Entry Strategies: Strategic Alliances

This allows them to capitalise on the core competencies of other firms, resulting in competitive advantage if successful. The major benefits of strategic alliances rather than acting independently include a new source of revenue, a vehicle for firm growth, faster responses to market opportunities, technological changes and global conditions, and grants experiences to draw new knowledge from.

The foreign partner can also become a competitor by selling its production in places where the parental company is already in.

Strategic alliance is an agreement between two or more organizations to cooperate in a detailed business activity, so that each get benefited from the strengths of one an other, and gains competitive advantage. The formation of strategic alliances has been seen as a comeback to globalization and increasing doubt and difficulty in the business environment. Strategic alliances occupy the sharing of knowledge and expertise between partners as well as the reduction of risk and costs in areas such as relationships with suppliers and the development of new products and technologies. strategic alliance is sometimes equated with a joint venture, but an alliance may involve competitors, and generally has a shorter life span. Strategic partnership is a closely related concept. This article analyzes definition of strategic alliance, its benefits, types, process of formation, and provides a few cases studies of strategic alliances. This paper tries to synthesize the scope and role of marketing functions in the determination of effectiveness of strategic alliances. Several propositions from a marketing perspective about the analysis of alliance process are formulated. On the basis of the propositions, a framework is developed for future research

The failure rate for international strategic alliances is quite high. Success seems to be a function of three main factors:

According to our textbook, global sourcing is the practice of purchasing goods and services from the around the world wherever it is least costly (Pg 82). A strategic alliance is a partnership between two entities in which they both share their

Moving toward establishing win-win relationships in the context of strategic alliances, organizations are looking at total cost as a criterion, thus allowing win-win relationship building to lower total costs. Most public and private sector organizations are expected to use integrative (win-win) versus distributive (win-lose) negotiations, as they move away from adversarial and toward collaborative relationships with suppliers.

4. When domestic and global sources in existing trading alliances come under pressure toinnovate, reduce prices and increase services:

Last but not least, having a cross-border strategic alliance with a partner will help to bring unique resources, skills, and personnel when working together. Because B/E Aerospace already has its operations in the global market, this method works when the company learns how to develop new core competencies and new capabilities from its global partner(s). However, the challenges of a cooperative strategic alliance lay between the differences of the organizational culture and the partner’s culture. The very first stage of strategic alliances is to choose the right partner based on the foundation of trust and honesty. Complex laws, regulations, and initiatives can be hard to mutually benefit both partners.

efficiently than if either firm attempted to do so on its own. The role of strategic alliances in shaping the

The business-level strategy end goal is to combine all of the component capabilities necessary to bring a product or service to the market with as many core competencies as possible, with as few weak activities as possible, in search of competitive advantage (South University Online, 2016, para. 4). In order to meet these requirements complementary strategic alliances are the most effective approach. Complementary strategic alliances are used in order for firms to share some of their resources and capabilities in complementary ways in order to create a competitive advantage (Hitt et al., 2015, p.271). This is the best strategy for business- level because these alliances allow firms to minimize risk and market issues. This is done by the firm having more access to supplies through the

The lesson learned from this is that sometimes it is easier and faster reach a new market via joint venture, even though the profit will be less, but the company can save a lot of money in studying the new market trying to understand the new culture and how they purchase and also it can minimize the risk because there is a national brand supporting the new international brand, which gives confidence and security to the customers.

We found innovation, cost reduction and market conditions as key elements supporting a successful internal strategy and strategic alliance and diversification to be among the most widely applied strategies for a foreign market penetration and development, while fusions and licenses were the least preferred.

A joint venture is a contractual agreement joining together two or more parties for the purpose of executing a particular business undertaking (InvestorWords, 2008). Some of the most significant benefits gained from joint venturing include, a reduced risk of both companies resulting from capital and resource sharing, the opportunity to increase sales, and enhance technological capabilities through research and development underwritten by one party (INC, 2009). Joint ventures also provide a mode for entering foreign markets because the partnering companies join complementary skills and knowhow with local firms (Qiu, 1984). Companies often jump into joint venture agreements blinded by these benefits and often fail to research the risks

Strategic alliances risk factors, every strategic alliance have some type of risks that may occur during a partnership; some strategic alliances, sometimes use partners to strengthen their competitive advantages against each other. This creates a new competitor for both parties, to avoid this risk the companies will sign an agreement stating that after the strategic alliance is terminated, the other is not permitted to use or sell certain equipment or technologies for a period of time; for example, within a 3 year period. Another risk is leadership, who will make the decisions in the strategic alliances; this sometimes can cause a problem that will create issues between the two

A strategic alliance is a good way for the company because it allows sharing the risks and the resources with the alliance that mean does not have to bear all the risk of the exporting. In addition, the alliance can help it to develop the new competencies - maybe the new product or