Understanding Strategic Alliances: Benefits and Key Considerations

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Management

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Nov 24, 2024

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A strategic alliance can be defined as an agreement between two firms to take part in a project that is beneficial to both teams while still maintaining their independence. A strategic alliance is therefore less binding and simpler as compared to a joint venture, where the two firms involved put together resources to generate an independent business unit (Serrat & Serrat, 2017). A business may go into a strategic alliance for different objectives which may include joining a new market, enhancement of its product and service line, or gaining a competitive advantage over a rival in the same market. The agreement makes it possible for the two firms to work towards a shared objective that will be beneficial to both. In a strategic alliance, the agreement may be made either on a short-term or long-term basis. The strategic alliance could be integral to a company as it attempts to improve its processes and increase both efficiency and effectiveness. Through the strategic alliance, the involved parties are able to effectively distribute resources, gain access to resources that were initially hard to access and enhance the public image of the businesses. Through this agreement, the companies may also be forced to address any conflicts they may have. However, a strategic alliance can also result in a waste of resources and damage to the public image of one or both parties when effective measures are not put in place to ensure transparency in the agreement. The driving force of strategic alliances is companies that are trying to grow and develop but lack the resources to take on such objectives (Serrat & Serrat, 2017). Rather than pulling resources towards the objective on their own, the companies seek resources that exist in the companies and combine with the resources they must speed up the process of attaining the set objectives. One illustration of a strategic alliance is a company that has resources but lacks the clientele and a company that has the clientele but lacks the resources to meet their needs.

Companies may strive to address the shortcomings in their business operations, but the process may take a long time and may not be achievable. Company A can therefore approach company B and indicate that since they have the resources, they can work together through an agreement and offer resources to company B and in exchange, get clientele in the process. The two companies are thus able to effectively attain the set objectives without any challenges. When going into a strategic alliance, it is however crucial for both parties to have a good agreement on the resources that will be shared and terms on the independence of operation of both parties involved (Bamel et al., 2021). Lack of a good agreement often results in conflicts that may damage the companies rather than help develop their portfolio. In many cases, companies seek other companies that have equal standing in the market. This means that none of the two companies will have dominance over the other. Both companies are able to almost equally contribute to the success of the strategic alliance thereby eliminating any conflicts that may occur.

References Bamel, N., Pereira, V., Bamel, U., & Cappiello, G. (2021). Knowledge management within a strategic alliances context: past, present and future. Journal of Knowledge Management , 25 (7), 1782-1810. Serrat, O., & Serrat, O. (2017). Learning in strategic alliances. Knowledge solutions: Tools, methods, and approaches to drive organizational performance , 639-647.

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