Benefits and Challenges Associated With Using Strategic Alliances

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BENEFITS AND CHALLENGES ASSOCIATED WITH USING STRATEGIC ALLIANCES
Over the past years, strategic alliance has been seen as an expansion in globalization and is a known device/mechanism used in the global market by different firms, which is widely accepted. Most leading companies have used different alliances to improve their resources better than their competitors.
Strategy involves planning for the future, is a direction for achieving long term profit through its capabilities and competence. Strategy is a long term commitment.
Strategic alliance is a joint agreement between two or more firms from different countries to co-operate in business and has agreed to share their resources to achieve a strategic objective and competitive advantage. However, the way an initiator of any alliance business positions the business influences its competitiveness.
Most firms enter into a strategic alliance for some key reasons such as; for reduction of risk, for organic growth, for improvement in market, to select out more resources, to create worth and creation of new market, which a single firm might not be able to achieve by standing separately. Firms are also involved in an alliance for technological development and for sharing research and development cost. Despite the benefits involved in the formation and entering international strategic alliance, there are also pitfall, which might prevent the formation and growth of firms, it includes the selection of the right partner, partners been dependent instead creating its own strategy, managing partner's weaknesses and strengths, learning partner's cultural differences. Moreover, some big companies such as computers, telecommunication and biotechnology used different kinds of alliance to improve...

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...elps alliance manager to deal with cultural behaviours. When challenges are recognize, they should make an effort to avoid it. Alliance strategy requires the alliance manager to deal with differences in culture by adapting to their cultural dispositions. However conflict must be eliminated and nature of the business, its reason, strategy, should be clearly stated in the new business.

REFERENCES
Johnson,G. , Whittington,R. ,Scholes,K. (2012) Fundamentals of strategy.2nd edn. Harlow;Pearson
Iynch,R.(2012) Strategic Management.6th edn. Harlow;Pearson
Mellahi,K. ,Frynas,G. ,Finlay,P. (2005) Global strategic management. United states; oxford university press
Rugman,A.(2009) The oxford handbook of international business. 2nd edn. United states; oxford university press
Tjemkes,B. ,Vos,P. ,Burgers,K. (2012) Strategic management alliance. United states; Routledge

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