1. This strategy seeks to enhance the long-term competitive advantage of a company by forming alliance with its competitors.
2. The objective of this alliance is to leverage critical capabilities, increase the flow of innovation and flexibility in responding to market and technological changes.
3. Similarly, a company may enter a foreign market by forming alliance with a company in the foreign market for marketing or distributing its products.
4. Strategic alliance, more than entry strategy, is a competitive strategy.
5. It enables companies to increase resource productivity and profitability by avoiding unnecessary fragmentation of resources and duplication of investment and efforts.
6. Such alliances are normally used in pharmaceutical, computer, nuclear and telematics industries, which have high fixed costs in research and development and manufacturing and high and fast changing technology.
7. The automobile industry has been witnessing several alliances for overseas operations.
8. An alliance in the telematics sector which essentially brings together two separate streams of technology related to information gathering and processing and also related to information transmission.
9. An example is IBM’s agreements with STET, Italy’s state owned Telecommunication Company and Nippon Telegraph and Telephone to develop computer communications services and a joint research venture with Ericson (Sweden) to explore the linking of data-management technology with digital switching technology. 10. It is also observed that within the service sector strategic alliances are less common, but those between hotels, airlines and tour operator’s and between accountants and management consultants are increasing.
Countertrade is a form of international trade in which certain export and import transactions are directly linked with each other and in which import of goods are paid...