A business alliance is an open-ended agreement that governs the co-operation between two or more companies. An alliance may take different forms ranging from technology licensing arrangement to a partnered production venture. Alliances between companies have become integral to business success, particularly in high-tech industries. Recent trends indicate the increase in business partnerships between China and Western countries (Ulijin, 2010).
Strategy plays a key role in business alliances and is an integral aspect of the arrangement. Each company has a human resource (HR) department that handles matters regarding the workforce of the company. This renders the human resource an important player during the planning and execution of business partnerships. Human resource would, therefore, be a key aspect of a business partnership between a United States company and a Chinese company. This paper will outline the role of HR in a partnering decision and its function in the partnership. It will also analyze the factors that drive cross-cultural business alliances.
People residing in different countries have different cultures. A business alliance between companies in different countries will, therefore, consist of employees with different cultural backgrounds. The difference in cultures poses a risk to a business partnership. Despite the risk, there are factors that drive cross-cultural businesses and prove such alliances beneficial. One of the factors that drive cross-cultural business alliances is complemented associated with business alliances. One of the complements associated with business alliances is economies of scale. Economies of scale are that cost advantage that accrues as a result of increased output. Businesses enjoy high profits resulting from economies of scale. Alliances between companies increase the total output of the companies involved in the alliance. As a result of the increased total output, business alliances enjoy economies of scale hence high profits. This drives business alliances between companies with different cultures. Another factor that drives cross-cultural business alliances is power advantage. Power advantage refers to the ability of a company to control the market (Culpan, 2002). Business alliances, especially between large companies, offer power advantage to the companies. Power advantage gives the partnering companies an edge in competition. Government regulation also promotes cross-cultural business alliances. Businesses are important to governments since they pay taxes to the government that provides funds for public projects. Governments, therefore, implement favorable regulations that ensure thriving of business alliances. Favorable government regulations are a driving force in cross-cultural business alliances. Risk pooling involves partnering companies merging their resources and sharing the risk. Risk pooling minimizes the risks involved and promotes cross-cultural business alliances.The 5Cs are an integral aspect of business alliances. The 5Cs include capital, change, culture, customers and competition. They ensure the success of the business alliance and minimize the risks involved. Culture of the partnering companies must be compatible to ensure success of the alliance. Business alliances entail risk pooling and capital for the joint venture should be adequate. There should be enhanced capital access to meet the costs involved in the joint operations (Becker, 2002).Change catalysts should also be favorable to ensure profitability of the venture. Customers in the new market should also be receptive to the cross-cultural business alliance. An edge in competition deems the alliance profitable. Although all the 5Cs are important in alliances, culture and capital have a higher priority. Business alliances should emphasis on capital and the compatibility of cultures in cross-cultural alliances to ensure sustainability of the venture (Becker, 2002). Capital and compatibility of cultures are core parts of business alliances and determine sustainability and survival of any joint venture.The human resource department in corporations has been encouraged to become a strategic partner. HR is an important part of a business alliance. As a HR executive working for a U.S company, I would advise the C-suite to consider the cultural differences between the two companies. The cultural background of the workforce of the Chinese company is different from that of the workforce of a U.S company, and this is bound to have certain implications on the operations of the alliance. If the different cultures are compatible, this will ensure success of the business alliance. HR plays a role in the partnering decisions of a company. Human resource is important to the success of any company. HR is in charge of managing human capital, and it identifies the important leverage points where human capital contributes most to strategic success (Culpan, 2002). HR determines the compatibility of the workforce in terms of culture and other aspects during partnering decisions. Successful partnerships require a participative human resource department in the company (Culpan, 2002). The C-suite should involve HR in partnering decisions since HR plays a crucial role in determining the success of the business alliance. HR should go beyond its normal duties of performing due diligence prior to an agreement and specifically recommend business partnerships. This will ensure minimal incidences where partnerships fail due to lack of involvement of HR in partnering decisions. In conclusion, an alliance between a Chinese company and a U.S company is recommended. The alliance will enable the two companies to pool their resources and ensure sustainability of the venture. HR ensures compatibility of the two different workforce, which is integral to the success of the venture. There are also conducive factors such as favorable government regulation that drive the cross-cultural business alliance.
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