2.1 can add their complement of ability.

2.1 Strategic alliance

A strategic alliance
is an agreement between two or more parties to pursue a set of agreed-upon
objectives needed while remaining independent organizations. In recent years,
international strategic alliances continue to dramatic growth in popularity and
both sides of firms take an advantage from an alliance.

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It is a difficult and
critical decision for multinational corporations when they decide to enter new
strategic alliance (Geringer, 1991; Ireland, Hitt, & Vaidyanath, 2002). In
creating a new alliance, the companies will find partners who can fill certain
skill and who can add their complement of ability. Dacin et al. (1997) mentioned
complementation is one of the important factors to choose alliance partner.

Nowadays global competition
lays the foundation for the company to develop strategic alliances at both international
and national level.  The choice of the
right partner is one of the most important factors in the successful alliance
(Kauser & Shaw, 2004a). According to Mendelson&Polonsky (1995) and
Elmuti&Kathawala (2001), a major step in creating successful alliance is
partner selection. Spekman (1998) finds that process of good partner selection strongly
depends on mutual goal between partners.

Gulati (1995) finds that
prior alliances establish ties that directly and indirectly affect on a choice the
new alliance partners. Gulati and Gargiulo (1999) argue that partners of new
alliance raise with prior ties, interdependence, centrality and common third
parties in alliance network. Also, they focused on intra-industry alliances.

According to Li and Rowley (2002), different evaluation criteria for alliance
and inertia plays an important role during the selection process.

Geringer (1991) asserted
that affinities in organizational culture and former alliance experience with
firms could affect alliance performance. According to Harrigan (1988), the
longevity and stability of an alliance would have positive effects on
performance. Lewin and Kozin (2000) mentioned that one of the reasons for the
failed alliance is lack of misknow each role of strategic alliance and mutual
connection between the firms of alliances. According to De Man and Duysters
(2002), there are main 5 reason for alliance failure – lack of trust, mismatch
of partner’s culture, operational problem, partner unable to deliver expected
competences, and mismatch with partner’s strategy.

2.2 Partner selection criteria

There are many selection criteria provided
for choices partner for strategic alliance. In 1951, Brendel tried to frame of partner selection criteria for
choosing channel members. He made 20 key questions for industrial companies and
questionnairies about  company’s
prospective channel members. Nowadays, this list of selection criteria  has become most important literature. Most of
those questions were related to consumer products company. Hlavacek and
mcCuistion (1983) made another set of selection criteria which is added some
criteria to Brendel’s list.

Pegram (1965) offered channel member
selection criteria which are divided to number such as management succession,
management ability, sales performance, market coverage, attitude, market coverage
etc. He used broader range and large number of companies.

Another most important set of criteria is
proposed  by Shipley (1984). This study
based on industrial companies in United Kingdom and USA and criterias divided
into three groups as product and service factors, sales and market factors,
risk and uncertainty factors.

Hagen (2002), Jamali (2004) and Holtbrugge
(2004) argue that main criteria for alliance partner is four C’s as control,
capability, compatibility, and commitment. These four C’s were derived through
extensive analysis and study of the existing research on strategic alliance. So
many researchs and case studies  have
shown the signifance of four C’s to the strategic alliance success (Brouthers
et. All 1995).

Brouthers et.al, find that alliance
performance measures depend on researching how the multivarious factor such as
selection criteria, characteristic of partner, alliance experience.

2.3 Related
literature to Mongolian insurance

Kang-Soo Kim et. Al (2011) mentioned that

According to Mongolian government policy, most
risky sector such as agriculture, aircraft, have to coverage from re-insurance.

in 2009, Mongolian insurance firms paid out 5.9 billion MNT (Mongolian currency,
tugrug) to main international resinurance companies which included insurance
coverage for MIAT aircraft, Mobicom, Mongolian Railways and Erdenes Mining