Strategic alliances
Strategic Alliance Alliance Pros and Cons There are various strategic alliance pros and cons that business managers should be well informed on before deciding to team up. A strategic alliance is an agreement whereby two or more businesses dealing in similar or related products join to form one company for a particular period of time. Besides, the businesses in the alliance usually have a similar target audience too, making them compatible in almost all levels of operations. Although the mean reason behind strategic alliances is profitability, profitability, the businesses businesses involved are not usually usually in direct competition competition with one another. In a strategic alliance, the companies or businesses involved partner in a number of ways including, sharing of resources, epertise among others for mutual benefit. Based on the purpose of the alliance, the partnership can be structured in different ways. The most common types of strategic alliances include joint ventures, e!uity and non"e!uity strategic alliances. This implies a wide range of strategic alliance pros and cons, depending on the type of partnership and its purpose.
Strategic Alliance Alliance #ros and $ons The following are some of the main advantages and disadvantages of a strategic alliance. Pros of a Strategic Alliance %hen businesses come together, they can easily attain a competitive advantage over others in the market, which operate individually. This This is because, they will be able to pull together their resources, resources, capabilities and epertise epertise for better results. As a result, the alliance is likely to grow rapidly and efficiently, efficiently, thus, earning the parties involved a greater market share.
&conomically, &conomically, there are other ways through which businesses can also benefit from strategic alliances. The partnership can help in the reduction of costs and risks, which are evenly distributed across the members. Besides, an alliance is also a greater way of increasing economies of scale owing to the epected growth in production volume, which reduces the cost per unit. A strategic alliance can also offer organi'ational benefits to a company in various ways. Since the companies involved in the partnership share skills, epertise and even
e!uipment, there is an easier echange of the same between the workers. In this way, companies are able to enhance the !uality of their products, increase production and even epand distribution. Strategic alliances can also benefit the involved partners politically. politically. (or instance, a local company can decide to team up with a foreign one in order to gain entry into a new market in cases where there are barriers to local enterprises. Cons of a Strategic Alliance )ne of the risks or disadvantages of a strategic alliance is sharing. Since the involved parties pull their resources, resources, skills, capabilities capabilities and knowledge, it can be challenging challenging when it comes to business secrets. Although there may be agreements for the protection of trade secrets, it is not always certain that that they shall be upheld upheld by all parties.
Another disadvantage of a strategic alliance is that in some occasions, it is not easy to choose the right partner. This may result into lack of commitment, which can negatively impact the overall operations of the alliance. In fact, there are several occasions whereby partners have turned into rivals, tearing down each other. There are other risks that are likely to be faced by parties in a strategic alliance including, poor communication, lack of clear goals and objectives, lack of trust a mong others. In fact, the seeds of failure are often sown in the alliance long before it even begins operating. *owever, *owever, this does not mean that all alliances alliances are doomed to fail, some can thrive well and deliver greater results for the partners.
$onclusion $onsidering the strategic alliance pros and cons outlined above, there are more benefits to forming such such a partnership compared to the demerits. *owever, *owever, it should be noted that the success of the partnership relies on its purpose and commitment commitment to fulfilling that goal. It is of great importance that the businesses first draw clear and precise objectives, and procedures procedures to be followed in their their operations. Besides, lines lines should also be drawn on the obligations of each party in order to enhance efficiency and team work for mutual benefit.
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ICICI Bank, India’s largest private sector bank and Vodafone India, one of India’s largest telecom service providers, announced a strategic alliance to launch a unique mobile money transfer and payment
service called ‘m-pesa’. ‘m-pesa’ is the trademark of Vodafone. The announcem ent was made by Chanda Kochhar, M ! C"#, $C$C$ %ank and Marten &ieters, M ! C"#, Vodafone $ndia 'td. ICICI Bank and Vodafone India through its 1! subsidiary, "obile Commerce #olutions $td% & (MC)'*' have (nali)ed plans to launch mobile payment services this year, under the brand name ‘m-pesa’. This o*ering will comprise+ a mobile money account with ICICI Bank and a Mobile Wallet - issued by MC SL.
+his innovative oerin ill ive the customer a comprehensive service comprisin/ • • •
• •
Cash deposit and withdrawal from designated outlets "oney transfer to any mobile phone in India ange of mobile payment services including purchase of mobile recharge, recharge of -T. services and utility bill payments "oney transfer to any bank account in India /ayments at select shops
The partnersh ip between ICICI Bank and Vodafone e*ectiv ely leverage s the strengths of Vodafone’s signi(cant distribution reach and the security of (nancial transactions provided to customers by ICICI Bank% These services are made convenient using a vast network of authori)ed agents who will enable the customer to deposit and withdraw cash in and from their account% By facilitating banking transactions at such agent locations, this alliance e*ectively delivers the last mile access in remote areas% The mobil e payment service will be launched initi ally in the eastern region of the country vi)% Kolkata, West Bengal, Bihar and Jharkhand and then will be rolled out to other parts of the country in a phased manner%
Chanda Kochhar, Manain irector! C"#, $C$C$ %ank said, 0ICICI Bank has been at the forefront of leveraging technology in banking and has revolutioni)ed the way Indian customers carry out their banking transactions% e have now launched ‘m-pesa+M’, a uni2ue and innovative o*ering which will allow us to provide basic banking services to millions of customers spread across the country% This will help us reach out to segments that currently do not have access to banking services, towards our ob3ective of achieving greater (nancial inclusion% e are very happy with this partnership with Vodafone which will bring together the strengths of our respective brands and our complementary capabilities%4 Marten &ieters, Manain irector ! C"#, Vodafone $ndia said, 0Vodafone is the world’s largest and leading provider of m obile payment services% Vodafone ‘m-pesa+M’is o*ering millions of people basic (nancial services, beyond the reach of traditional banking% 5fter an in6depth understanding of the Indian customer insights, we concluded that there is tremendous potential for this product in India% e are really proud to announce the strategic partnership with ICICI Bank and launch this (rst6of6its6kind o*ering with ICICI to provide mobile payments% This o*ering has been customi)ed to serve the Indian customer in compliance with all applicable regulatory re2uirements4%
A strategic business alliance pairs two companies that complement each other, allowing each to promote the other or to provide an exchange of goods or services that give each access to something it needs at a lower cost. Strategic alliances require commitments that can backfire if they cost one party too much, don’t deliver the expected results or transfer the problems of one party to the other, so carefully consider any working relationship with another business before you enter into one. Sponsored Link
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Wedding Industry Several types of businesses involved in weddings commonly form str ategic alliances with one or more businesses in the industry. &hotographers agree to promote cake makers, banquet halls, chapels, caterers and dress shops in exchange for the same promotion. A caterer might develop an exclusive relationship with an event space, guaranteeing that each party works harder to promote the other. Some of these businesses not only promote each other, but also pay referr al fees or bundle services at discounted prices.
Tennis Industry Local teaching professionals and coaches are influential in driving tennis racket sales, recommending specific brands and models to their students. (any pros don’t work at facilities with pro shops on site, so they develop relationships with local retailers in exchange for instore promotion, referral commissions or free product. -ennis racket and clothing manufacturers s ponsor tens of thousands of teaching pros across the countr y, supplying them with rackets, bags, clothing, shoes and other logo items the pros use and wear, promoting the manufacturer. -he manufacturers require an exclusiveusage agreement and often tie the relationship together with a local retailer that supplies the pro, and which the pro promotes.
Retail Industry -he more a manufacturer can help a retailer promote its product, the more the retailer will sell. (anufacturers often provide instore promotional support to their retailers in the form of signage, contests, discounts, rebates and display stands. Some retailers sign an exclusive distribution agreement in exchange for better pricing, more trade credit or increased promotional support. 'n cases where the retailer can’t offer exclusivity, it might arrange specific shelf space for a manufacturer.
Cause Marketing usinesses work with charities to generate positive publicity and to turn them into marketing partners. A business often donates product, services or money to a nonprofit in exchange for that organi/ation promoting the business on its website, in its mailing, at its events and on its social media sites. -hese alliances might include the charity earning a percentage of sales, motivating the charity to work harder to promote the business. -he business gets to use t he charity’s name and logo on its packaging, marketing materials and website, promoting the relationship. Sponsored links
example
ust because two things don’t seem to go together at (rst, doesn’t mean they aren’t a great pair% 5t (rst glance, some companies may seem to not have much in common, but after a little closer look you might (nd some similarities7Customer bases with common interests, the ability to
leverage one client pool with another, or even 3ust a symbiotic partnership that continues behind the scenes for years% 8or most strategic alliances, the companies involved have the ability to reach further out within a prospective customer pool% 5nd with two sales teams working in the channel, that means you have access to twice as many prospects than if you were working alone% 5nd let’s not forget co6 branded marketing content% Building your own strategic alliances9 -ownload the /artner #uccess :it for the tools you need% Below are (ve e;amples of strategic alliances that paid o* in a huge way%
0ord and "ddie %auer V market% hen 8ord partnered with =ddie Bauer, the consumers clamoring for a (nely out(tted sports utility vehicle produced on 5merican soil were satiated%
)potify and 1ber $eaping forward to a very recent piece of news, #potify and >ber have partnered to provide stereo control to >ber customers% ?ot every #potify consumer uses >ber, nor does every >ber rider have a #potify account% The strategic alliance allows each company to pursue prospects from the other’s e;isting customer base, all while continuing to promote both products% In both cases, it gives the company a leg up over its competition% #potify is o*ering something with the /remium package that other streaming services do not yet have% 5nd likewise, >ber can provide the riders with
an opportunity to listen to their own playlists as opposed to other ride6 share services that cannot match them yet%
2oole and 'u3ottica $u;ury eyewear and cutting edge technology% hile you might not think of them working together, oddly enough the partnership is e;actly what was needed for each company to get ahead in the market% $u;ottica can provide premium 2uality eyewear to the lu;ury market, with a 3usti(cation that the technology is what is driving the price, and maintain and increase their market share by diversifying the customer base% @oogle on the other hand, can provide technology that has a touch of lu;ury, and reach consumers that may be seeking eyewear that has the premium look, regardless of the technology%
4elett-&ackard and isney This alliance formed back when "r% .ewlett, "r% /ackard, and "r% -isney were all still involved with their respective companies% -uring the creation of 8antasia, -isney purchased some audio e2uipment from .ewlett6 /ackard% The strategic alliance continued onwards, as -isney relied heavily on ./’s development and IT team for it’s own infrastructure% In fact, at current6day -isney attractions, the Imagineering team is still 2uite married to the ./ systems architecture% -uring the design and build phase of -isney’s "ission+#/5C=, ./ engineers and -isney imagineers were working side by side to create the most technologically6advanced ride yet%
)tarbucks and %arnes ! 5oble .ere’s a matchup that has stood the test of time% hereas many brick and mortar bookstores have folded due to lack of customer base, the few that have formed strategic alliances have continued to prosper% Ane e;ample would be Barnes ?oble, partnering with #tarbucks%
Aver the years, #tarbucks has become synonymous with co*ee% $ike it or hate it, you instantly recogni)e the name% ith a #tarbucks location in most &if not all' Barnes ?oble bookstores, customers have twice the reason to shop there% Co*ee break, and browse the latest bestsellers shelf all in one stop% hile we’re not claiming that this strategic alliance has kept Barnes ?oble’s doors open, it is worth pointing out that many of its ma3or competitors have since closed up shop% In a time when digital media sales are constantly on the rise, purveyors of printed literature need to be savvy to stay in business% Barnes and ?oble has certainly tried to stay ahead of the curve% ?ote that in all (ve cases, the companies that formed these strategic alliances did not share much in common prior to their partnership% The one common point might be the customer base, albeit an indirect relationship in most cases% "ost likely, the marketing teams for both corporations began by reviewing potential strategic alliances and determining whether the partnership would be bene(cial in both long and short term% 8or your own channel partnership, following this pattern may be fruitful as well by potentially doubling your prospect pool% orking with your channel partners to encourage co6branding, as well as educating them on sales content, will ensure that your channel partnership is as successful as possible%
Strategic alliances are partnerships in which two or more companies work together to achieve objectives that are mutually beneficial. $ompanies may share resources,
information, capabilities and risks to achieve this. According to #roducer+s eSource, a common reason for entering into a strategic alliance is to obtain the advantage of another company+s innovations without having to invest in new research and development. %hile companies have used ac!uisition to accomplish some of these goals in the past, forming a strategic alliance is more cost"effective. Ads by oogle TIBCO® Mashery API Solutions -/0 1eader in (ull 1ife $ycle A#I 2anagement. 3ead the latest artner 3eport4 mashery.com Starbucks According to 3ebecca 1arson, assistant #rofessor of Business at 1iberty 5niversity, Starbucks partnered with Barnes and 6obles bookstores in /778 to provide in"house coffee shops, benefiting both retailers. In /770, Starbucks partnered with #epsico to bottle, distribute and sell the popular coffee"based drink, (rappacino. A Starbucks"5nited Airlines alliance has resulted in their coffee being offered on flights with the Starbucks logo on the cups and a partnership with 9raft foods has resulted in Starbucks coffee being marketed in grocery stores. In -0, Starbucks formed an alliance with the 6AA$#, the sole purpose of which was to advance the company+s and the 6AA$#+s goals of social and economic justice. Apple According to :An )verview of Strategic Alliances,: Apple has partnered with Sony, 2otorola, #hillips, and AT;T< in the past. Apple has also partnered more recently with $learwell in order to jointly develop $learwell+s &"=iscovery platform for the Apple i#ad. &"=iscovery is used by enterprises and legal entities to obtain documents and information in a :legally defensible: manner, according to a -/ press release. *ewlett #ackard and =isney *ewlett"#ackard and =isney have a long"standing alliance, starting back in /78>, when =isney purchased eight oscillators to use in the sound design of (antasia from *# founders Bill *ewlett and =ave #ackard. %hen =isney wanted to develop a virtual attraction called 2ission? S#A$&, =isney Imagineers and *# engineers relied on *#+s IT architecture, servers and workstations to create =isney+s most technologically advanced attraction. &li 1illy
#harmaceutical giant &li 1illy has been forming alliances for nearly a century, according to its brochure, #ower in #artnerships, and was the first in their industry to establish an office devoted to alliance management. 1illy currently has over one hundred partnerships around the world devoted to discovery, development, and marketing. (or eample, 1illy partners with the Belgium"based company alapagos to develop treatments for osteoporosis. 1illy also partners with $anada+s Bio2S medical group in a licensing and development agreement for a novel treatment for multiple sclerosis. In @apan, 1illy is partnering with 9yowa *akko 9ogyo $o., 1td., to bring a targeted cancer treatment to market. 1illy will have the eclusive license to develop and sell the product worldwide ecept in @apan, and the two companies will share rights in certain Asian countries. Ads by oogle
5pple and IB" 5lliance Bears #oftware 8ruit onathan Vanian -ec 1D, E1F
Apple and IBM’s partnership to create and sell mobile apps to businesses reached a new milestone, the technology giants said on Wednesday. The two companies have now built over 1 business apps, meeting a goal they set when !irst partnering last year. The announce shows that Apple and IBM are ma"ing progress with their bloc"buster alliance, which is intended to ma"e their products more attractive to business customers. By wor"ing together, they hope to leverage each others e#pertise$Apple%s consumer "now&how, and IBM%s deep ties to corporate IT departments$to be stronger than going at its alone. Apple &55/$, G%EH!' and IBM &IB", 6%E!' released '( apps in )ecember alone that cover sectors li"e the auto, chemical, petroleum, retail, and healthcare industries. IBM said its port!olio o! business apps now target 1' industries and *+ di!!erent ob roles within them. -ne new ihone app targets the energy and utilities industry by allowing wor"ers who inspect in!rastructure !or storm&related damages to /uic"ly share in!ormation with their colleagues and customers. Another new iad app !or eldercare wor"ers lets those pro!essionals "eep better tabs o! their elderly clients who live alone by letting them more easily access patient !iles. 0We thin" there’s relevance there to retirement communities, said 2atharyn White, IBM’s vice president o! the Apple and IBM partnership.
-nly one o! the newly released apps is built !or the iad ro hybrid laptop and tablet, but White said IBM and Apple are developing more apps !or the device that target !inancial planners, !ield maintenance wor"ers, and the travel industry, among others. Apple and IBM typically team up on designing the apps, while IBM developers write the code 3written in Apple’s 4wi!t programming language5. IBM handles integrating the so!tware !or customers into their computer systems, White said. 6ustomers pay monthly !ees based on the number o! users as well as an initial !ee to wire up the new so!tware to its internal databases and in!rastructure. The business apps were built to plug into IBM%s Watson data&crunching service to provide better data analysis and predictions. 7owever, that connection to Watson costs e#tra. IBM did not disclose the number o! customers using the new mobile apps, but did say that 4candinavian Airlines, 8oda!one 9etherlands, and Asian so!t drin" bottler 6oca&6ola Amatil are customers. 4o!tware sales have been a wea" point !or IBM in recent /uarters as the company transitions !rom selling so!tware licenses to a so&called so!tware&as&a&service model similar to companies li"e 4ales!orce. In IBM’s last /uarterly earnings, sales o! so!tware declined 1: year over year to ;+.1 billion. )trateic 6lliance of )tarbucks and +ata Coee7.. / Strategic Alliance of Starbucks and -ata %offee0.. y 1 Anu2 Singh Swati Sharma
$ndian Coee $ndustry/ 'ndian %offee 'ndustry -he coffee industry of 'ndia is the fifth largest producer of coffee in the world, accounting for over four percent of world coffee production, wit h the bulk of all production taking place in its Southern states. Avg. %offee consumption in 'ndia is "! cups per day. 'ndia is the only country that grows all of its coffee under shade. 'ndian coffee has a unique historic flavor.
+ata Coee7../ -ata %offee0.. Area of business *rows coffee on its own estates, &rocesses the beans, 3xports green c offee, (anufactures and exports 'nstant %offee
&illars #f +ata Coee’s %usiness )tratey/ &illars 4f -ata %offee’s usiness Strategy
Competitive 6dvantae of +ata Coee/ %ompetitive Advantage of -ata %offee -he largest integrated coffee plantation company in the world . 't5s uniqueness lies in its ability to produce large quantities of estate specific, strain specific, special and premium coffee, while maintaining a strict consistency in quality. 't has a hand in every aspect of the coffee making process 6ith the ma2or coffee consumption markets being Arabicacentric, this lobby has been prevailing in international markets by -ata coffee.
)tarbucks/ Starbucks 't is an international coffee and coffeehouse chain based in Seattle, 6ashington. Starbucks stresses quality above price and other features it could emphasi/e. Starbucks speciali/es in coffee and related beverages. -he company sells coffee, 'talianstyle espresso beverages, cold blended beverages, as well as a selection of premium teas and coffee related accessories and equipment.
Competitive advantae of )tarbucks/ %ompetitive advantage of Starbucks Strong brand image Starbucks speciali/es in coffee and related beverages. Starbucks is the largest coffeehouse company in the world. -hey have loyal customer worldwide.
Marketin )tratey of )tarbucks/ (arketing Strategy of Starbucks Starbucks started a community website, (y Starbucks 'dea 't’s rare to find a Starbucks ad in a billboard, ad space, newspaper or poster in places. -he company has went to great lengths to create a 7community atmosphere8 among premium coffee lovers. Starbucks operates primarily through 2oint ventures and licensing arrangements with consumer products business partners.
6bout the deal7/ About the deal0 Starbucks is coming 'ndia with 2oining hand to -ata %offee. Starbucks will explore setting up stores in the -ata group5s retail outlets and hotels, besides sourcing and roasting coffee beans at -ata %offee5s 9odagu facility. -his Agreement includes opening cafes, bean sourcing and roasting. 4ne of the hurdles that the two companies have to sort out is Starbucks’ franchiseeled business model
#b8ective of +ata Coee behind this deal/ 4b2ective of -ata %offee behind this deal -he agreement will allow -ata coffee to provide roast coffee bean to Starbucks in 'ndia. *et opportunity to 2ointly invest in additional facility for export to other market. Starbucks provide new technology to the promotion of responsible agronomy practices. A long term relationship will be formed with this (o: with Starbucks. After this deal, -ata %offee is become Asia’s biggest publicly traded coffee grower
#b8ective of )tarbucks behind this deal/ 4b2ective of Starbucks behind this deal Starbucks aiming to enter in 'ndian market through this (o:. Starbucks believe that 'ndia can be an important source for coffee in the domestic market, that’s why they enter in 'ndia. -he knowledge and understanding of the 'ndian market c an be brought by -ata *lobal everages, because it has been in this play for a while -he -ata also have an arm in retail so there’s a s ynergy there as well.
Marketin )tratey 6nalysis #f the eal / (arketing Strategy Analysis 4f the ;eal
Marketin )tratey 6nalysis #f the eal/ (arketing Strategy Analysis 4f the ;eal
Marketin )tratey 6nalysis #f the eal/ (arketing Strategy Analysis 4f the ;eal
Marketin )tratey 6nalysis #f the eal/ (arketing Strategy Analysis 4f the ;eal %ompetitive -iming<;irection (atrix
Marketin )tratey 6nalysis #f the eal/ (arketing Strategy Analysis 4f the ;eal Service decoupling Approach
Marketin )tratey 6nalysis #f the eal/ (arketing Strategy Analysis 4f the ;eal &orter five force (odel
9elationship Marketin7../ )elationship (arketing0.. Starbucks and -ata %offee developed a long term and intimate relationships. -hrough this deal they developed open communication 6 ith this (4: -ata %offee able to know the requirement and preference of Starbucks more closely -ype of Strategic ;ecision (aking.. $ormal ;ecision (aking
&oer&oint &resentation/ Strategic 'mplementation of ;ecision0..
&roduct 'ife Cycle7../ &roduct Life %ycle0..
%randin 6rchitecture...../ randing Architecture..... Sub rand they can opt this strategy for the branding purpose, as Starbucks uses this strategy for the branding purpose and may be it will continue it in 'ndia. 3ndorsed brands According to us they can also opt this strategy because -ata coffee uses this strategy %oranding
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Conclusion7../ %onclusion0.. -his deal will be beneficial for both the side, because this deal has given a new phase to both the company. As Starbucks prospect After having (o: with -ata %offee ,Starbucks is able to enter in 'ndian emerging market. $rom -ata
%offee prospect, after this deals they are entering in coffee retail outlet business, which is also giving a new phase to -A-A %offee. -hey may be revolutioni/ed the 'ndian coffee retail outlet industry.
Types of #trategic 5lliances Definition: 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.
The strategists oshino and 3angan have classified the strategic alliance based on two dimensions? Extent of organizational interaction and conflict potential among the alliance partners . Through this classification, the strategists try to eplain two things to the alliance partners?
The e;tent to which the partners must interact to have the alliance work e*ectively% >nderstand the potential of conJict that may arise out of being competitors in the market%
On the basis of these, four types of strategic alliances emerge:
1%
&rocompetitive 6lliances/ The procompetitive alliance is characteri)ed by lo interaction and lo con;ict% #uch alliances o*er the bene(ts of vertical integration, i%e% a relationship between the manufacturer and its suppliers or distributors, without the (rms actually investing the resources in the manufacturing (rm or distributing the semi6(nished or (nished goods%
E%
5oncompetitive 6lliances/ #uch alliances are characteri)ed by hih interaction and lo con;ict. The noncompetitive alliances are formed between the companies that operate in the same industry but do not consider each other as rivals% Their business operations do not coincide and are 2uite distinctive due to which the feeling of competitiveness does not emerge% Aften, the companies that have e;panded geographically within the industry adopt the noncompetitive alliance%
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Competitive 6lliances/ 5s the name suggests, these alliances are characteri)ed by hih interaction and hih con;ict % .ere, two competing (rms that perceive each other as rivals come together to form an alliance and% Therefore, the intense interaction between the two is necessary% #uch alliances could be intra6 or inter6industry% Aften, the foreign companies operating in India forms a competitive alliance with the local rival companies for speci(c purposes%
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&recompetitive 6lliance/ The precompetitive alliance is characteri)ed by lo interaction and hih con;ict% #uch partnership brings two (rms from di*erent, most often unrelated industries to work towards a speci(c activity, such as new product development, new technology development, or creating awareness among the potential customers about the use of new product or idea% The 3oint activities and advertising campaigns are the e;amples of a precompetitive alliance%
Thus, the strategic alliance types are classified on the basis of interaction and the potential of conflict between the partners to the contract.
Read more: http://businessjargons.com/types-strategic-alliances.html#ixzz4ZInl!jz
"ypes o $trategic %lliances in $"R%"&'I( %))I%*(&$
(ollaborati+e agreements bet,een businesses can tae a number o orms and are becoming increasingly common as businesses aim to get the upper hand o+er their
competitors. "he main types o strategic alliances are listed belo,:
oint entures % joint +enture is an agreement by t,o or more parties to orm a single entity to undertae a certain project. &ach o the businesses has an e0uity stae in the indi+idual business and share re+enues1 expenses and proits. 2oint entures are agreements bet,een parties or irms or a particular purpose or +enture. "heir ormation may be +ery inormal1 such as a handshae and an agreement or t,o irms to share a booth at a trade sho,. 3ther arrangements can be extremely complex1 such as the consortium o major .$. electronics irms to de+elop ne, microchips15 says (harles 6. )icson in % )egal 'uide or $mall 7usiness. oint +entures bet,een small irms are +ery rare1 primarily because o the re0uired commitment and costs in+ol+ed.
3utsourcing "he 89s ,as the decade ,here outsourcing really rose to prominence1 and this trend continued throughout the 88s to today1 although to a slightly lesser extent. "he early orecasts1 such as the one rom %merican ournalist )arry &lder1 ha+e been sho,n to not al,ays be true: 23utsourcing and globalization o manuacturing allo,s companies to reduce costs1 beneits consumers ,ith lo,er cost goods and ser+ices1 causes economic expansion that
reduces unemployment1 and increases producti+ity and job creation.5
%iliate ;areting %iliate mareting has exploded o+er recent years1 ,ith the most successul online retailers using it to great eect. "he nature o the internet means that reerrals can be accurately traced right through the order process. %mazon ,as the pioneer o ailiate mareting1 and no, has tens o thousands o ,ebsites promoting its products on a perormance-based basis.
"echnology )icensing "his is a contractual arrangement ,hereby trade mars1 intellectual property and trade secrets are licensed to an external irm. It
6roduct )icensing "his is similar to technology licensing except that the license pro+ided is only to manuacture and sell a certain product. sually each licensee ,ill be gi+en an exclusi+e geographic area to ,hich they can sell to. It
>ranchising
>ranchising is an excellent ,ay o 0uicly rolling out a successul concept nation,ide. >ranchisees pay a set-up ee and agree to ongoing payments so the process is inancially ris-ree or the company. ?o,e+er1 do,nsides do exist1 particularly ,ith the loss o control o+er ho, ranchisees run their ranchise.
R@A $trategic alliances based around R@A tend to all into the joint +enture category1 ,here t,o or more businesses decide to embar on a research +enture through orming a ne, entity.
Aistributors I you ha+e a product one o the best ,ays to maret it is to recruit distributors1 ,here each one has its o,n geographical area or type o product. "his ensures that each distributor
Aistribution Relationships "his is perhaps the most common orm o alliance. $trategic alliances are usually ormed because the businesses in+ol+ed ,ant more customers. "he result is that cross-promotion agreements are established. (onsider the case o a ban. "hey send out ban statements e+ery month. % home insurance company may approach the ban and oer to mae an exclusi+e a+ailable
to their customers i they can include it along ,ith the next ban statement that is sent out. It
3&AS)6S Companies decide to form strategic global business alliances for many reasons% Ane of the most important reasons is to gain access to another company’s knowledge or resources% Companies can also decide to 3oin forces to develop new products or to enter a market that neither could enter alone% Ather reasons for developing strategic alliances include the following+ 8orming economies of scaleE =nhancing competitiveness -ividing risks
#etting new standards for technology =ntering new markets Avercoming the competition in a market 5c2uiring new skills and resources Aften, when companies co6operate on a pro3ect, they e;change skills that are not for sale% Typically, one partner possesses technological e;pertise and the ability to keep abreast of rapidly evolving technological developments% hat that partner needs from the other partner or partners is capital, large distribution systems, marketing e;pertise, service networks and credibility in the marketplace% =ach partner therefore provides the other with vital resources and uses the partnership to
e;tend its skill set into new areas% 1% 0ormin economies of sale /artnerships can generate economies of scale that will enable the participating companies to marshal a broad set of resources and achieve the critical mass needed for international success% Companies with complementary skills can rely on each other’s proven e;pertise instead of spending time and resources to independently develop what has already been achieved% E% "nhancin competitiveness "any international trade pro3ects re2uire e;pertise from di*erent (elds% Traditionally, companies have tried to develop or maintain all the re2uired skills in6house% .owever, as technological and administrative comple;ity increases, companies are learning that they cannot do everything by themselves% 5s a result, the most competitive corporations are adopting a strategy of maintaining their core competencies only% @aps in the skill bases are then (lled by partnering with a company that has the missing skills% This strategy avoids the need to e;pend resources and run the risks associated with developing the skills in6house% K% ividin lobal business risks isk sharing through partnering is most often seen in research and development areas% esearch and development costs are always increasing and the speed of innovation means that products rapidly become outdated and the risks of investing in developing new products are high% #haring research and development costs and facilities provides good value for money, while sharing e;pertise can speed up the process% /artnering can be used to share risk in other areas as well% 8or e;ample, companies can share transportation and distribution systems, which saves money and enables faster delivery of the product% oint marketing is another way of spreading risk and increasing returns% It is now e;tremely common for (lm producers, book publishers, toy manufacturers and fast food outlet owners to co6 operate in parallel promotional campaigns that spread the risk involved in new ventures, reinforce each other and ma;imi)e returns to each of the participants% 6 #ee more at+ http+LLwww%tradeready%caLE1L(ttskills6refresherLH6reasons6forming6 strategic6global6business6alliancesLMsthash%gy.n>=oo%dpuf Ariginal article+ http+LLwww%tradeready%caLE1L(ttskills6refresherLH6reasons6forming6 strategic6global6business6alliancesL F% )ettin ne standards The development of new technologies creates entirely new market opportunities% The (rst company to create a new technology might set the standards for its industry simply because it is the (rst% .owever, several competitors might develop similar technologies at about the same time% It is very diNcult to predict whose technology will set the standard for the industry, so trying to be the (rst into the market with a new technology can be very risky% 8orming alliances is one approach to establishing standards in an industry% It also increases the chances that the
standards a company invests in will be accepted throughout the industry% #tandards make markets, and for this reason, many high technology companies cannot a*ord not to be involved in some sort of alliance, consortium or other co6operative e*ort% F% =ntering new foreign markets #trategic global business alliances are e*ective ways of entering new foreign markets% /artners can provide established marketing and distribution systems, as well as knowledge of the markets they serve, ensuring that products get to market faster and are more likely to be purchased% 8oreign partners can advise a company on how to modify a product to meet local regulations and market preferences% They can help with such issues as translation of documentation, conversion from metric to imperial measures, conversion of power re2uirements and compliance with packaging regulations% #trategic alliances can also be useful when market conditions or government policies present market entry barriers% /artnering with a local company can help overcome these barriers% D% Avercoming competition Companies often co6operate in marketing or distribution to overcome competition% 5 well6conceived alliance can mean a head start in a market, possibly even preventing other competitors from entering% 8orming an alliance with an established, ma3or company can reduce the inJuence of other companies% .owever, companies should be careful that alliances do not form a cartel or otherwise breach anti6competition laws in the target market% 6 #ee more at+ http+LLwww%tradeready%caLE1L(ttskills6refresherLH6reasons6 forming6strategic6global6business6alliancesLMsthash%gy.n>=oo%dpuf Ariginal article+ http+LLwww%tradeready%caLE1L(ttskills6refresherLH6reasons6 forming6strategic6global6business6alliancesL
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