top of page

Global Strategic Alliances

A strategic alliance in business is a relationship between two or more businesses that enables each to achieve certain strategic objectives which are unachievable on their own. The strategic partners maintain their status as independent and separate entities, share the benefits and control over the partnership, and continue to make contributions to the alliance until it is terminated. Strategic alliances are often formed in the global marketplace between businesses that are based in different regions of the world.

 

In a strategic alliance, firms share their capabilities and enhancing their competitive advantage and/or creating new business without losing their respective autonomy. A strategic alliance is less involved and less permanent than a joint venture, in which two companies typically pool resources to create a separate business entity. In a strategic alliance, each company maintains its autonomy while gaining a new opportunity.

 

A strategic alliance could help a company develop a more effective process, expand into a new market or develop an advantage over a competitor, among other possibilities.

 

Advantages of the Global Strategic Alliance

 

There are many specific advantages of a global strategic alliance.

 

  • Get instant market access, or at least speed your entry into a new market.

  • Exploit new opportunities to strengthen your position in a market where you already have a foothold.

  • Increase sales.

  • Gain new skills and technology.

  • Develop new products at a profit.

  • Share fixed costs and resources.

  • Enlarge distribution channels.

  • Broaden your business and political contact base.

  • Gain greater knowledge of international customs and culture.

  • Enhance your image in the world marketplace.

 

Disadvantages of the Global Strategic Alliance

 

There are also some inevitable trade-offs to consider:

 

  • Weaker management involvement or less equity stake.

  • Fear of market insulation due to local partner's presence.

  • Less efficient communication.

  • Poor resource allocation.

  • Difficult to keep objectives on target over time.

  • Loss of control over such important issues as product quality, operating costs, employees, etc.

 

Types of Global Alliance

 

Coalitions

 

  • Alliances of competitors, distributors and suppliers in the same industry putting together their capabilities with a view of spawning world markets.

 

Co-specializations

 

  • Alliances of firms that join their respective unique but complementary capabilities to create a business or develop new products or technology.

 

Learning Alliance

 

  • To serve as a vehicle for know-how transfer between partners.

 

 

In negotiating a deal for a global strategic alliance, your main concern is that you and the other party share the same goals and see the deal-making process in the same light. It is vital that you enter into a written agreement when forming a strategic alliance. The parties must define in writing how the relationship will function, the decision-making process, how long the relationship will last and how it will wrap up in an orderly fashion.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By: Andrea Loor García

 

 

 

References:

© 2023 by The Book Lover. Proudly created with Wix.com

  • Grey Facebook Icon
  • Grey Twitter Icon
bottom of page