Strategic Alliance Report free essay sample

Strategic alliance, joint venture, merger and acquisition refer to different forms of corporate partnering and the degree of participation in each other businesses. The joint venture and the strategic alliance have gained increasing popularity in corporate business models because of their relative flexibility, and at much less cost than a corporate merger or acquisition. A Strategic Alliance is a formal 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. Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. The alliance is a cooperation or collaboration which aims for a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts. The alliance often involves technology transfer (access to knowledge and expertise), economic specialization [1], shared expenses and shared risk. We will write a custom essay sample on Strategic Alliance Report or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Types of strategic alliances Various terms have been used to describe forms of strategic partnering. These include ‘international coalitions’ (Porter and Fuller, 1986), ‘strategic networks’ (Jarillo, 1988) and, most commonly, ‘strategic alliances’. Definitions are equally varied. An alliance may be seen as the ‘joining of forces and resources, for a specified or indefinite period, to achieve a common objective’. According to Yoshino and Rangan[2] the Internationalisation Strategies can be categorized using the model displayed at the right side. edit] Stages of Alliance Formation A typical strategic alliance formation process involves these steps: Â ·Strategy Development: Strategy development involves studying the alliance’s feasibility, objectives and rationale, focusing on the major issues and challenges and development of resource strategies for production, technology, and people. It requires aligning alliance objectives w ith the overall corporate strategy. Â ·Partner Assessment: Partner assessment involves analyzing a potential partner’s strengths and weaknesses, creating trategies for accommodating all partners’ management styles, preparing appropriate partner selection criteria, understanding a partner’s motives for joining the alliance and addressing resource capability gaps that may exist for a partner. Â ·Contract Negotiation: Contract negotiations involves determining whether all parties have realistic objectives, forming high calibre negotiating teams, defining each partner’s contributions and rewards as well as protect any proprietary information, addressing termination clauses, penalties for poor performance, and highlighting the degree to which arbitration procedures are clearly stated and understood. Alliance Operation: Alliance operations involves addressing senior management’s commitment, finding the calibre of resources devoted to the alliance, linking of budgets and resources with strategic priorities, measuring and rewarding alliance performance, and assessing the performance and results of the alliance. Â ·Alliance Termination: Alliance termination involves winding down the alliance, for instance when its objectives have been met or cannot be met, or when a partner adjusts priorities or re-allocated resources elsewhere. The advantages of strategic alliance includes 1) allowing each partner to concentrate on activities that best match their capabilities, 2) learning from partners developing competences that may be more widely exploited elsewhere, 3) adequency a suitability of the resources competencies of an organization for it to survive. There are three types of strategic alliances: joint venture, equity strategic alliance, and nonequity strategic alliance. Joint venture is a strategic alliance in which two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage. Equity strategic alliance is an alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities to create a competitive advantage. Nonequity strategic alliance is an alliance in which two or more firms develop a contractual-relationship to share some of their unique resources and capabilities to create a competitive advantage.