Multinational corporations (MNCs) often enter emerging market countries through acquisition of or alliances with privatized companies or state-owned enterprises (SOEs). Acquiring SOEs and forging strategic alliances give multinationals potential market advantages in regions like Central and Eastern Europe that are undergoing economic transformations.
However, MNC partnerships or acquisitions are often seen as threats by state enterprises, privatized companies, government agencies, or political interest groups that oppose foreign domination of domestic industries. This article discusses the reasons for such opposition and gives an overview of the conditions of state-owned enterprises in Central and Eastern Europe. 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.
The article therefore describes the motivations for and impacts of MNC alliances and acquisitions and shows in which way each of the three involved groups (MNCs, governments, SOEs or privatized enterprises) can benefit. Despite a lot of convergent interests, however, there are also conflicting stakeholder interests that need to be considered.
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. The crucial elements of this decision making process are summarized in a checklist that aims to support the development of an appropriate strategy.