THE SHAPE OF PARTNERSHIPS TO COME
When Taiwan Aerospace opened talks aimed at buying 40% of the commercial airframe business of McDonnell Douglas for as much as $2 billion, a lot of observers shrugged off the deal as an inconsequential offer for a failing business (page 55). But the bid should be seen as an augury: More and more U.S. companies without the resources to compete globally on their own will have to seek out partners abroad.
This is nothing new, of course. Detroit's carmakers have done it for years, but they often managed the joint projects as extensions of their U.S. businesses and product lines. In the McDonnell Douglas deal, the U.S. company is ceding a lot of control and equity to the overseas partner. Something different is being created -- a hybrid adapted to irresistible new market forces, in this case rapid growth in Asia.
International management consultant Jordan Lewis argues that what he calls "partnering" is required to compete effectively in Asia, Europe, and North America. In this view, McDonnell Douglas is partnering with the deep-pocketed Taiwanese government that can provide entre into the rich Southeast Asian market for long-distance jetliners and at the same time muster considerable engineering and assembly knowhow. If it follows Lewis' logic, McDonnell Douglas will someday also find a partner in Europe.
There is a new challenge to U.S. management in all this. American companies should vigilantly protect their top technologies and manufacturing techniques built up over decades and plow profits from the partnerships into these areas of strength. That will prevent the hollowing out of the U.S. partners. At the same time, U.S. executives must be flexible enough to learn from their partners how to manage and market in the new environment.