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Introduction

Strategic alliances are the competitive weapon of 21st century. It provides an opportunity for large and small high technology companies to expand into new markets by sharing skills and knowledge. In this firms co-operate out of mutual need and share the risks to reach a common objective.

Strategic alliance Definition Acc to Chan and Heide defined strategic alliance as it is a contractual agreement among organizations to combine their efforts and resources to meet a common goal. However it can also be defined as A strategic alliance is an agreement between two or more partners to share knowledge or resources, which could be beneficial to all parties involved.

Agreement for cooperation among two or more independent firms to work together toward common objectives. Unlike in a joint venture, firms in a strategic alliance do not form a new entity to further their aims but collaborate while remaining apart and distinct. A Strategic Alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations.

Acc

to Chan and Heide defined strategic alliance as it is a contractual agreement among organizations to combine their efforts and resources to meet a common goal. However it can also be defined as A strategic alliance is an agreement between two or more partners to share knowledge or resources, which could be beneficial to all parties involved.

Reasons for strategic Alliance Gain access to a new or restricted market Develop new goods or services Facilitate new market entry Share significant R&D investments Share risks against uncertainty Develop market power Gain access to complementary resources Build economies of scale Meet competitive challenges Learn new skills and capabilities Outsource for low costs and high quality output

Process of strategic alliances SELECTION OF SUITABLE PARTNER NEGOTIATION OF EACH OTHERS NEEDS MANAGEMENT TOWARDS COLLABORATION

Stages in Alliance Formation Strategy Development Partner Assessment Contract Negotiation Alliance Operation

An alliance can fail for many reasons failure to understand and adapt to a new style of management failure to learn and understand cultural differences between the organizations lack of commitment to succeed strategic goal divergence insufficient trust operational and geographical overlap unrealistic expectations

Joint Ventures A union of two or more parties who contractually agree to contribute to a specific venture which is usually limited to a specific task for a specific period of time A joint venture is a separate legal entity generally governed under partnership lawwhich varies from state to state The JV parties can be individuals, partnerships or corporations that continue to operate independently from the other except for activities related to the Joint Venture.

Joint Venture Strategic Alliance This is where two businesses may join together to form a separate business, owned by both companies. Many companies who are in competition with one another, will join forces and share the market.

Pros and cons of Joint Ventures Advantages Allows for sharing of risk (both financial and political) Provides opportunity to learn new environment Provides opportunity to achieve synergy by combining strengths of partners May be the only way to enter market given barriers to entry Disadvantages Requires more investment Must share rewards as well as risks Requires strong coordination Potential for conflict among partners Partner may become a competitor

INTELLECTUAL PROPERTY RIGHTS Patents--------Offers a 20 yrs monopoly. Copy Rights----Provides exclusive rights to creative individuals for the protection of the literary or artistic productions. Registered Designs----As protected by registration is for the outward appearance of an article and provides exclusive rights for up to 15 yrs.

Registered Trademark---Is a distinctive name, mark or symbol that is identified with a companys products.

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