Strategic Alliance
Strategic Alliance
In today’s ever changing environments strategic alliances have emerged as a driving force behind the success of many business ventures. Strategic alliances allow companies to expand their reach without having to maximise their risk or commit themselves beyond their core business. Throughout this paper I will be examining the driving forces behind strategic alliances looking predominately at the motivations behind the formation of a strategic alliance and the idea of a multi company alliance. Following this I will be analysing the key elements that make for a successful strategic alliance and how a successful alliances are measured. After which I will be establishing the risk that are pronounced when entering into such ventures, looking at past ventures and the issues that prevented them from becoming profitable.
What are strategic Alliances
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” (Wheelen and Hungar, 2000, p. 125). Strategic alliances allow companies to remain independent organisations. Its main function is to gain competitive edge over the competition and this is recognized by the agreement of each company to commit resources to achieve a common objective. It involves full collaboration of both companies whereas they see the venture more beneficial to the development of the organisation then one could achieve alone.
Companies that can succeed with strategic alliances have the advantage of creating dominant position within their market share. To create a successful alliance sees organisations gain more control over its market and competitors.
In the beginning alliances where formed for a specific purpose to gain access to the best raw material at the lowest cost whilst enhancing technology and creating high levels of market penetration with the main focus being on
In today’s ever changing environments strategic alliances have emerged as a driving force behind the success of many business ventures. Strategic alliances allow companies to expand their reach without having to maximise their risk or commit themselves beyond their core business. Throughout this paper I will be examining the driving forces behind strategic alliances looking predominately at the motivations behind the formation of a strategic alliance and the idea of a multi company alliance. Following this I will be analysing the key elements that make for a successful strategic alliance and how a successful alliances are measured. After which I will be establishing the risk that are pronounced when entering into such ventures, looking at past ventures and the issues that prevented them from becoming profitable.
What are strategic Alliances
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” (Wheelen and Hungar, 2000, p. 125). Strategic alliances allow companies to remain independent organisations. Its main function is to gain competitive edge over the competition and this is recognized by the agreement of each company to commit resources to achieve a common objective. It involves full collaboration of both companies whereas they see the venture more beneficial to the development of the organisation then one could achieve alone.
Companies that can succeed with strategic alliances have the advantage of creating dominant position within their market share. To create a successful alliance sees organisations gain more control over its market and competitors.
In the beginning alliances where formed for a specific purpose to gain access to the best raw material at the lowest cost whilst enhancing technology and creating high levels of market penetration with the main focus being on