Page 108 - DMGT545_INTERNATIONAL_BUSINESS

Unit 6: Modes of Entering International Business

6. The interest of governments in attracting foreign capital and technologies without ceding notes
control of local companies to foreigners.
figure 6.1: evolution of factors leading to alliances

6.3.3 Goals of alliances

Alliances include a wide variety of goals which companies are completely or partially precluded
from achieving when confronting competition on their own.

Setting New Global Standards

Entering into an alliance can be the best way to establish standards of technology in the sector.

PHILIPS-SONY

In the late 80’s, Philips was in essence pushed out the VCR market, when Japanese producers
managed to impose their standards. To avoid new defeats, Philips created various alliances with
Japanese rivals to assure technological compatibility among European and Japanese products.

The compact disc (CD) was designed with a global standard by virtue of a series of alliances:
1. Between Philips and Sony, which not only contributed to the planning of the CD and sound
reproduction, but with its presence in the alliance dissuaded other Japanese producers
from seeking alternative solutions?
2. To spread usage of the CD and the standard, Philips ceded the production licensing in
exchange for modest royalties.

3. Philips and DuPont made a 50-50 joint venture to produce and sell optics components for
the audio-video market.
4. Philips and Sony jointly launched the mini-CD.

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