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 beginnin...

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...company had established a viable synergy, both going into the agreement with hidden agendas having numerous lawsuits against each other for technology infringement. The alignment is said to have lacked a clear vision, trust and respect from the start, having lost the companies a total of $150 million.

Human factors

Assessing the success of a strategic alliance

Strategic alliances will be assed on the degree in which they allow their partners to obtain the goals and objectives outlined by the organisations. The reasoning being that in an age of rapid innovation and uncontrollable environments that it may not be easy to assess failure unless it involves a financial loss. However assessing the success of an alliance is of extreme importance as it distinguishes the re negation of the alliance and the condition/ benchmarks by which the new alliance if any will go by.