The paper "Trade Winds and Nisho Iwai - Issues that Could Produce Negative Effects for Alliance Firms" is a perfect example of a business assignment. Both Trade Winds and Nisho Iwai lack the necessary component for them to succeed individually in a highly competitive global business environment. The high costs of warehousing in recent years have put pressure on Trade Winds Ltd profit margins. Nisho Iwai, on the other hand, faces such problems as foreign exchange fluctuations and suppliers directly seeking its customers due to the open nature of the market.
This thus causes NI to lose the market share. How the two companies could find a way out of their problems The two companies could find a way out of their problems by forming a strategic alliance. In this regard, both NI and Trade Winds will not dissolve their identity. Instead, they will simply agree to share their core competence to realize their growth objectives. Both Nisho Iwai and Trade Winds are in vulnerable strategic positions, and therefore, forming strategic alliances will enable them to share resources. The Performance Difference from Alliances Point of View and Competitive Advantage and Competitiveness According to Wang & Horsburgh (2007), resources are inputs to an organization’ s production process.
Resources could either property-based or knowledge-based. Property-based resources typically refer to tangible input resources, whereas knowledge-based resources are the ways in which business organizations combine and transform these tangible inputs (Levy & Powell 2004). The valuable tangible and intangible resources that Nisho Iwai possesses include a trading house that holds the goods until it can find a suitable buyer and brand reputation. Trade Winds, on the other hands, have adequate knowledge in international dealings.
According to the resource-based view of strategic alliances, both NI and Trade Winds can link resources, capabilities and competencies in order to achieve a sustained competitive advantage. The following are the main benefits that both Trade Winds and NI will realize as a result of strategic alliances; resource acquisition, competitiveness in global market, effective management of risks, economies of scale, ability to cultivate multinational markets among others. Focusing on the Resource-Based View of strategic alliances, Wang & Horsburgh (2007) argued that different organizations have different idiosyncratic. Also, the RBV of strategic alliances emphasizes that no two firms have identical strategic resources.
Both NI and Trade Winds can generate economic rent by leveraging their key assets. Additionally, firms activities Wang & Horsburgh (2007), in their studies, stated that alliances must create value. Thus, a strategic alliance should reduce uncertainties and expenditures, and also, offer access to complementary assets. According to the resource-based view of strategic alliances, organizations with valuable, rare and inimitable resources have a high potential for achieving superior performance. In the formation of alliances, firms with valuable, rare, inimitable and non-substitutable resources are often reluctant to get into alliances with partners whose resources do not have the above characteristics.
For this reason, such organizations often tend to seek partners who also possess a competitive advantage of some kind. Both Trade Winds and NI possess different components, and therefore, they will combine resources in order to achieve competitive advantage. What produces positive effects on alliance firms? Performance of an alliance highly depends on the resources that are available to the partners, and the more the resources, the higher the possibility of returns.
These resources are contributed by the individual partners before the alliance is formed, and this is done through an agreement. Trade Winds have an upper hand in international dealings whereas NI has a warehouse. These two organizations will then come into an agreement on how these two resources shall be used to the benefit of the alliance. During the implementation of an alliance, organizations must make an agreement in regards to their contribution towards the partnership and the benefits they shall reap from the partnership to avoid future conflicts.