Success is not enough: The spectacular rise and fall of a strategic alliance between two multinationals

Abstract

This article analyzes a strategic alliance between two multinational companies from the same geographical region. Originating in the same industrial culture and with technically advanced, complementary products, they formed a strategic alliance for international growth in 1947. Despite significant changes in the market over the years, the companies remained market leaders and icons of a successful alliance until 1988, when the alliance suddenly collapsed. The study describes the alliance process from a long-term perspective using a theoretical framework based on motives, resources, competitive advantage, trust and performance. Although the alliance is no more, it is found to have made a substantial contribution to the collaborating firms with respect to their growth and expansion in the world market. Both partners achieved what they expected from the alliance. They also have developed well as competitive companies thereafter. The sudden end to the collaboration can therefore not be seen as a failure. However, it is argued that the separation process, as the process of alliance formation, needs to be taken seriously, and managers must give sufficient time and effort to ensure that the break-up becomes non-dramatic and less painful.