The paper "The Concept of Strategic Alliances " is a good example of business coursework. Strategic alliances basically started as joint ventures primarily aimed at enabling the exploitation of natural resources. Within the past three decades, strategic alliances have experienced a very high rate of formation. Today, they have taken many other forms amid increased competition and globalisation resulting in a shift in the motives for their formation. Globalisation has pushed the momentum for business strategic alliances worldwide for several reasons ranging from market entry to the reduction of risk amid swelling uncertainty and intricacy in the business environment. Strategic alliances advanced and spread in the form of formal inter-organisational dealings, predominantly involving companies in international business systems.
The aim of these cooperative arrangements is to accomplish organisational objectives better through partnership than through competition, even though they have their challenges and failures as well. Strategic alliances have grown to become important forms of business activity in numerous industries, for the most part in view of the insight that companies are competing on an international field. In this paper, I discuss whether strategic alliances are cooperative agreements between actual or potential competitors as postulated by Hill (2007, p. 301) detailing their success or failure and providing illustrative examples. Strategic Alliances The concept of strategic alliances means different things to different individuals, and for this reason, the term has attracted altered definitions from different authors.
In this paper I adopt quite a few definitions that refer to the concept of strategic alliances as cooperative agreements: Parkhe (1993, p. 794) defines strategic alliances as "fairly enduring inter-firm cooperative arrangements, that involve flows and linkages that employ resources and/or governance structures from independent organisations, for the joint achievement of individual goals connected to the corporate mission of each one sponsoring firm. ” Varadarajan and Cunningham (1995, p.
282) describe strategic alliances as "the merging of particular resources and skills by the cooperating organisations with an intention to realise joint goals, as well as goals specific to the separate partners". Sporleder (1993) view strategic alliances as agreements flanked by firms to cooperate with a determination to realise some strategic drive. Dussauge and Garrette (1995) give a more comprehensive definition. They describe strategic alliances as cooperative agreements or relationships involving two or more independent firms, which will manage one definite project, with a determined spell, for which they will be together in order to expand their competencies.
Strategic alliances are created to sanction the partners to pool resources and synchronise efforts in order to accomplish results that neither could attain individually. The key parameters adjoining strategic alliances are resourcefulness, need and speed. In a strategic alliance, the partnering firms: (1) stay officially autonomous after the alliance is shaped; (2) share benefits and administrative control over the feat of apportioned tasks; and (3) make constant influences in one or more strategic areas, such as technology or products (Yoshino & Rangan, 1995, p. 5).
These three gages suggest that strategic alliances generate interdependence among independent economic units, getting new-fangled benefits to the partners in the form of intangible assets, and requiring them to make lasting assistances to their corporation. Strategic alliances could either be formed vertically (vertical alliances) or horizontally (horizontal alliances). Vertical alliances involve two or more firms in industry at different stages of production, whereas horizontal alliances involve two or more firms at the same stage of production.
For the most part, partners in vertical alliances are likely to be stakeholders and not shareholders. Also, there are different forms of strategic alliances that characterise different tactics that the partnering firms embrace in order to regulate their reliance on the alliance and on other partners. Isorait (2009) identifies different forms of strategic alliances. These include (1) Joint Ventures that are an agreement by two or more partners to form one entity to embark on a certain task and can involve research and development, (2) Outsourcing, which has gained much prominence, (3) Affiliate Marketing that has burst out over recent years, with the most prosperous online retailers, such as Amazon, expending it to great effect, (4) Technology or Product Licensing, which involves a contractual arrangement whereby trademarks, intellectual properties as well as trade secrets are licensed to another firm or to sell certain products or services.
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