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Strategic Alliance - Essay Example

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Strategic Alliance Table of Contents STRATEGIC ALLIANCE 19 2 Introduction 4 Strategic Alliance Trends 5 Reasons for Strategic Alliances 7 For entering into new markets and growth 7 To decrease the financial risk and share the cost of research and development 8 Achieve competitive advantage in market 8 To obtain new technology and innovation 9 Forms of Strategic Alliances 9 Risks of Strategic Alliance 10 The clash of different culture and absence of chemistry between the parties 11 Lack of right co-ordination among the management teams of different companies 11 Differences in the operation systems and attitude of the partners 11 Lack of clear objectives and goals 12 Relational Risk 12 Strategi…
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Download file to see previous pages Nike is one of the largest and most popular athletic footwear company, but it not manufacturing even a single shoe. Similarly, Boeing is one of the biggest aircraft manufacturing companies, but it does not manufacture not more than cockpits or wing bits. These companies have entered into strategic alliances with the suppliers to do the manufacturing activities for them. Strategic Alliance is an agreement between the firms for conducting the business activities together. Strategic alliance goes beyond just informal handshake agreements or partnership. It includes lengthy formal contract in which both the parties also exchange the equity and contribute capital to establish a joint venture firm or corporation Strategic alliance means merger of two companies. This is what is generally assumed, but companies are coming up for multi-strategic alliances nowadays. This might be because they are willing to utilize their strengths to controlling the market. For example, a strategic alliance of six companies was formed to develop General Magic Corporation for developing the communication software called Typescript. The companies involved in the strategic alliance are Apple, Motorola, Sony, AT&T, Philips and Matsushita (Longenecker, & TenaLoeza, 2010, p. 224). The large organizations not only form strategic alliance with big organizations but also with the small companies too. The alliances are formed in order to form joint ventures for using their skills and expertise to promote their competitive advantage. It links two business entities, without affecting the independent legal status of the firm or company (Kale, & Singh, 2009, p. 2). Strategic Alliance Trends The strategic alliances have become a superficial form of business practice, which has its primary focus on increasing the credibility of the business through association of one of more companies. It is also done for achieving the strategic objectives of the company, entering into new market, increasing the market share, increasing the delivery capacity of the company, reducing the cost of operation, and introducing innovative products or services in the market. The alliances of the companies nowadays contribute to 20-33 percent of their annual revenue. The companies get the advantage of handling larger order volumes; they get bigger customers and can offer high quality products or services to the customers. It can be seen that the strategic alliances between the companies are growing at a pace of 25 percent annually (Keasler, & Denning, n. d., p. 3). In an alliance, the different department of the whole organization get involved such as the sales, marketing, supply chain, delivery department, etc. SO it can be well assumed that the support of the internal resources is necessary for a ...Download file to see next pagesRead More
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