MGT 201 Strategic Management Assessment Task 2. Individual Assignment (60%) Assessment Task 2. individual (60%) This assignment assesses your ability to work individually to deliver a set of strategic...

Environmental Dynamics and Strategic Orientations with respect to the Merger Acquisition
MGT 201 Strategic Management
Environmental Dynamics and Strategic Orientations with respect to the Merger Acquisition    
Strategic Alliance
Ranjit Singh    5/27/2020    
Introduction
Strategic alliance is a mutual agreement between two or more companies where the partners decides to either go for merger or acquisition. The benefits derived from the alliance may be in the form of increased synergy, reduction in costs, increase in production and supply and transfer and sharing of technical skills and knowledge among the employees. But, all the parties to the strategic alliance retain its independence. In a merger or acquisition a new separate business entity is formed for entering a new market, improve the product line and to have an added advantage over its competitors. The ultimate objective of the strategic alliance is common and beneficial for all the partners. The relationship of strategic alliance depends on the performance of either party to the alliance. Although there are various advantages of strategic alliance it can also have few drawbacks as well. There may be differences of opinion as both companies operate based on its own corporate culture. This may result in conflicts. Further there is requirement of trust and transparency between the partners to the strategic alliance. We will discuss about the three strategic alliances between various companies that have happened in recent times. (Investopedia; Strategic Alliance; By Will Kenton; 5th Sep 2019)
Benefits and Drawbacks of Strategic Alliance for International Expansion and Diversification Strategies
Strategic alliance is the mutual agreement between two or more businesses for gaining synergy where each of the parties earns more from the alliance than individually. There are several drawbacks of strategic alliances also. These may be during an international strategic alliance there is a chance of weaker management control and lesser stake in the equity of the business. There is also fear of erosion of goodwill due to strong brand of the local partner. There are chances of inefficient allocation of resources and breakdown in the communication system due to language barriers. There are possibilities of loss of control over the quality, costs and employee which can lead to difficulty in sustaining the target objectives. But, strategic partners must plan suitably to overcome these barriers and try to sort benefits out of the alliance. The various benefits can be as follows:
1. Try to enter and capture the new market strategically and with a deliberate approach
2. Exploit only those areas initially where the alliance have competitive advantages
3. Increase the sales by launching new products as per the customer preferences
4. Gain expertise in skills and technologies and expand the distribution channels
5. Learn more on the international and local culture and customs and expand the ranges of products and political foundation
6. Increase the brand image of the alliance infront of the global marketplace
(The Balance Small Business; Advantages and Disadvantages of Global Strategic Alliances; By Laurel Delaney; Oct 30th 2019)
Similar such strategic alliances happened between various companies and a range of new opportunities and benefits were derived out of these alliances. One such alliance was between the Delta Air Lines Inc and Northwest Airlines Inc. Delta Air Lines Inc got merged with Northwest Airlines Inc with the later became subsidiary of Delta Air Lines. Although Delta Air Lines maintained a strong cost structure and liquidity balance yet due to difficult situation faced by the airlines industry the merger was necessary for both the companies. This alliance enabled both the companies to cope with the economic challenges faced by the airline industry presently and in the future. The transaction was expected to generate more than $2 billion of cost synergies and efficient utilization of aircrafts. The total expense for this alliance was $600 million. The shareholders of Northwest Airlines will get 1.25 shares of Delta Airlines for each Northwest Airline shares they hold. (Delta News Hub; Delta and Northwest Merge, creating premier global airline)
Another strategic alliance was between Pemex – Petroleos Mexicanos and Shell Oil Company. It is a joint venture between the two companies where Shell oil will sell unleaded gasoline on a long term agreement to Pemex. Pemex being Mexico’s state owned refinery will acquire 50% of Shell Oil’s Deer Park Tex refinery. This joint venture was signed in the year 1993 and is a tremendous success for both Pemex and Shell Oil Company. The agreement was extended for further 10 years. The Deer Park Tex refinery is now the 10th largest refinery in US by its capacity. (RB Energy; Let's Stay Together - Pemex And Shell Renew Their Deer Park Vows, With A Commodity Twist; By Sandy Fielden; 9th June, 2018)
The Renault-Nissan-Mitsubishi strategic alliance is another example of how and why companies merge to gain enhanced competitive advantage and growth through their area of expertise. The alliance was initially conducted between Renault and Mitsubishi where Renault will assemble a variation of their own travel van for Mitsubishi which will be sold in the markets of Australia and New Zealand. As per the Alliance operating Board meeting it was stated that each of the three partners to the alliance will be the in operation from their respective regions. It will be Nissan for China, Renault operating from Europe and Mitsubishi operating from South East Asia. It was also decided by the chairman of the Alliance operating board to discuss on the strategies to enhance the governance with the directors of each companies to operate actively during this strategic alliance process. (Just Auto; Renault-Nissan-Mitsubishi Alliance Details new framework; By Graeme Roberts; 30th Jan 2020)
         
Role of centralized and decentralized decision making in striking the right balance between the rewards and punishments in an ethical and unethical strategic alliance
Centralization of decision making is conducted by the top managers or the top hierarchy of an organization. It means all decisions and strategies are formulated from the top levels and are implemented throughout the organization. On the other hand, decentralization is a process where the decision making is conducted by the...