Multinational strategic alliances and acquisitions in Central and Eastern Europe: Partnerships in privatization

Abstract

Executive Overview Multinational corporations (MNCs) often enter emerging market countries through acquisitions of or alliances with privatized companies or state-owned enterprises (SOEs). Acquiring SOEs and forging strategic alliances—ranging in intensity from nonequity contractual relationships to joint ownership—give multinationals potential market advantages in regions like Central and Eastern Europe that are undergoing economic transformation. In many Central and Eastern European countries, however, MNC partnerships or acquisitions can be seen as threats by state enterprises, privatized companies, government agencies, or political interest groups that oppose foreign domination of domestic industries. In order to succeed, MNCs must develop alliances or acquisitions as win-win arrangements that benefit not only their own shareholders, but also their host-country counterparts and governments. MNCs can carefully plan win-win arrangements through a process that clearly defines and prioritizes business objectives, identifies the most effective entry channels and options, assesses the potential impacts on major host-country stakeholders, determines local partner fit, and creates mutually beneficial results. Alliances and acquisitions are more likely to succeed when all stakeholders see MNCs as partners in privatization and economic transformation.