Strategic Alliances

Cooperation in business is a new type of strategy which is used by managers all over the world. For many organizations in many industries, the current business environment compels the use of collaborative alliances as an essential component of strategy. This concept called ‘Strategic Alliances’. The objective of this cooperation is to gain access in new markets and new supply sources, capitalize on technology and become more profitable. Companies may share resources, information, capabilities and risks to achieve this objective. In this research, I am going to present how strategic alliances work in related to our main article “Strategic intent”. In recent years, the increasing in globalization of markets has led to the significant growth of cross-border cooperation between companies. Alliances are becoming more and more popular. “Strategic Alliances and Joint Ventures: Making Them Work” brings us to the new idea of strategic management where organizations are joining together in partnership to achieve mutual benefits. Walters, Peters and Dess (1994) answered the question why alliances are formed. They studied that strategic alliances are formed for a variety of reasons, which include reducing manufacturing costs, entering new markets, developing and diffusing new technologies rapidly. Forming alliances is the key feature that affects the performance of the partnerships. According to Walters, successful alliances require several steps both partners must take. Essential ingredients for success also include trust, compatibility and commitment to the common goals. Managing a strategic alliance is also a difficult process as each company wants a voice in management, which often leads to slower, more complex decision making. Walters, Peters and Dess emphasised three key principles that help an alliance be successful. Firstly, an alliance should clearly define a strategy and assign responsibilities. Secondly, as trust is one essential element of strategic alliances

References: 1. Cravens K, Piercy N and Cravens D, 2000, “Assessing the performance of strategic alliances: Matching metrics to strategies”, European management journal, Vol. 18, No. 5, p. 529-541. 2. Das T, Teng B, 2000, “Instabilities of strategic alliances: An internal tensions perspective”, Organization science, Vol. 11, No. 1. 3. Walters B, Peters S and Dess, G, 1994, “Strategic alliances and joint ventures: Making them work”, Business horizons.