Strategic alliance any agreement where two or more companies agree to cooperate with each other to achieve a certain, mutually beneficial goal. A strategic alliance also see strategic partnership is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. Strategic alliance organizations are feeling increased pressure. At this moment in history the companies of the east are showing themselves to be able to compete successfully against. International strategic alliance linkedin slideshare. A true strategic alliance is the most challenging form of business relationship. A joint venture real estate joint venture a real estate joint venture jv plays a crucial role in the development and financing of most large real estate projects.
The strategic alliance refers to the agreement between two or more firms that unite to pursue the common set of goals but remain independent after the formation of the alliance. Strategic alliance collaboration between two or more companies designed to achieve some corporate objective. The agreement is less complex and less binding than a. Definitions of strategic alliances adapted by yi wei, 2007. What every manager must know, observed that there was little agreement on terms or definitions and confined his discussion of the definition of strategy to a lengthy footnote. Prashant kale is an assistant professor at university of michigan business school. Difference between joint venture and strategic alliance. Its a joint venture that bolsters a core business strategy, creates a competitive advantage, and abates competitors from moving in on a marketplace. Definition of strategic alliance strategic alliances are agreements between companies partners to reach objectives of common interest. In this stage the possibility of a strategic alliance is examined with respect to objectives, major issues, resource strategies for production. Some of the definitions emphasize the fact that the partners do not create a new legal entity.
The article presents analysis of the definition of strategic alliances, the analysis of alliance and the research of a strategic alliance concept. Strategic alliance is an agreement between two or more firms or companies reaching on the objective of common interest. To answer our research questions, it is first necessary to give a definition of ijvs. In a slow cycle, the companys competitive advantages are shielded for. Unlike in a joint venture, firms in a strategic alliance do not form a new entity to further their aims but collaborate while remaining apart and distinct. Strategic alliance is a trading partnership that enhances the effectiveness of the competitive strategies of the participating firms by providing for the mutually beneficial trade of technologies, skill, or products based upon. Strategic alliance definition a strategic alliance enables two organizations in resource sharing in order to meet the objectives of a mutually agreed upon project. Strategic alliance agreement this strategic alliance agreement is entered into on this 18th day of september, 2000 by and between commerce one, inc.
Strategic alliances allow an organization to reach a broader audience without putting in extra time and capital. The role of third parties in strategic alliance governance, in t. Read chapter 4 forces driving the formation of strategic alliances. A strategic alliance is an agreement between two separate business entities to pool resources in order to achieve a common goal. A strategic alliance allows parties to remain more independent than they would in a joint venture or partnership while still allowing businesses to work together and build longterm relationships. So although in global markets, the number of strategic alliances continues to grow, they still have a very low success.
A strategic alliance can be formed for the purposes of raising capital, sharing assets, developing new products, or any other purpose. Pdf the article presents analysis of the definition of strategic alliances, the analysis of alliance and the research of a strategic alliance concept find, read. In a strategic equity alliance, company a buys a particular percent of company bs equity. Strategic alliances financial definition of strategic. In finer terms, a strategic alliance is a relation that exists amidst two firms, to do business. A global strategic alliance means cooperation between international companies and it can take various forms, such as cofunding of research projects, sharing of production facilities and marketing of each others products using current distribution networks what are the main disadvantages of strategic alliance. Strategic alliance definition in the cambridge english. Strategic alliance definition the business professor. The article presents analysis of the definition of strategic alliances, the analysis of alliance. Strategic alliance meaning in the cambridge english. A strategic alliance is a longterm valuecreating relationship. Click here to buy this book in print or download it as a free pdf, if available.
Noun a partnership between two entities made for mutual benefit. But, nowhere does he define strategy in straightforward terms. Young vice president, business development parexel international june 14, 2015. However, the parties involved in a strategic alliance remain independent in their business operations it is common for companies to come together to work for a mutually beneficial project. A strategic alliance is where two or more firms pool part of their activities in order to strengthen their market offering whilst still retaining their separate corporate identities sarpong, 2014. There is nothing else like it in the world of business. Strategic alliances are among the various options which companies can use to achieve their goals.
Dyer is a professor of international strategy at brigham young universitys marriott school in provo, utah. Pdf strategic alliance in a closedloop supply chain, a. Strategic alliances and innovation strategies 59 should lead to realization of strategic goals and benefits of partners involved. This article aims to establish the rationale for cooperation between companies, to investigate the motives for developing cooperative relationships, to identify the nature and functioning of strategic alliances, and to identify the nature and functioning of strategic networks.
Formation forming a strategic alliance is a process which usually implies some major steps that are mentioned below. In strategic alliances, the participants remain separate and do not form a new entity as with joint ventures and some other types of partnerships. Before we can define what a strategic alliance manager is we need to define a strategic alliance. The companies mainly enter alliances for the purpose of achieving strategic, not operational objectives. Another type of strategic alliance involves buying off equity percentages from the partner firm. A strategic alliance is an arrangement between two companies to undertake a mutually beneficial project while each retains its independence. Topics to be covered role of business development in strategic alliances process. Heres a list of similar words from our thesaurus that you can use instead. What to consider in creating a strategic alliance although many research institutes have experience with networks, partnerships, communities of practice and other forms of institutional and individual collaboration, an alliance approach is relatively new to these notforprofit organizations. Therefore, they represent a form of strategic partnership, p. These are the ones that highlight the core of a strategic alliance. Strategic alliance is an arrangement between two or more firms to carry out a number of objectives agreed upon by the entities or to fulfil a critical business requirement while operating as separate organisations.
Strategic alliance in a closedloop supply chain, a case of manufacturer and econonprofit organization. Agreement for cooperation among two or more independent firms to work together toward common objectives. Even if bargaining power is balanced at the outset of an alliance, strengths may change within a few years, creating a massive shift in bargaining power and leading. Access to new customer base a franchise business is constantly searching for new, creative ways to increase its clientele and reach new potential customers, and forming a strategic alliance provides an opportunity to do that. As critical personnel become stretched and financial resources become scarce, strategic alliance organizations must allocate their resources in the most efficient manner possible so that truly strategic alliances can support and accelerate the strategy of the business. From this definition, a strategic alliance must have two or more independent organizations join together to pursue mutual benefits, which will be. Advantages and disadvantages of strategic alliance a strategic alliance is an agreement among companies to do business together in such a way that goes beyond normal companytocompany dealings, but fall short of a merger or a full partnership. Pdf an overview of strategic alliances researchgate. Harbir singh is a professor of management at the wharton school of the university of pennsylvania. Generally, a strategic alliance is entered into to gain geographical presence, achieve economies of scale through alliance for manufacturing or to gain access to researchtechnology etc. Management of alliance and value creation to attain competitive advantage is very important in strategic alliance ireland et al, 2002.
In joint venture, two organizations accumulate their resources in establishing an individual. Alliances and partnerships edinburgh business school. Understanding the benefits and challenges of strategic. Strategic alliances are agreements between companies partners to reach objectives of a common interest. Strategic alliances are agreements between independent companies to cooperate in. The role of strategic alliance manager is extraordinarily unique. Some literature sources define alliances as horizontal associations within the. The equity of a company is the remaining value after subtracting its liabilities from its assets. Strategic alliances can be effective ways to diffuse new technologies rapidly, to enter a new market, to bypass governmental restrictions expeditiously, and to learn quickly from the leading firms. The strategic alliance is a cooperative agreement between two companies that agree to share resources to pursue the common set of goals but remain independent after the formation of the alliance.
When discussing the definition i always emphasize the italic items. C1, a delaware corporation with principal offices at 4440 rosewood drive, bldg. Life cycle of an international strategic alliance stage 1. Strategic alliance is considered as an essential source of resourcesharing, learning, and thereby competitive advantage in the competitive business world. As compared to a joint venture, such agreement bears less involvement and less binding. Strategic alliances types and benefits of strategic. A strategic alliance in business is a relationship between two or more businesses that enables each to achieve certain strategic objectives neither would be able. A strategic alliance can be defined as an agreement between two or more companies to achieve common business goals by sharing their strengths and resources. Pdf strategic alliances can be effective ways to diffuse new.