widely studied in the context of public goods (Olsen & Zeckhouser1996).
However, the inter-country alliances for promoting economic development and trade or investment have not attracted the necessary interest. The economic and political alliances between nations such as commonwealth groupings can contribute to foreign direct investments. But today, in these rapidly globalized economic and political alliances among nations, focusing on mutual benefits is becoming increasingly vital as international wide range alliances have not seemed to work effectively. A new type of alliances would have a broader goal than to simply promote trade and investment. Unlike bilateral treaties and regional trade agreements which have a very narrow scope, a commonwealth alliance would be an economic-political organization that could:
- Facilitate international negotiations
- Support economic and social development
- Achieve economy of scale and reduce costs
- Reduce useful over competition and protect from competition.
- Release funds for R&D
- Link the different national cultures
- Improve and extend knowledge and expertise
- Protect the environment and reduce environmental damages
- Protect national wealth and social prosperity
An example of this kind of alliance could be among Northern European nations or Mediterranean countries that already have many things in common and this alliance could protect and improve the social and economic life of these nations moving them forward to a more sharing and collaborative economy. Another possible inter-country alliance could be between Sub-Saharan developing countries and advanced nations with strong funding, technology and know-how capabilities but with weaknesses in raw materials.
In summary, the current alliances system must be improved and the above mentioned thoughts are suggested as one realistic way for the global economy to move to the next step in order to escape today’s deadlocks.
Sources:
Strategic Alliances: Formation, Implementation, and Evolution (Cambridge, MA: Blackwell Business, 1993)
The Changing Geography of International Business: Strategy, Performance & Institutional Change (Gary Cook & Jennifer Johns)
International and Strategic Alliances And Cultural Diversity (Daniella Hiedtmann) Strategic Alliances (Bain & Company)
Yves L. Doz and Gary Hamel. Alliance Advantage: The Art of Creating Value through Partnering. (Cambridge, MA: Harvard Business School Press, 1998)
Mariana Mazzucato, The Entrepreneurial State: Debunking Public vs. Private Sector Myths (London: Anthem Press, May 2013
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