Brief introduction to strategic alliances

2. GROUP MEMBERS
ROLL NO NAME
5061 Kena Shah
5063 Vidhi Shah
5068 Kanishka Soni
5069 Shraddha Soni
5076 Awar Pavan
5082 Chauhan Neha
5083 Chauhan Urvashi
5085 Dadhaniya Yash
5086 Darji Nenshi
5088 Desai Sakshi

3. STRATEGIC ALLIANCE DEFINITION:-
(a) Alliance means "co-operation between groups that produce better results that can be
gained from a transaction. Because competitive markets keep improving what you can get
from transactions, an alliance must stay ahead of the market by making continuous
advances."
(b) A strategic alliance is when two or more businesses join together for a set period of time.
The businesses, usually, are not in direct competition, but have similar products or services
that are directed toward the same target audience.
(c) Strategic alliance is a primary form of co-operative strategies. "A strategic alliance is a
partnership between firms whereby resources, capabilities, and core competences are
combined to pursue mutual interests."

4. CHARACTERISTICS OF STRATEGIC ALLIANCE
• Two or more firms.
• Independence.
• Non equity loosely structured relationship.
• Alliance can be struck between competitors.
• Each partner must contribute.

5. REASONS FOR STRATEGIC ALLIANCE
 The 3 main reasons are :-
1) Entering new markets :- To introduce new product in new markets
2) Reducing manufacturing cost :- To pool capital & increase the use of existing facilities
3) Developing & diffusing technology :- To jointly build the technical expertise in developing
products
 The other reasons may be to :-
• Satisfy the customer needs – to serve changing customer needs
• Speed production introduction – narrowing of development-to-market lead time
• Share R&D costs – high financial costs involved & global market
• Capture new developments- the leaders can maintain their position
• Jump market barriers- it can help company to concentrate on new products development
• Pre-empt competitive threats- if can’t beat other competitors, join with them
• Use excess capacity- restructuring effect of manufacturing alliance

6. TYPES STRATEGIC ALLIANCE
1Joint Venture: In a joint venture partnership, two-parent companies
establish a child company. These alliance partners maintain the
relationship by sharing resources and equity with a binding legal
agreement. Whether formed for a specific purpose or ongoing strategy,
a joint venture has a clear objective, and profits are split between two
companies.
2. Equity Strategic Alliance: An equity strategic alliance is created when
one company purchases a certain percentage of equity from another
company. Thisis also referred to as a partial acquisition.
3. Non-Equity Strategic Alliance: In a non-equity strategic alliance, two
companies sign a contract agreeing to pool resources, decision-making,
and core capabilities.

7. TASK FOR THE STARTUP PHASE OF ALLIANCE :
Building a successful alliance requires careful planning and attention to
detail, especially during the startup phase. Here's a breakdown of the key
tasks is mentioned.

8. 1.Analyze History of Inter-Institutional Relationships:
• Understand past collaborations between your organization and the potential
partner. Identify successes, challenges, and learnings to inform your current
partnership.
• Activities:
a) Review existing agreements and documentation. Conduct interviews with key
personnel involved in past collaborations.
b) Analyze media coverage and public reports. Identify common goals, values, and
challenges.

9. 2. Review Organizational Mandate and Culture:
• Understand each organization's mission, values, and operating norms. Identify potential
areas of conflict or misalignment, and develop strategies to bridge them.
• Activities:
a) Review mission statements, strategic plans, and internal documents.
b) Conduct interviews with senior leadership and key personnel.
c) Analyze organizational structures and decision-making processes.

10. 3. Define Roles with Individuals and Organizations:
• Clearly define the roles and responsibilities of each individual and organization
involved in the alliance. This ensures accountability, avoids confusion, and optimizes
collaboration.
• Activities:
a) Develop a RACI matrix (Responsible, Accountable, Consulted, Informed) for key
tasks and deliverables.
b) Establish clear communication channels and reporting structures.
c) Outline decision-making processes and conflict resolution mechanisms

11. 4.Address potential operational challenges:-
A)Consistency of commitment and timeliness of action:
A common challenge in collaborative work is clash of individual institutional priorities.
Institutions will need to set principles incentives and performance criteria for all personal
involved in the work of the alliance.
B) Recognition of boundary relationships:
Each organization in the prospective alliance will belong to many other networks and
partnerships.
In effect there are concentric rings of relationships spreading out from the alliance.
Institute will need to plan how to inform and engage other networks and organizations in
various activities of the alliance.

12. C) Funding the costs of alliance management:-
A common factor in the failure of alliance is lack of funding available.
Institute will need to determine what realistic costs are for staff time and communications
necessary to ensure that the relationship does in fact lead to real added value and better
outcomes.
D)Financial planning and management:-
The institutes will need to consider how to manage the funds that are raised to support the
alliance
For that options are include
i. Each institute raises and manages its own fund
ii. One institute raises fund from several donors and distributes resources to the other
institute in alliance
iii. Each institute raises funds but combines those funds in a common trust with trustees
drawn from each institute.

13. 5) Implement a monitoring framework to assess alliance performance:
In order to determine whether the partners in the alliance are learning what they need to
learn to function as an alliance, they will need to monitor performance on two key points:
1.Effectiveness of the pilot venture:
Is this alliance really leading to new knowledge and greater impact?
2.Efficiency of the pilot venture:
Are the management issues being addressed?

14. BENEFITS OF STRATEGIC ALLIANCES
1. Gain a means of distribution in international market:
• it may be beneficial for an exporter to join with international partner. It allows your
business to reach new audiences and expand its reach globally.
2. Diversification:
• The benefit of diversification in a strategic alliance is like having more options on your
team. It helps to reduce risks and makes your business stronger.
3. Avoiding competition:
• An alliance may be entered into with a market leader or a major competitor to avoid
competition.
4. Focus on new products and restructuring:
5. Innovation:
6. Skill:
• It brings together complementary skills which cannot be possible for a company to
develop on its own.

15. 7. Technology transfer
8. Economics of scale
9. Foreign market
• It develops a habit to enter international market by expansion of
channels.
10. Overcome legal barriers
• In some countries it is mandatory to have local partners to conduct
business. Thus, alliances offer suitable options.

16. RISK IN STRATEGIC ALLIANCES
 Failure to understand and adapt new management.
 Failure to learn and understand cultural differences between the
organizations.
 Lack of commitment.
 Strategic goal divergence.
 Insufficient trust.
 Operational and geographical overlap.
 Unrealistic expectations.

17. MEASURING STRATEGIC ALLIANCE SUCCESS
1. DRIVERS OF STRATEGIC ALLIANCE :
Literature suggest that most common types of drivers are influence the propensity of
firm to enter into strategic alliances are turbulence in market, resources constraints, market
uncertainty etc.
A. Environmental Characteristics :- An organization consist of actors and forces of
outside the firm, which affects the companies attitudes, actions and outcomes. The relentless
challenges of globalization mandate alliance, making it absolutely essential to strategy.
B. Firm Characteristics:- Alliance improve the strategic position of firms in
competitive markets by providing resources from other firms that enable them to share costs
and risks in product design, production, marketing or distribution.

18. 2. STRATEGIC ALLIANCE FORMATION
A. Partner Match: Creation of alliance in which chosen partners are similar in
management style and company culture.
B. Strategic Orientation : It reflects the willingness of firm to enter into strategic
alliances and to adopt innovative strategies. Firm select strategy to improve competitive
posture and also to gain competitive advantage .

19. 3. STRATEGIC ALLIANCE RELATIONSHIP ATTRIBUTES :
A. Trust : Trust build the long term organizational relationship and also reduces the risk
associated With opportunistic behavior.
B. Communication : Communication allow partners to understand to alliances, goal, roles
and responsibilities of althea actors. It also helps with sharing and dissemination of individual
experiences.
C. Commitment : Both parties can achieve individual and joint goals without raising the
spectre of opportunistic behavior by high level of commitment.
D. Collaboration: A highly collaborative relationships provide the flexibility and adaptability
to overcome the uncertainties, resolve conflicts and achieve mutually beneficial outcomes.
E. Conflict Resolution : Conflict may distinguish as functional or dysfunctional. Functional
conflict would enhance an alliances performance, while dysfunctional conflict within alliance
would affect the effectiveness of alliance performance.

20. MODEL OF SUCCESSFUL STRATEGIC ALLIANCES

21. FEATURES OF SUCCESSFUL STRATEGIC ALLIANCES
• Values: To be successful in an alliance the organizations need to hold a shared
set of values about the cause they are championing and about ways of working
together.
• Leadership: Partnerships require champions in each of the participating
organizations, and these individuals need to take direct responsibility for
achieving the partnership goals.
• Clarity of Mission and Strategy: Each partnership needs to have great clarity
over its goals, achievable objectives with win-win opportunities for both
organizations.

22. • Board Commitment: The boards of all participating organizations need to be strongly
committed to the partnership and willing to support it through the goodtime and the difficult
times.
• Resources: Strategic alliances need to be properly resourced and there needs to be great
honesty and realism about the time and financial commitments each organization will have
to make to the partnership.
• Open and Honest Communications:. Each requires regular and thorough communication.
Formal communications should be supported by plenty of informal communication, ideally
at board, senior management and staff levels.
• Commitment to Good Faith Negotiations:( three ground rules) Without prior agreement
of all partners:
• There should be no material changes in the partnership proposition
• Negotiators must be named and there should be no changes during negotiations
• There must be no negotiations with other external parties