By : Sandeep Sharma Apeejay Institute of Technology Greater noida

The alliance is a cooperation or collaboration which aims for a synergy. The alliance often involves technology transfer (access to knowledge and expertise), economic specialization , shared expenses and shared risk.

³The whole is greater than sum of parts´

Strategic alliance
A Strategic Alliance is a formal relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations.

Strategic alliance
Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. Ex : Star Alliance

Strategic Alliances Partnerships between firms

Firm A Firm B

where their

Capabilities are combined to pursue mutual interests to Develop Manufacture Distribute

Core Competencies

Goods Services

Reasons for Alliances
Slow Cycle Market Gain access to a restricted market Establish franchise in a new market Gain market power Gain access to complementary resources Meet competitive challenge Pool resources for large projects Learn new business techniques Increase speed of product, service or market entry Maintain market leadership Form an industry technology standard Share risky R&D expenses

Standard Cycle Market

Fast Cycle Market

Types of Strategic Alliances
Joint Venture Independent firm is created by the joining assets from two other firms where each contributes 50% of the total Example: Dow Corning from Dow Chemical and Corning Inc. Equity Strategic Alliance Partnership where the two partners do not own equal shares Example: Chrysler and Mitsubishi Automotive NonNon-Equity Strategic Alliance Contract is given to supply, produce or distribute a firm s goods or services (without equity sharing) Example: Chrysler s supplier network

Types of Strategic Alliances
Global Strategic Alliances
working partnerships between companies (often more than two) across national boundaries and increasingly across industries. Sometimes formed between company and a foreign government, or among companies and governments

Few Strategic Alliances HeroHonda

Reliance and Samsung Reliance and Aaj Tak

MarutiSuzuki Ltd.

Microsoft and Nokia

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