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Sun Oil Corporation and YPF Global Strategic Alliance Global strategic alliance (GSA) is defined as a corporate agreement between two companies from different countries (Hill & Jones, 2009). For the exploration of Isla de Los Estados, the joint venture structure will be appropriate for both the firms. In this type of GSA, both companies will share resources appropriately to gain maximum benefits. The joint venture structure of GSA would include different characteristics. The first characteristics is that profit and loss would is shared equally as both companies have expertise in exploration and has sufficient resources (Steers & Nardon, 2006). The duration would also be fixed for the GSA structure because of limited resources of liquid petroleum gas under the permafrost of the island. The long time partnership may affect the interest of Sunoco. Sunoco brings various core competencies and advantages to GSA. The commitment of company towards health, environment and safety is one of the core competencies Sunoco brings to the GSA. The senior management of Sunoco represents its values and behavior towards the success of the organization that would also be effective to increase the effectiveness of the GSA (Sunoco, 2010). The other core competency that Sunoco brings the GSA is effective outsourcing and messaging services that causes increases in the direct communication with the end-users that is essential for the survivability of the GSA. Some strategic advantages Sunoco brings in the GSA causes an increase in the effectiveness of the joint venture structure. The strategic alliance with the Sunoco opens avenues entering into the foreign market for YBF. Through the strategic alliance with Sunoco, YBF can enter in the market of USA on the other hand Sunoco may expand its business operation in Argentina. It also provides advantages of the shared fixed cost and shred risk that would be effective to increase the profits for both the organization from the GSA. The IT department and other professionals for instance, engineers, at Sunoco are quite qualified and have a great experience in this field (Sunoco, 2010). The expertise of the professionals is beneficial for the long run success of GSA. The knowledge and experience of the professionals and senior management is effective to use the new and advanced technology for YBF that would be beneficial for individual organization. Each partner in GSA has different objectives. The major objective of Sunoco from GSA is expanding its business operations in Argentina to improve its global reach. The entry in the market of Argentina through the strategic alliance with YBF reduces the market cost of the Sunoco that is also an important objective of its management. The management of Sunoco also hopes to gain the large share of the liquid petroleum gas to cover a large market share and to increase its competitive advantages (Preparation for a Strategic Alliance). The strategic alliance is helpful determining the quantity of liquefied petroleum gas in Permafrost for the Sunoco and determining the future profitability. The other objective of Sunoco is accessing the customer and markets of YBF in the Argentina. The management of YBF hopes to gain the advantage of the advanced technology, distribution channel, expertise of the professional etc. from GSA as well an increase in the market reputation of YBF as Sunoco is a leading company of USA having a large market share. The business skills and capabilities of the Sunoco would also be used by YBF that would cause an increase in its business effectiveness (Preparation for a Strategic Alliance). The capital resources reduce the liability cost of the business in the exploration of the Island. Through Sunoco and YBFs partnership, YBF will not expand its business operation in the USA. The partnership is formed only to work in the Argentina for the exploration of Isla de los Estados. It has specialization in the exploration and exploitation of crude oil, natural gas, and liquefied petroleum gas in inhospitable regions that is not the segment of Sunoco. The expansion of the business in the USA would provide global exposure to the organization and would increase the competitive position (Kaluzny, Zuckerman & Ricketts, 2002). The objective of GSA from the standpoint of YBF is facilitating an effective exploration facility with the help of expertise and technology of Sunoco. The other objective is successful exploration of Isla de los Estados. The exploration requires a large resource of capital that can impact the financial position of YBF. The GSA would be effective to use the capital resources of Sunoco in the exploration that would reduce the finance cost for YBF and causing an increase in its profitability. To achieve this objective an effective form of the GSA should be facilitated. The sharing of risk, profits and resources with the strategic partner would be effective to accomplish these objectives of YBF from GSA. There should be a win-win situation for both the partners. The selection of right partner and development of trust is the main key to accomplish the objectives of GSA (Hitt, Ireland & Hoskisson, 2008). The difference between the strategic objectives and vision poses challenges for the GSA. The difference between the objectives and strategic vision of the YBF and Sunoco also creates challenge for the GSA. In order to minimize these differences, following control mechanism can be used. The norms, values and culture of the organization are becoming an important control mechanism to minimize the differences between the strategic objectives of the partners in a strategic alliance. To implement this mechanism the common values, norms and beliefs should be developed within the GSA. The organizational learning for an intermediate corporate culture would also be developed to implement this control mechanism (Katz & Shepherd, 2004). It is also important to have a control mechanism in efforts increasing the probability of desired behavior. The trust control mechanism is directly related to the length of partnership and the sharing of information between the partners. To implement this control, all the required information should be shared. The intra-firm communication would also be effective to minimize the differences between the strategic objectives of the firm (Katz & Shepherd, 2004). The increase in the communication would be effective to understand the objectives of each other that would facilitate more effective relationship in GSA. These three control mechanism would be effective to reduce the differences between the strategic objectives of the partners. The understanding of the each other’s corporate culture, values and beliefs would reduce the conflict between the interests and would be effective to increase the interest of both partners in GSA. These mechanisms would also be effective to facilitate a flexible partnership structure that would be beneficial to control the GSA at a higher extent. The flexible partnership structure would be effective to increase the congruence of values and effective management practices that would be beneficial for the GSA (Katz & Shepherd, 2004). The increase in the trust would also helps to facilitate and effective monitoring mechanism to reduce the difference and to control the GSA. The implementation of these control mechanism tools may cause the exposure of some confidential information of both the organizations that may affect their future operations. The issues of the security may rise due to implementation of these control mechanisms. It may also distract the focus of both the partners towards the main objective that may affect their position in international or domestic market. The implementation of the control mechanism would also cause an increase in the transaction cost for alliance partners that would affect them financially (Rugman, 2009). Thus, there are several issues that may rise from the implementation of control mechanisms. In order to reduce these problems the management of alliance should follow a proper process to implement them. References Hill, C. & Jones, G. (2009). Strategic Management Theory: An Integrated Approach (9th ed.). Cengage Learning. Hitt, M.A, Ireland, A.R. & Hoskisson, R.E. (2008). Strategic Management: Competitiveness And Globalization: Concepts & Cases (8th ed.). Cengage Learning. Kaluzny, A.D, Zuckerman, H.S. & Ricketts, T.C. (2002). Partners: Forming Strategic Alliances in Health Care. Beard Books Katz, J.A. & Shepherd, D.A. (2004). Corporate Entrepreneurship. Emerald Group Publishing. Preparation for a Strategic Alliance. (n.d.). Corporate Financial Associates. Retrieved May 28, 2010, from http://www.cfaw.com/library/200/CFA+Strategic-Alliance.pdf Rugman, A.M. (2009). The Oxford Handbook of International Business (2nd ed.). Oxford University Press US. Steers, R.M. & Nardon, L. (2006). Managing in the Global Economy. M.E. Sharpe. Sunoco. (2010). Retrieved May 28, 2010 http://hesreport.sunocoinc.com/fw/main/HES-Governance-218.html