What is strategic alliance? An arrangement between two companies that have decided to share resources to undertake a specific, mutually beneficial project.
expand into a new marketa company develop an develop a advantage Strategic alliance more over a help effective competitor process among other possibilities.
Stages of alliances formation terminat ion Alliance operatio Contract n Partner Negotiat AllianceStrategy Assess ionDevelop ment ment
WHY THE STRATEGIC ALLAINCES? Control Maximizarc Unify in corporate management and administration • answer market demands Family Wealth Reorganize retrenchment To reduce fiscal costs
the advantage1. Get instant market access, or at least speed your entry into a new market. 2. Exploit new opportunities to strengthen your position ina market where you already have a foothold.3. Increase sales.4. Gain new skills and technology.5. Develop new products at a profit.6. Share fixed costs and resources.7. Enlarge your distribution channels. 8. Broaden your business and political contact base. 9. Gain greater knowledge of international customs andculture. 10. Enhance your image in the world marketplac
Fear of market insulation due to local partners presence Loss of control over such Weaker managementimportant issues as product involvement or less equity quality, operating stake. costs, employees, etc DisadvantagesDifficult to keep objectives Poor resource allocation on target over time. Less efficient communication
Benefits Can capitalize on the strengths of each Participating single organization. Can Provide links to local contacts and local communities / stakeholders who may be critical to the success of the program you want to launch or implement. Involves Shared Responsibility for the development and execution of a special program or service. Limits to Participating organizations liability to the scope of project Involved. Reduced-cost Provides Opportunities and expertise for each Participating Organization.
There are four types of strategic alliances.Joint venture is a strategic alliance in which two or more firms create a legallyindependent company to share some of their resources and capabilities to develop acompetitive advantage.Equity strategic alliance is an alliance in which two or more firms own differentpercentages of the company they have formed by combining some of theirresources and capabilities to create a competitive advantage.Non-equity strategic alliance is an alliance in which two or more firms develop acontractual-relationship to share some of their unique resources and capabilities tocreate a competitive advantage.Global Strategic Alliances working partnerships between companies (often morethan two) across national boundaries and increasingly acrossindustries, sometimes formed between company and a foreign government, oramong companies and governments.