Strategic alliance

From Wikipedia, the free encyclopedia - View original article

 
Jump to: navigation, search

A strategic alliance is an agreement between two or more parties to pursue a set of agreed upon objectives need while remaining independent organizations. This form of cooperation lies between Mergers & Acquisition M&A and organic growth.

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.

Terminology[edit]

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’.

There are seven general areas in which profit can be made from building alliances.[2]

Typology[edit]

One typology of strategic alliances conceptualizes them as horizontal, vertical or inter-sectoral:[3]

Another typology distinguishes between four forms of strategic alliances: joint venture, equity strategic alliance, non-equity strategic alliance, and global strategic alliances:

Advantages/Disadvantages[edit]

Advantages[edit]

The advantages of forming a strategic alliance include:

Disadvantages[edit]

Stages of Alliance Formation[edit]

A typical strategic alliance formation process involves these steps:

Strategy Development[edit]

Features common to transactions that are natural candidates for strategic alliances are:

External links[edit]

References[edit]

  1. ^ David C. Mowery, Joanne E. Oxley, Brian S. Silverman, Strategic Alliances and Interfirm Knowledge Transfer (1996) Strategic Management Journal, Vol. 17, Special Issue: Knowledge and the Firm (Winter, 1996), pp. 77-91
  2. ^ Rigsbee, Ed (2000). Developing Strategic Alliances, First Edition. Library of Congress Cataloging-in Publication Data. ISBN 1-56052-550-9. 
  3. ^ Besanko, D., Dranove, D., Shanley, M., Schaefer, S. (2013). Economics of Strategy. 6th edition, Hoboken, NJ: Wiley, p. 148.