The paper "The Concept of the Strategic Alliance" is a good example of business coursework. Today, globalization and emerging technologies in the business environment have resulted in many economic, social, political, cultural, and policy challenges that organizations have to deal with. These issues influence the demand for increased efficiency, improved quality, as well as, lower cost. As a result, attaining sustainable competitive advantage in the business environment has become a problem (Al Khattab & Talal 2012, p. 222). For sure, anyone organization, by itself, does not possess adequate resources and skills to compete effectively.
Strategic alliances provide an alternative to such firms. Strategic alliances help an organization to join forces with other organizations in order to attain quality management that would otherwise be beyond the current organization capacity. Currently, businesses all over the globe are entering into alliances (Vikas & Lather 2014, p. 4). For instance, Starbucks hotel has partnered with Barnes and Nobles, PepsiCo, and United Airline among other and these alliances have sold its brand in different nations. Strategic alliances are beyond simple tools, which are helpful in attaining collective goals directly profiting all collaborators.
Today, alliances have emerged as key instruments in organizations, especially in the hospitality industry that is enhancing and maintaining competitiveness in the industry (Czaj 2015, par. 2). This paper studies an international hospitality strategic alliance and ways in which the strategic alliance has assisted in creating better brand recognition on different continents. The Concept of the Strategic Alliance In the business environment, the concept of the strategic alliance is defined from a different perspective. “ Strategic alliance refers to the different kinds of partnership arrangements between two or more firms that follow clear strategic joint goals with different levels of possible incorporation among the members” (Elmuti & Kathawala 2001, p. 23).
On the other hand, Gomer-Casseres (2003 p. 329) defined “ strategic alliance as any form of governance structure to control an incomplete agreement between distinct organizations and in which every partner has limited control” . In addition, the author adds that the “ strategic partnership is a process of sharing control and governance of future decision and negotiations between the organizations” . In view of this definition, “ strategic alliances can rather be defined as continuing, inter-firm, cooperative agreements that involve flow and relationships” .
These linkages utilize resources or/ and governance structures from independent firms for the mutual achievement of individual objectives connected to the business mission of every sponsoring organization. Strategic alliances “ involve two or more partners, and they range from equity alliances to non-equity ones” . Both equity and non-equity alliance constitute two modes of partnership that defines the nature of arrangements that are either formal or informal (Webster & Chathoth 2008, p. 503). In the hospitality industry, informal alliances are very common. They are considered as the most effective ways of attaining the twin goals of escalating firm`s capacity to satisfy, serve and reach consumers whereas concurrently striving to minimize cost (Vikas & Lather 2014, p. 4).
Informal collaborations are applicable when; 1) there is work uncertainty that exists partnering companies. 2). There is a need for flexibility to sustain the success of the partnership. 3) There are no separate boundaries between partnering companies (Webster & Chathoth 2008, p. 503). Todeva and Knoke (2005, p. 3) continue to stress that strategic alliances build interdependence between separate economic units. They convey new benefits to the partners in the form of intangible assets and compel them to make lasting support to their collaboration.
The term strategic alliances, partnership, joint venture and relationships all define the union or coming together of two or more organizations into a connection that has synergistic value (Vikas & Lather 2014, p. 4). However, Wakeam (2003, p. 1) states that not all alliances are strategic some are conventional. For an alliance to be truly strategic, it has to meet one of these five criteria (Aurifeille & Tisdell, 2007, p. 180). They are: 1) critical to the achievement of a major business aims or goals; - although almost all alliances are formed to generate revenue in a cost-effective manner, not all alliances that generate revenue or reduces cost are truly strategic.
Nevertheless, a true strategic alliance has an underlying organizational goal like attaining an industry-leading cost structure and has a great bearing on the opportunities for attaining revenue growth objectives. 2) Play a critical role in the development or protection of an organization's major competencies and competitive advantage. 3) Hinders a competitive threat; even when an alliance falls short of developing a competitive advantage it can be strategic.
This happens when a firm brings competitive equality to a second segment of a market it competes when the absence of equity develops a competitive disadvantage in the allied primary market of that segment. 4) By building or protecting the future strategic options of the firm. 5). When an alliance is fueled by the objective of mitigating major risk. Nevertheless, the nature of the risk and its probable effects on the business goals are the ones that define whether that alliance is truly strategic.
According to Wakeam (2003, p. 1), the critical issue is firm to understand which of these criteria, the other partner views to be strategic. If the either of the party misinterprets the other party's anticipation, that alliance is likely to fall apart.