1.0 Introduction 簡介
BellSouth is America's third largest telecom company which provides telecommunications, radio communications and entertainment services, online advertising, Internet, data and e-commerce services for 41 million customers in the 17 countries in the world. In the development process, BellSouth has formed alliances with a number of enterprises, such as the Network media company named StarMedia Network (Menkus, 1990). The process of forming alliances provides valuable experience for study and research on how to establish corporate alliances (Coloma, 2007). This article first introduces how BellSouth forms alliances, and then it describes the advantages and disadvantages of equity-based alliances and non-equity alliances. Finally, it takes BellSouth as an example to discuss the consideration brought by termination of alliances.
2.0 Main body主體
2.1 Steps of BellSouth’s forming alliancesBellSouth組建聯盟的步驟
Steps of BellSouth’s forming alliances include, first, BellSouth bought StarMedia's $ 25 million convertible preferred stocks, taking 11% of the online media company's equity. Second, partnering with the company to create Web sites that enable affiliate clients enjoy BellSouth’s services (Coloma, 2007). For instance, StarMedia (STRM) and BellSouth (BLS) created a website in Latin America that allowed StarMedia's more than 12 million users through BellSouth’s services to use computers or mobile phones to have access to StarMedia website.
2.2 Advantages and disadvantages of equity-based alliance基于股權的聯盟的利弊
Strategic alliances constructed by way of equity participation make alliance members break through their respective limitations and utilize their complementary advantages in specific fields to expand their business. Equity alliances allow all parties in the alliance to jointly produce, share risks and share profits (Stouthuysen, Slabbinck, Roodhooft, 2017).
以股權為基礎的聯盟有利于擴大企業的財務實力，有助于增強互信和責任感，更有利于長期合作（DePamphilis，2017）。Equity-based alliance is conducive to expanding the financial strength of enterprises, and it helps to enhance mutual trust and sense of responsibility, which is more conducive to long-term cooperation (DePamphilis, 2017).
However, when partners collaborate in a coalition, they expose their potential knowledge, skills, and other valuable resources. Because the companies have a stake in the coalition, if the coalition fails, the money invested will go to naught; if the coalition terminates, it needs to be resold. The companies want to be detached from the alliance is also a very difficult and lengthy process with a high exit cost. Co-ownership not only reduces the flexibility of the companies’ strategy, but also reduces the flexibility of the decision-making of all parties involved in the alliance.
2.3 Advantages and disadvantages of non-equity alliances
The advantage of non-equity alliance is that each of them does not need to form an economic entity or a permanent institution, and the structure is relatively loose. The cost of capital invested by the alliance of enterprises is relatively low, and the management of the alliance also has more flexibility. In non-equity alliances, all parties generally are in an equal and interdependent position and remain relatively independent in their operations, which is advantageous for protecting their own core technological advantages.
The disadvantages of non-equity alliances are poor control of the alliances, poor stability and a lack of long-term interests in the loose organizations, inadequate communication among members of the alliances, inefficient organizations, etc.
2.4 Reflection on termination of BellSouth’s alliances
In the course of its development, BellSouth formed alliances with a number of companies, including StarMedia, IBM, and Protect One. Among them, there were successes and failures, such as its alliance with protect one in 2001, the alliance was terminated in 2007, the reason was that both parties have irreconcilable contradictions in their development strategy and marketing strategy, and the alliance has not brought the expected benefits to both parties. The author's thinking on the strategy of BellSouth’s alliances is that BellSouth always formed a alliance by way of equity-based alliance and hoped that the stability of the alliance would be guaranteed in this way. However, it did reduce the flexibility of the company's strategy and reduced the alliance flexibility of all parties' own decision-making, making the alliance fail to achieve the desired purpose.
Different alliances have different advantages and disadvantages for enterprises. Enterprises should choose suitable ways of alliance based on their own needs and characteristics. For the same reason, BellSouth always forms alliances with equity-based alliances, which reduces each party's own decision-making flexibility. Therefore, in the future, it must find a balance between the stability and flexibility of the alliance.
Coloma, G. (2007). The effect of the Telefonica–BellSouth merger on the Argentine cellular telephone market. Telecommunications Policy, 31(8–9), 541-557.
DePamphilis, D. M. (2018). Chapter 15: business alliances: joint ventures, partnerships, strategic alliances, and licensing. Mergers, Acquisitions, and Other Restructuring Activities (Ninth Edition), 551-582.
Menkus, B. (1990). BellSouth hacker charges dropped. Computer Fraud & Security Bulletin, 10(10), 5.
Stouthuysen, K., Slabbinck, H. and Roodhooft, F. (2017). Formal controls and alliance performance: the effects of alliance motivation and informal controls. Management Accounting Research, 37(12), 49-63.