STRATEGIC ALLIANCE
STRATEGIC
ALLIANCE
From software to steel,
aerospace to apparel, the pace of strategic alliances worldwide is
accelerating. A strategic alliance is an agreement between firms to do business
together in ways that go beyond normal company-to-company dealings, but fall
short of a merger or a full partnership. Strategic alliances can be as simple
as two companies sharing their technological and/or marketing resources. In
contrast, they can be highly complex, involving several companies, located in
different countries. Strategic alliances are becoming more and more prominent
in the global economy.
Strategic alliances
enable business to gain competitive advantage through access to a partner’s
resources, including markets, technologies, capital and people. Teaming up with
others adds complementary resources and capabilities, enabling participants to grow
and expand more quickly and efficiently. Strategic alliances also benefit companies
by reducing manufacturing costs, and developing and diffusing new technologies
rapidly. Any firm opting for strategic alliance incurs certain costs and risks
compared to a firm going alone. These risks include the loss of operational control
and confidentiality of proprietary information and technology. In addition, the
parties may deprive themselves of future business opportunities with
competitors of their strategic partner. Alliances also raise the spectre of
potential conflicts, loss of autonomy, difficulties in coordination and
management, mismatch of cultures, etc.
TYPES OF STRATEGIC ALLIANCES
