Strategic Alliance

1. Strategic Alliance
Presented By: Mohamed Zakaria
Presented To: Dr. Amr Kheir El din
ESLSCA Global Business Diploma
October 2014

2. Definition of Strategic alliances
• Strategic alliances are cooperative agreements
between two or more companies to work together
and share resources to achieve a common
business objective, Each company maintains its
autonomy while gaining a new opportunity
• A global strategic alliance is an agreement among
two or more independent firm to co-operate for
the purpose of achieving common goal such as a
competitive advantage or customer value creation
while remaining independent

3. Definition of Strategic alliances
Strategic alliances are agreements
between companies (partners) to reach
objectives of a common interest. Alliances
are among the various options which
companies can use to achieve their goals.
They are based on cooperation between Companies

4. Motives for Alliances
• You can’t do everything.
• Adding value to product.
• Improving market access.
• Strengthening operations.
• Adding technological strength.
• Enhancing strategic growth.
• Building finance strength.
• New market entry INFORMATION

5. WHY STRATEGIC ALLIANCE..?
• Sharing resources like products, distribution
channels, manufacturing capability, project
funding, capital equipment, knowledge, expertise,
or intellectual property, to create Synergy to gain
Competitive Advantage
• “Our success has really been based
on partnerships from the very beginning.” Bill Gates

6. Purposes of Strategic Alliances
• Alliances enable buying & supplying firms to
combine their individual strengths & work
together to reduce non-value-adding activities
& facilitate improved performance.
• In order for both parties to remain committed
to this form of relationship, mutual benefit
must exist (i.e. a "win-win" relationship)
1+1=3

7. KEY FACTORS OF STRATEGIC ALLIANCE
• Select the proper partners for the intended goals
• Share the right information
• Negotiate A deal that includes risk and benefit
• Come to a realistic agreement on the time
• Mutual, flexible commitment on what's suitable to
change, measure and share within each partner's
culture
• Respect and protect the brand of each partner

8. PROCESS OF STRATEGIC ALLIANCE
Setting alliance strategy
Selecting a partner
Structuring the alliance
Managing the alliance
Re-evaluating the alliance

9. Types OF STRATEGIC ALLIANCE
Joint venture Equity strategic
alliance
Non- Equity
strategic alliance
Global Strategic
Alliances

10. Types of Strategic Alliances
• Joint Venture: an agreement by two or more parties to form
a single entity to undertake a certain project. Each of the
businesses has an equity stake in the individual business and
share revenues, expenses & profits.
• Global Strategic Alliances: working partnerships between
companies (often more than 2) across national boundaries &
increasingly across industries. Sometimes formed between
company & a foreign government, or among companies &
governments

11. Types of Strategic Alliances
• Equity strategic alliance: an alliance in which 2 or
more firms own different percentages of the
company they have formed by combining some of
their resources & capabilities to create a competitive
advantage.
• Non- equity strategic alliance: an alliance in which 2
or more firms develop a contractual-relationship to
share some of their unique resources & capabilities
to create a competitive advantage.

12. ADVANTAGES
• Improve organization efficiency.
• Offer to access new market and technologies.
• Reduce the impact of risk.
• Learning from partners
• Alliance could help a company develop a more
effective process expand into a new market or
develop an advantage over a competitor.
Competitive Advantage

13. Disadvantages
• Significant differences between the
objectives
• Irreconcilable differences in business
culture and management styles.
• Loss of control over such important issues
as product quality, operating costs,
employees, etc.

14. Examples of Alliances
Starbucks
Starbucks partnered with Barnes and
Nobles bookstores in 1993 to provide in-house
coffee shops, benefiting both
retailers.
In 1996, Starbucks partnered with Pepsico to
bottle, distribute and sell the popular coffee-based
drink, Frappacino.
A Starbucks-United Airlines alliance has
resulted in their coffee being offered on flights
with the Starbucks logo on the cups.

15. Mistakes Leading to Failure
• Alliance business is viewed internally by one
partner.
• One of the partners is too dependent on the
other’s capabilities.
• Problems and mistrust.
• Cultural & language barriers.
• Collaboration in competitively sensitive areas can
be difficult.
• A clash of egos might occur.

16. Examples of Alliances
• Nokia and Microsoft in alliance to make Zune phone
• Star Alliance – Airlines alliances.
• Philips and Sony jointly launched the mini-CD.
• Nestlé and Fonterra Sign Agreement on Dairy Alliance for
the America
• McDonald’s with Disney, Coca-Cola & Walmart
• Motorola-Toshiba: In 1987- Toshiba to produce
microprocessors & contribute access to the distribution
network.

17. THANKS