Globalization and Multinational Enterprises: The Role of Strategic Alliances in Expanding Market

Abstract

The global economy has benefited significantly from globalization, allowing multinational enterprises (MNEs) to move beyond their borders and reach new markets. Indeed, forming strategic alliances is a part of this expansion strategy and an important tool for MNEs to streamline the challenges present within different global markets that are invariably competitive. These partnerships, frequently with local companies or
fellow international titans, not only grant MNEs invaluable insights into the regulatory landscape and consumer markets of foreign countries but also extend opportunities to leverage capital reserves that are difficult for local competitors. You mention that strategic alliances reduce many of the risks associated with foreign entry modes (e.g., cultural differences, political instability or unfamiliar legal environments) experienced by MNEs. The use of alliances is increasingly seen as a way to pool resources, exploit technological innovation, and quicken the
pace in bringing new products or services into development, ultimately providing a competitive advantage. Since the innovation process in sectors such as pharma and technology with high sunk R&D costs is lengthy, MNEs can reduce their costs up to the post-decisive stage by sharing risk among allies using specific capabilities of each other. We conclusively state that strategic alliances are key instruments for MNEs globalisation, enabling a more flexible and adaptable market expansion process that favours innovation with the needed fast agility to cope abrupt changes in economic environment worldwide.