An Agreement Between Firms To Cooperate Of A Joint Goal Is

The management structures that control cooperation are multiple and generally unique for each relationship. Cullen identified five typical management structures used by companies for their joint ventures and strategic alliances: the dominant parent company, the joint management structure, the shared control management structure, the independent management structure and the rotating management. Not all joint ventures and strategic alliances cross international borders. Companies in the same country can enjoy many of the same benefits as those found in an international cooperation agreement. In 2007, SAB-Miller and Coors set up a joint venture that merged their U.S. operations. The two companies merged their portfolio of brands to consolidate their position in the beer market. According to SABMiller, the scale and increase in resources will allow companies to invest more in brands and product innovations. The Company anticipates that lower operating costs will result in cost synergies in the $US 500 million per year.

When companies in developed countries cooperate with companies in less developed countries, they usually achieve huge cost savings by looking for cheaper labor and unused reserves of equipment. The company in the less developed country benefits from advanced technology and better access to capital. Both companies benefit from the cooperation. Many U.S. companies have been attacked as they moved their production sites to Mexico “south of the border,” hurting U.S. workers. Companies are criticized for partnering with governments in developing countries to maintain cheaper labor in less developed countries and thus reduce their production costs. Many argue that it hurts American workers, but opponents often overlook the benefits the developing country receives. Often, large U.S. business offers jobs in areas with alarming unemployment rates and offers them infrastructure and support they have never had before. In a rotating management structure, key positions in the hierarchy between companies rotate.

Each company assigns a person for its mandate. This structure is popular when an alliance partner is from a less developed country. This type of management helps train local management so that technology and expertise are transferred to the community, Cullen said. and strategic choices. In many cases, a joint venture is considered to be a subsidiary of the dominant parent company. When large multinationals form alliances with companies in small countries, the multinational often presents itself as a dominant parent company….