The paper "Strategic Alliances as a Strategy for Competitive Advantage in International Business" is a great example of business coursework. Strategic alliances have increasingly become a preferred strategy for firms in an increasingly competitive global marketplace. The last few decades have witnessed an ever-increasing number of firms partnering up with each other to pursue new opportunities, access new markets or acquire new technologies and skills. Firms have sought to access their partner’ s comparative strengths in key areas such as technology, manufacturing or even market access in exchange for access to their own resources or support in key areas.
These alliances have taken a variety of forms and have also resulted in a variety of outcomes. This essay will discuss strategic alliances as a strategy for competitive advantage in international business. First, the essay will define strategic alliances and broadly outline the parameters for strategic alliances as a form of inter-firm collaboration. The motives for entering into strategic alliances will also be briefly discussed. The essay will then explore the advantages as well as disadvantages of strategic alliances by referring to the experiences of several firms in various forms of strategic alliances.
In conclusion, the essay will discuss the reasons why some strategic alliances work for the firms involved and why others are not successful. Strategic Alliances A strategic alliance is a voluntary trading partnership between two or more firms aimed at increasing the effectiveness of their competitive strategies by linking specific facets of the businesses of the participating firms (Yoshino & Rangan 1995, Das & Teng 2000). A strategic alliance provides a platform for the mutually beneficial exchange of resources such technologies, skills and products between participating firms to enable the joint accomplishment of the goals of each individual firm in the partnership (Yoshino & Rangan 1995, Inkpen 1999). Strategic alliances are a distinct form of collaboration as opposed to mergers and acquisitions since the firms that participate in the alliance; are autonomous or remain independent even after the formation of the alliance, share the benefits of the alliance as well as control over the performance of assigned tasks and contribute on a continuous basis in one or more key strategic areas (Yoshino & Rangan 1995, p. 5, Inkpen 1999).
Strategic alliances usually take a number of forms within a spectrum that involves varying degrees of interfirm collaboration. These include contractual agreements such as joint research and development, joint product development, long – term sourcing agreements, joint manufacturing and joint marketing, shared distribution and shared service arrangements. They also include equity arrangements where no new entity is formed such as minor equity investments or equity swaps as well as arrangements which include the formation of new entities such as non-subsidiary joint ventures (Yoshino & Rangan 1995). There are a variety of reasons why firms to enter into strategic alliances.
These include seeking to enhance productive capacity, reduction of risk and uncertainty in internal structure’ s and external environments, acquisition of competitive advantages to increase profits and access to future business opportunities that would allow firms command higher market value for their outputs (Webster 1999). Specific strategic motives include acquisition of means of distribution, to obtain skills and knowledge, to obtain economies of scale, development of new products, technologies or resources, pooling resources, overcoming legal and/or regulatory barriers to entry in new markets, pre-empting competitors or seeking cooperation with rivals (Todeva & Knoke 2005, Inkpen & Ramaswamy 2006).
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