A strategic alliance is when two or more
businesses join together for a set period of time. The businesses, usually,
are not in direct competition, but have similar products or services that
are directed toward the same target audience.
Alliance means "cooperation between groups
that produces better results that can be gained from a
transaction. Because competitive markets keep improving what you can get
from transactions, an alliance must stay ahead of the market by making
Strategic alliance is a primary form of
cooperative strategies. "A strategic alliance is a partnership between
firms whereby resources,
core competences are combined to pursue mutual interests."2
Alliances can be structured
in various ways,
depending on their purpose. Nonequity strategic alliances, equity strategic
alliances, and joint
are the three basic types of strategic alliances.
new economy, strategic alliances enable
business to gain
through access to a partner's resources, including markets, technologies,
capital and people.
Teaming up with others
resources and capabilities, enabling participants to grow and expand
more quickly and efficiently. Especially fast-growing companies rely heavily
on alliances to extend their technical and operational resources. In the
process, they save time and boost productivity by not having to develop
their own, from scratch. They are thus freed to concentrate on
innovation and their core business.
fast-growth technology companies use strategic alliances to benefit from
more-established channels of distribution, marketing, or
of bigger, better-known players. However, more-traditional businesses tend
to enter alliances for reasons such as geographic expansion, cost reduction,
manufacturing, and other
As global markets open up
and competition grows, midsize companies need to be increasingly creative
about how and with whom they align themselves to go to the market.
Toshiba’s approach is to develop strategic alliances with different partners
technologies because a single company cannot dominate any technology or
business by itself...
Functioning as an Alliance
"A good neighbour is a fellow
who smiles at you over the back fence
but doesn't climb over it."
~ Arthur Bear
Alliance is defined by its
synergistic outcome – results must exceed the sum or the parts. This
definition implies needed behavior. "For superior results you can't simply
call each other partners. You must
Alliances go beyond doing things between firms that become transactions
afterwards – like licensing, co-locating resources, starting to
outsource, or trading a
lower price for a longer term. Such tactics may be involved in alliances;
alone they produce one-time gain. In an alliance, continued
joint creativity leads to regular improvement, outperforming what any
single change can do."1
Planning for a Successful Alliance
Before entering into a
strategic alliance, enough thought is to be placed behind the structure of
the relationship and the details of how it will be managed. Consider the
following in your planning process...
Pros & Cons
Strategic alliances can
allow your business to meet its objectives, while maintaining the
flexibility to adapt quickly by switching partners, as appropriate.
However, such a
partnership may be too informal if your
corporate strategy requires the long-term certainty of a
acquisition. In this case, if your success depends upon a strategic
partner's continued cooperation with your business - and not your
competitor's business - a strategic alliance might be a trial phase before
committing to such an arrangement.
7 Dimensions of Strategic Innovation
Strategic Innovation framework weaves together seven dimensions to
produce a range of outcomes that drive growth.
Core Technologies and
Competencies is the set of
internal capabilities, organizational competencies and assets that could
potentially be leveraged to deliver
value to customers, including technologies,
equity and strategic relationships...
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horizontal well drilling processes, but there was no available device to do
so. BP pooled their intellectual and financial resources with Schlumberger,
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