Introduction

Strategic Alliances have developed from an option to a necessity in many markets and industries.
Variation in markets and requirements leads to an increasing use of Strategic Alliances. It is of essential
importance to integrate Strategic Alliance management into the overall corporate strategy to advance
products and services, enter new markets and leverage technology and Research & Development.
Nowadays, global companies have many alliances on inland markets as well as global partnerships,
sometimes even with competitors, which leads to challenges such as keeping up competition or protecting
own interests while managing the Alliance.

Strategic Alliance
A strategic alliance is an agreement between two or more parties to pursue a set of agreed upon
objectives needed while remaining independent organizations. A strategic alliance will usually fall short
of a legal partnership entity, agency, or corporate affiliate relationship. Typically, two companies form a
strategic alliance when each possesses one or more business assets or have expertise that will help the
other by enhancing their businesses. Strategic alliances can develop in outsourcing relationships where
the parties desire to achieve long-term win-win benefits and innovation based on mutually desired
outcomes.
This form of cooperation lies between mergers and acquisitions and organic growth. Strategic alliances
occurs when two or more organizations join together to pursue mutual benefits. Strategic alliances have
emerged to solve many company business problems, and to spur collaboration and innovation.

Goals of Strategic Alliances

All-in-one solution

Flexibility

Acquisition of new customers

Add strengths, reduce weaknesses

Access to new markets and technologies

Common sources

Shared risk

Advantages:

Shared risk
Shared knowledge
Opportunities for growth

Speed to market
Complexity
Costs
Access to resources

Access to target markets

Disadvantages

Sharing

Creating a Competitor

Opportunity Costs

Uneven Alliances

Foreign confiscation

The five criteria of a strategic alliance:

There are five general criteria that differentiate strategic alliances from
conventional alliances. An alliance meeting any one of these criteria is strategic and
should be managed accordingly.
1. Critical to the success of a core business goal or objective.
2. Critical to the development or maintenance of a core competency or other source of competitive
advantage.
3. Blocks a competitive threat.
4. Creates or maintains strategic choices for the firm.
5. Mitigates a significant risk to the business.

The Nature and Significance of Strategic Alliance:

Strategic alliance is emerging as and proving to be a powerful management tool/technique in business
management, especially in the current era of globalization of business. But, unlike other management
tools or techniques, strategic alliance may harm the interest of business or even make the managers of the
business lose their business altogether.
Procompetitive alliances are generally interindustry, vertical value-chain relationships, as between
manufacturers and their suppliers or distributors.
Noncompetitive alliances tend to be intraindustry links among noncompetitive firms, for example
General
Motors and Isuzu, which are jointly developing a small car that both will sell.
Precompetitive alliances typically bring together firms from different, often unrelated industries to work
on well-defined activities such as new technology development. DuPont and Sony's cooperative
development of optical memory-storage products is an example.