Chapter 8: International Strategy 255for failure when firms use strategic alliances as an entry mode. Another issue is that inter-
national strategic alliances are especially difficult to manage. Trust is an important aspect
of alliances and must be carefully managed. The degree of trust between partners strongly
influences alliance success. The probability of alliance success increases as the amount of
trust between partners expands. Efforts to build trust are affected by at least four funda-
mental issues: the initial condition of the relationship, the negotiation process to arrive
at an agreement, partner interactions, and external events.^87 Trust is also influenced by
the country cultures involved and the relationships between the countries’ governments
(e.g., degree of political differences) where the firms in the alliance are home based.^88
Firms should be aware of these issues when trying to appropriately manage trust.
Research has shown that equity-based alliances, over which a firm has more control,
are more likely to produce positive returns.^89 (We discuss equity-based and other types of
strategic alliances in Chapter 9.) However, if trust is required to develop new capabilities
through an alliance, equity positions can serve as a barrier to the necessary relationship
building. Trust can be an especially important issue when firms have multiple partners
supplying raw materials and/or services in their value chain (often referred to as out-
sourcing).^90 If conflict in a strategic alliance formed as an entry mode is not manageable,
using acquisitions to enter international markets may be a better option.^918-4d Acquisitions
When a firm acquires another company to enter an international market, it has com-
pleted a cross-border acquisition. Specifically, a cross-border acquisition is an entry mode
through which a firm from one country acquires a stake in or purchases all of a firm
located in another country.^92
As free trade expands in global markets, firms throughout the world are completing
a larger number of cross-border acquisitions. The ability of cross-border acquisitions to
provide rapid access to new markets is a key reason for their growth. In fact, of the five
entry modes, acquisitions often are the quickest means for firms to enter international
markets.^93
For example, two European supermarket
chains have been seeking a merger which
will have significant effects in the U.S. mar-
ket. The proposed $29 billion merger between
Ahold, the Dutch owner of the Stop and Shop
and Giant chains in the United States, with
Delhaize, the Belgian operator of American
chains Food Lion and Hannaford, would give
the merged Ahold-Delhaize combination a
4.6 percent share of the U.S. grocery market,
making it the fourth-largest player by revenue.
This would give the combined European-
based firms a major footprint on the East
Coast and over 2,000 stores in the United
States. Ahold also owns Peapod, a large online
grocer in the United States thus strengthening
its stake in United States markets. Ahold owns
the leading grocery chain in the Netherlands,
Heijn, and has stores in Belgium and the
Czech Republic. Delhaize owns its namesake
store in Belgium, Alpha Beta chains in Greece,
and other stores in Eastern Europe.^94
LAURIE DIEFFEMBACQ/Getty Images
The CEOs of Ahold, Dick Boer (left), and Belgian rival Delhaize, Frans
Mullerand Delhaize, shake hands prior to announcing the merger
of these giant food distribution chains in a significant cross-border
merger.