What are the advantages and disadvantages of international strategic alliances? How to select partners for cooperation?
An International strategic alliance is typically established when a company or establishment decides to edge into related business or new geographic market especially one where the government prohibits imports in order to protect domestic industries. There are a number of advantages and disadvantages pertaining to international strategic alliances.
The advantages of international strategic alliance are as follows; it is much more flexible to than an acquisition with respect to the degree of control enjoyed by both party. International strategic alliance may facilitate entry into a foreign market, or at least speed up your entrance into new markets. When a company decides to enter a market, it is wise to get a partner who knows that market or is from that market. Understanding the market can promise success for the business in the future. An alliance may be necessary because cooperation with or participation in a local company is a condition of trading in a particular country, or because the cooperation of a local partner will help to overcome barriers such as local regulatory, cultural and language difficulties. Secondly, an alliance helps one to gain new skills and technology. An alliance is to bridge a competency gap by accessing the skills of a strategic partner, the other partner will be looking for something else in return that may take the form of further technology transfer. Thirdly, an alliance allows firms to share the fixed costs and resources of developing new products, processes or services. Fourthly, it exploits new opportunities to strengthen your position in the market where your partner already has a foothold. Other advantages include it helps one to broaden a company’s business and political contact base, increase sales, enlarge the distribution channels, enhancing your image in the