Advantages And Disadvantages Of Strategic Alliances Pdf

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Franchisors should go into partnerships unselfishly and with clear expectations from both sides—just as they would before signing on a franchisee. To prosper and grow as a franchise, more often than not, there will be a point when it will be necessary to find creative new ways to expand and develop into new markets.

References Investopedia Strategic alliances. The role of strategic alliances in high-technology new product development. Strategic Management Journal.

Strategic Alliance: What is it, Types, Benefits & Why You Need it.

If you've reached a point that you feel you've gotten about as far as you can on your own in charting your export strategy , it's a good time to consider joining forces with another company of similar size and market presence that is located in a foreign country where you are already doing business, or would like to.

That's a global strategic alliance. Before you can move ahead though, it's important to understand exactly how a global strategic alliance works, and what it can and cannot do for you.

Alliances are typically formed between two or more corporations, each based in their home country, for a specified period of time. Their purpose is to share in the ownership of a newly formed venture and maximize competitive advantages in their combined territories.

The cost of a global strategic alliance is usually shared equitably among the corporations involved and is generally the least expensive way for all concerned to form a partnership. An acquisition, on the other hand, offers a faster start in exploiting an overseas market but tends to be a much more expensive undertaking for the acquiring company—one that is likely to be well out of the reach of a solo operator.

While a global strategic alliance works well for core business expansion and utilizing existing geographic markets, an acquisition works better for immediate penetration to new geographic territories.

A global strategic alliance is also much more flexible than an acquisition with respect to the degree of control enjoyed by each party. Depending on your resources, you can structure an equity or non-equity partnership. Within an equity partnership, you can hold a minority, majority, or equal stake.

In a non-equity partnership, the host country partner has a greater stake in the deal, and thus holds a majority interest. You might be surprised to find that you can build mutually advantageous alliances with some unlikely allies.

Many companies make conscious decisions to form partnerships with complementary or even competing companies that can offer them market share in countries they have been struggling to break into for years. Nokia and Microsoft, for example, have entered into a broad global strategic alliance where they plan to combine assets and develop innovative mobile products on an unprecedented scale.

By using their complementary strengths and expertise, these potential competitors thus ensure their mutual survival in the new global mobile ecosystem and marketplace. You'll probably feel most secure with a company with whom you already have a reasonably long-standing business relationship, especially if you have achieved substantial sales growth together. It could be your distributor in South Africa, a manufacturer who took on the distribution of your product in China, or that trading company in Japan who can't keep up with consumer demand.

Anyone of your contacts with a problem you can solve or a need you can fulfill could serve as a potential partner. There are many specific advantages of a global strategic alliance.

Here are You can:. There are also some trade-offs to consider:. Whatever the reason, what are you going to do if profits plummet, product quality deteriorates, or customers are dissatisfied? You do not have enough interest in the venture to take action. In any partnership, the majority interest holder tends to dominate, putting their needs first and their partner's last.

The ideal situation is a partnership that allows both parties to share in mutual successes, but if you do settle for a minority interest, make sure you maintain enough control to accomplish your objectives in the target market. Seek legal counsel that is well-experienced in international trade, acquisitions, joint ventures , and divestitures to go over the best- and worst-case scenarios with you.

You should hire counsel in both your own country and the host country for the maximum protection of your rights. You are not only seeking to ensure the fundamental integrity of the partnership but to work out crucial entitlements and obligations such as copyrights, trademarks, patents, taxes, antitrust, and exchange controls.

You will also need to keep informed about the host country's political and economic stability. Get in touch with the local economic development offices within the host country.

They should be able to assess the country's future investment climate and to provide you with past, present, and future growth trends. This will give you a better idea of what kind of risks you will incur if you go ahead with the alliance. The Balance Small Business uses cookies to provide you with a great user experience.

By using The Balance Small Business, you accept our. By Full Bio Follow Linkedin. She is also the author of three books on exporting. Read The Balance's editorial policies. Continue Reading.

Strategic Alliances in Banking

If you've reached a point that you feel you've gotten about as far as you can on your own in charting your export strategy , it's a good time to consider joining forces with another company of similar size and market presence that is located in a foreign country where you are already doing business, or would like to. That's a global strategic alliance. Before you can move ahead though, it's important to understand exactly how a global strategic alliance works, and what it can and cannot do for you. Alliances are typically formed between two or more corporations, each based in their home country, for a specified period of time. Their purpose is to share in the ownership of a newly formed venture and maximize competitive advantages in their combined territories.

Hence, forming a joint venture with another company is seen as a plausible solution. It is not like a partnership agreement because this has a definite end to it as it focuses on a single project or undertaking. It does pose a great sense of benefit for both companies, but it also comes with its share of side effects as well. That is what we are hoping to bring to light in this article. Starting a joint venture provides the opportunity to gain new insights and expertise. Think about it; the market is now way easier for you to understand given the short-term partnership that you have forged.


As any process, it has its advantages and its disadvantages, and it takes a lot of work, from each partner, in order to make the alliance complete its goals.


The Advantages of Business Alliances

Defines the concept of strategic alliances as well as outlining the potential benefits and disadvantages of entering into such relationships. This will facilitate critical reviews of the nature and type of relationship that best satisfies their individual needs. Strategic alliances are a means of rationalizing business operations and improving the overall competitive position of a company and are important because of the sheer speed and dynamism of technological change which has opened up a wide range of new activity areas. Banking firms, however, experienced difficulty in defining the type of relationship that best suits their needs. In particular parties have difficulty in distinguishing strategic alliances from other forms of organizational relationships.

15 Global Strategic Alliances Advantages and Disadvantages

The Advantages of Business Alliances

A business alliance, also known as a strategic alliance, is a formal business relationship between two or more organizations that share similar short and long-term objectives. A business alliance structure can include joint ventures, franchising, cross-licensing, cross-marketing, and co-manufacturing. Although there are advantages and disadvantages of strategic alliances, they generally enable your company to realize its potential more quickly than if you pursued an objective alone. By allying yourself with a well-established company that has mastered a market that you find enticing, you can quickly enter that market without having to allocate significant financial resources. Another of the important benefits of strategic alliance is that it provides access to the unique know-how of the company with which you are partnering.

Alliances and partnerships are a key staple in business strategies for organizations large and small. But while many partnerships begin with big visions and aspirations, not all alliances turn out to be strategic. In the last few months, I have seen various new alliances being formed among top companies of the world. Alliances are business relationships. Each alliance is a joint venture where two or more entities work together to achieve a shared goal while remaining separate and independent. A strategic alliance goes a step further. It allows individual companies to achieve more together than they would have on their own.

Global strategic alliances offer incredible new opportunities for businesses of any size. Thanks to the availability of communication and information-sharing resources, a startup can form the same quality of alliances globally as a large corporation. Businesses are looking to form these alliances with one another more than any other type of relationship. In , for example, there were 11 major global strategic alliances that were formed, including one between MasterCard and Apple Pay. They recognized that their collective branding allows their resources to maximize the reach of their mission and vision.


The main advantages of Strategic Alliances between companies are: A strategic alliance allows a business to get competitive advantage through access to a.


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