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Strategic alliances lead organization to get an opportunity to widen their customer base, offload or utilise their surplus capacity, integrate vertically, use each others strengths and so on.
1. Satisfy customer demands.
2. Share R&D costs.
3. Fill knowledge gaps.
4. Make scale economies.
shorter product cycle of modern technology.
6. Jump market barriers.
7. Speed in product introduction.
8. Pre-empt competitive threats
Alliances are the quickest way to grow a company, particularly in times of damage. Without implementing difficult and time-consuming internal changes, they allow a company to :
\ue000Rapidly move to decisively seize opportunities before they disappear.
\ue000Respond more quickly to change.
\ue000Adapt with greater flexibility.
\ue000Increase a company\u2019s market share.
\ue000Gain access to a new market or beat others to that market.
\ue000Quickly shore up internal weaknesses.
\ue000Gain a new skill or area of competence.
Alliances can rapidly meet a company\u2019s need for key resources such as more customers, additional capital, new/better products, new distribution channels, additional facilities, increased production capacity, or competent personnel etc.
\ue000Supply or purchase agreement.
\ue000Agreement to provide technical services.
\ue000Licensing of know-how, technology, design or patent.
\ue000Structure of organization.
\ue000Proportion between risks and reward.
A business strategic alliance is also means to an end, not just and end in itself. Strategic alliance often take place between firms of different industries and of varied sizes, for vertical or horizontal links, consolidation of positions or any of the following :
1) Gain a means of Distribution in International market \u2013 It may beneficial for an exporter to ally with local partner, to understand the functioning and the local market network.
2) Overcome legal or Regulatory barriers \u2013 In some countries it is mandatory to have local partner in order to conduct business. Thus, alliances offer suitable options.
5) Focus on New Products and Restructuring \u2013 An alliance in the form of a research and development alliance may focus at the development of new products. Apart from this, an alliance may also enable the firm to adapt to a more effective organisational structure.
Alliance strategy must be integrated into the overall corporate strategy and articulated in the strategic plan with a process for implementation. The entire process of developing and managing an alliance could be as follows :
a) Development of the strategic domestic or global plan
b) Development of the alliance plan
c) Alliance partner \u2013 search and selection
d) Development of the implementation plan
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