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UNDERSTANDING STRATEGIC ALLIANCES
Introduction
It is no longer an era in which a single company can dominate any technology/ business by itself. ...
Strategic alliances are partnerships whereby two or more firms choose to cooperate for their mutual benefit by combining their resources- financial, managerial, and technological as well as their competitive advantages. Alliances are often called cooperative strategies. ... For example in 1992, Kodak and Fuji two fierce competitors in the film market formed a strategic alliance with camera manufacturers Canon, Minolta, and Nikon to develop a new standard for cameras and film, the Advanced Photo System, to make picture taking easier and more goof-proof. ...
There has been a huge increase in the number of alliances being formed over the past few years mainly due to:
„h Advancements in technology, changes in traditional competitive advantage, the rising costs and risks of research and development and shorter product lifecycles
„h Convergence of technologies, based on the creation of new industries based on the growth of technology and mergers between companies to develop new sectors. ...
The most common type of strategic alliance is a joint venture but there are other types of alliances that have been formed depending on the companiesˇ¦ objective to form the partnership. ...
Non-Joint Venture Strategic Alliances
A strategic alliance that is not a joint venture may be formed merely to allow the partners to overcome a particular hurdle that each faces in the short run. ... Non-joint venture strategic alliances often are formed for a specific purpose that may have a natural ending. ...
Equity Strategic Alliances
These alliances consist of two or more partners who have different relative ownership shares (equity percentages) in the new venture. As with most global manufacturers, Toyota has equity alliances with suppliers, sub-assemblers, and distributors; most of these are part of their network of internal family and financial links.
Non-Equity Strategic Alliances
These partnership agreements are carried out through contract rather than ownership sharing. ...
Global Strategic Alliances
These are working partnerships between companies across national boundaries and increasingly across industries. A glance at the global airline industry, for example, shows that global alliances have become a main component of competitive strategy. ...
There has no doubt been a huge increase in the number of alliances being formed. Considering the advantages of these alliances will provide a better understanding to the ever increasing popularity of these partnerships.
Scope of Strategic Alliance
The range of cooperation among firms varies significantly, varying form comprehensive alliances to a more narrowly defined alliance. ...
Most comprehensive alliancesˇ¦ are organised as joint ventures due to the absence of a formal integration. ... Also comprehensive alliances allow for synergy through sheer size and total resources, for example General Milllis joint venture with Nestle, allowed the company become a serious competitor for Kellogg, through the use of General Millis knowledge of cereal making and Nestle marketing and distribution techniques. ... The types of Functional Alliances are:
„h Production Alliance
This is a functional alliance where two or more firms each produce products or provide services in a shared facility. ... For example Mattel, an USA toy manufacturer and their Japanese rival Bandai established a strategic alliance in 1999 on the basis that Bandai would distribute Mattel products in Japan while Mattel agreed to market Bandai Power Rangers in Latin America.
Approximate Word count = 2730
Approximate Pages = 10.9
(250 words per page double spaced)
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