Use alliances only selectively. Alliances with foreign companies have become another managerial fad and cure-all: they represent a tempting solution to the problem of a company wanting the advantages of foreign enterprises or hedging against risk, without giving up independence. In reality, however, while alliances can achieve selective benefits, they always exact significant costs: they involve coordinating two separate operations, reconciling goals with an independent entity, creating a competitor, and giving up profits. These costs ultimately make most alliances short-term transitional devices, rather than stable, long-term relationships.