Chapter P3, Problem 1IC

Summary Introduction

To determine:

The need to carry out strategic partnership and whether building natural gas highway of America requires forming such a partnership.

Introduction:

Strategic partnership comprises of an agreement or contract between two or more parties/organization under which all stakeholders agree to share resources, capital and skills in order to have a solution for an underlying problem.

Answer to Problem 1IC

It can be said that, it is difficult to manage and carry out the operation associated with a huge project that involves natural gas highway by a single company .Therefore, forming a strategic partnership will not only help in partnering the resources and technique, but will also help in addressing the issues in detail resulting in completing of the project in an efficient and effective manner.

Explanation of Solution

In this situation, clean energy fuels and Navistar international have entered into an agreement for building a natural gas highway of America. It stands significant to enter into partnership for undertaking such a huge project because it would be technically difficult for a single organization to carry out and manage the operations involved in the creation of natural gas highway. Formation of strategic alliance provides benefit to both allies and the problems related to the project can be addressed in detail.

The factor that encourages business to enter into alliance is shown below:

1. Global market access- formation of alliance helps in providing access to markets across the globe.

2. Increased revenue- Sharing resources and skills provide a chance to the allies to walk around new market for implementation of new ideas which leads to an increase in the company’s revenue. It has been stated by senior executives associated with different companies that their revenue has increased to a great extent through their alliance with other companies.

3. Capturing new customer- Every organization has an access to a limited number of customers that falls in their field of work. However, strategic alliance provides an opportunity to the company to grab customers in the markets that were previously inaccessible.

4. Exploring new areas of business- Strategic alliance provides the opportunity to the allies in exploring areas that are new for the business. The companies are able to work in new markets and increase their understanding of different type of customers. This helps in the expansion of the companies with respect to financial and physical context.