Not all the efforts to mold international coalitions are either global or strategic; some are mere extensions of traditional joint ventures-localized partnerships with a focus on a single national market. One example of a localized partnership is GM's venture with China to coproduce diesel engines and transmissions in that country. Neither the product nor the market is global. Other partnerships are loose amalgams of companies from different countries with little intention of attacking world markets systematically; these alliances usually want a short-term, tactical edge in manufacturing or marketing. A few partnerships widen their scope in order to focus their energies on a geographic region, such as the European Economic Community.
More important, but still not global, are those ventures aimed at the tricenters of economic power: the United States, Western Europe, and Japan. Even these ventures, however, are not global strategic partnerships by our definition. GSPs are those alliances in which:
(1 ) Two or more companies develop a common, long-term strategy aimed at world leadership as low-cost suppliers, differentiated marketers, or both, in an international arena.
(2) The relationship is reciprocal. The partners possess specific strengths that they are prepared to share with their colleagues.
(3) The partners' efforts are global, extending beyond a few developed countries to include nations of the newly industrializing, less developed, and socialist world.
(4) The relationship is organized along horizontal, not vertical lines; technology exchanges, resource pooling, and other "soft" forms of combination are the rule.
(5) The participating companies retain their national and ideological identities while competing in those markets excluded from the partnership.
SOURCE: H. V. Perlmutter and David Heenan, "Cooperate to Compete Globally," Harvard Business Review, March-April 1986, 137.
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