2. INTRODUCTION
Forms of foreign market entry strategies move along
a of choice factors such as control, risk, investment
intensity, and potential profitability, starting from an
export activity and continuing with licensing
(franchising, foreign manufacturing, contract
production) and various forms of FDI (portfolio
investments, JVs, and greenfield investments), and
concluding with strategic alliances options.
3. CONCEPT
Co-operative relationships between two companies
even competitors that have decided to share resources
to undertake a specific, mutually beneficial project and
achieve mutual goals while remaining independent
organizations and maintain theirs autonomy .
• Less involved and less permanent than a joint
venture.
4. CHARACTERISTICS OF ACTUAL
STRATEGIC ALLIANCES
Strategic alliances are currently gaining in popularity,
partly due to the characteristics of the agreement (namely
maintaining independency while pooling forces together
to achieve a common goal) and partly due to market
globalization conditions that require access to resources
and networking structures of a much larger scale and
scope than ever before.
5. FACTORS PROMOTING ALLIANCES
Strategic alliances help companies:
• To find new market entries.
• To shaping of industry evolution.
• To develop a more effective process.
• To expand into a new market or develop an
advantage over a competitor.
• Learning and applying new technologies.
• To rounding out a product line.
• To among other possibilities.
7. TYPES OF STRATEGIC ALLIANCES
Collaborative agreements between businesses can
take a number of forms and are becoming
increasingly common as businesses aim to get the
upper hand over their competitors.
The main types of strategic alliances are listed
below:
• Profit strategic alliances
• Nonprofit strategic alliances
8. • Franchising
• Outsourcing: The 1980s was the decade where outsourcing really rose to
prominence, and this trend continued throughout the 1990s to today,
although to a slightly lesser extent.
• Affiliate Marketing: Affiliate marketing has exploded over recent years,
with the most successful online retailers using it to great effect. The
nature of the internet means that referrals can be accurately tracked right
through the order process. Amazon was the pioneer of affiliate marketing,
and now has tens of thousands of websites promoting its products on a
performance-based basis.
• Technology Licensing: This is a contractual arrangement whereby trade
marks, intellectual property and trade secrets are licensed to an external
firm. It’s used mainly as a low cost way to enter foreign markets. The main
downside of licensing is the loss of control over the technology – as soon
as it enters other hands the possibility of exploitation arises.
9. • Product Licensing: This is similar to technology licensing except that the
license provided is only to manufacture and sell a certain product. Usually
each licensee will be given an exclusive geographic area to which they can
sell to. It’s a lower-risk way of expanding the reach of your product.
• R&D: Strategic alliances based around R&D tend to fall into the joint
venture category, where two or more businesses decide to embark on a
research venture through forming a new entity.
• Distributors: If you have a product one of the best ways to market it is to
recruit distributors, where each one has its own geographical area or type
of product. This ensures that each distributor’s success can be easily
measured against other distributors.
• Distribution Relationships: This is perhaps the most common form of
alliance. Strategic alliances are usually formed because the businesses
involved want more customers. It’s a win-win agreement – the bank gains
through offering a great deal to their customers, the insurance company
benefits through increased customer numbers, and customers gain through
receiving an exclusive offer.
10.
11. ADVANTAGES
Strategically it is a strong alliance when is composed with the best in
each field and the resulting solution is stronger than any of the part.
• Get instant market access, or at least speed your entry into a new
market.
• Exploit new opportunities to strengthen your position in a market
where you already have a foothold.
• Increase sales.
• Gain new skills and technology.
• Develop new products at a profit.
• Share fixed costs and resources.
• Enlarge your distribution channels.
• Expand your business and political contact base.
• Gain greater knowledge of international customs and culture.
• Enhance your image in the world marketplace
12. DISADVANTAGES
• Weaker management involvement or less equity stake.
• Less efficient communication.
• Poor resource allocation.
• Difficult to keep objectives on target over time.
• Loss of control over such important issues as product quality,
operating costs, employees, etc.
13. EXAMPLES
For example, an oil and natural gas company might
form a strategic alliance with a research laboratory
to develop more commercially viable recovery
processes.
A clothing retailer might form a strategic alliance
with a single clothing manufacturer to ensure
consistent quality and sizing.
A major website could form a strategic alliance with
an analytics company to improve its marketing
efforts.
15. STRATEGY ALLIANCE BY IBM
IBM, is an American multinational technology and consulting
corporation, with headquarters in Armonk, New York, United
States.
16. • strategic technology alliance formed by Monsanto Co.
and International Business Machines Corp. to develop
a genomics research database. Aim for the creation of
an IBM/Monsanto solution center; Terms of the
alliance; Products offered by the solution center.
• The Strategic Alliance between Nazi Germany and
America's Most Powerful Corporation in the following
way:
"[The book] tells the story of IBM's conscious
involvement — directly and through its subsidiaries — in
the Holocaust, as well as its involvement in the Nazi war
machine that murdered millions of others throughout
Europe.
17. Milly, Fred and James are all The Joint Venture
naturopaths located in different However over the course of their
areas around a city. They relationship as Milly, Fred and
decide to get together to help James get to know and trust each
each other with promotion. other they start to discuss new
They do a number of things opportunities and they see the
together. They share a stand at potential of offering natural
an expo, they run a shared therapies treatments to rural
advertisement in a Natural locations. So they decide to set up
Therapies magazine, they even a Joint Venture to open a mobile
do some of their purchasing natural therapies clinic to visit rural
together to reduce costs. All towns.
these are alliance strategies
