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Global Strategic Alliance (GSA), Infrastructure and Control: Argentina YBF and Sunoco

Prepare a paper describing the structure, implementation, and impact of a global strategic alliance. Please answer the following questions:

Exposition a priori for the IP:

There are two multinational corporations: Sun Oil Corporation (SUNOCO,) based in New Jersey, USA, and YPF Sociedad Anomina, based in Argentina. Sunoco refines, finds, and exploits deposits of petroleum called heavy crude. They make petroleum into marine fuels, coke, and lubricants. YBF is an Argentinean company that specializes in the exploration and exploitation of crude oil, natural gas, and liquefied petroleum gas in inhospitable regions.

Recently, the Argentinean government lent out exploration rights of Isla de Los Estados (an island 20 km East of Tierra del Fuego) to bid. A cursory survey done in the early 1960's stated that there was a 75% likelihood of substantial store of liquefied petroleum gas cached under the permafrost of the island. Sunoco wants to go find out how much liquefied petroleum gas is there.

However, the Argentine government requires all foreign-based corporations 'take on' an Argentinean-based partner.

A. How will you structure the global strategic alliance (GSA?) Will it be a joint venture (which one,) R&D Consortium with additional partners, et al.?

1) What are the characteristics of the GSA structure that you chose?
2) What are the core competencies, strategic advantages, skills, etc. that Sunoco brings to the GSA? Describe three skills, core competencies, and/or strategic advantages that Sunoco has that will increase the likelihood that the GSA will survive?
3) What does each of the partners hope to gain from the GSA? Other than a successful exploration of Isla de los Estados, what does YBF want out of the partnership as opposed to Sunoco?
a. Describe the objectives of this GSA from the standpoint of either YBF or Sunoco.
b. How will YBF or Sunoco achieve these objectives?

B. One of the major challenges facing any GSA is the differences between the partners in strategic vision and objectives. If you were to be made the senior manager for the GSA, describe the controls that you would put in place or steps you would take to minimize those differences.

1) Choose three control mechanisms, and describe how you would implement them.
2) Determine to what extent these three management control mechanisms will actually control the GSA.
3) Forecast briefly any problems or issues that could arise from implementation of these three control mechanisms.

Solution Preview

Global Strategic Alliance

Global strategic alliance (GSA) can be defined as a corporate agreement between two companies from different countries (Hill & Jones, 2009). For the exploration of Isla de Los Estados, the joint venture structure will be appropriate for both the firms. In this type of GSA, both companies will share resources appropriately to gain maximum benefits. The joint venture structure of GSA would include different characteristics. The first characteristics is that profit and loss would be shared equally as both companies have expertise in exploration and has sufficient resources (Steers & Nardon, 2006). The duration would also be fixed for the GSA structure as there are limited resources of liquid petroleum gas under the permafrost of the island. The long time partnership may affect the interest of Sunoco.

Core competencies, strategic advantages or skills:

There are various core competencies, skills and strategic advantages that Sunoco bring to GSA. The commitment of company towards health, environment and safety is one of the core competencies that it will bring in GSA. It would be support the long term GSA. The senior management of Sunoco represents its values and behavior towards the success of the organization that would also be effective to increase the effectiveness of the GSA (Sunoco, 2010). The other core competency that Sunoco will bring in GSA is the effective outsourcing and messaging services that would cause an increase in the direct communication with the end-users that is essential for the survivability of the GSA.

Some strategic advantages are also there that Sunoco will bring in the GSA and consequently it will cause an increase in the effectiveness of the joint venture structure. The strategic alliance with the Sunoco would open way to enter in the foreign market for YBF. Through the strategic alliance with Sunoco, YBF can enter in the market of USA on the other hand Sunoco may expand its business operation in Argentina. It would also provide the advantages of the shared fixed cost and shred risk that would be effective to increase the profits for both the organization from the GSA. The IT department and the other professionals of Sunoco are quite qualified and have a great experience in this field (Sunoco, 2010). The expertise of the professionals would be beneficial for the long run success of GSA. The ...

Solution Summary

This solution defines global strategic alliance, core competencies, strategic advantages or skills, gains from GSA to Sunoco and YBF, control mechanisms, compatibility of values for the partner firms, trust, intra-firm communication, effectiveness of control mechanism, and problems due to implementation of control mechanism. This solution is 1362 words with six references.