Overview of Strategic Alliance

An example in aviation industry that has successfully employed a strategic alliance is Qantas Airlines, who entered into a non-equity strategic alliance with the large Middle-Eastern airline Emirates. Strategic alliances are evident

Joint venture is an agreement between two or more parties to gather or pool resources together so as to accomplish a specified goal. The main objective is to implement a new business idea or project. The venture is a separate entity from the participants and their businesses. However proceeds, losses and costs incurred from the activities of the venture, the participants are responsible.

A foreign investor may enter into a joint venture by combining with a national of a host country to create a new entity or by acquiring a portion of an existing local entity.

Successful partners view the alliance as an opportunity to learn rather than purely as a cost- or risk-sharing device.

Although partners learn from each other through alliances, promoting inter-firm learning happens when all participants acknowledge a number of critical factors that help or hinder collaboration (Dickson et al., 1997). Compatibility is a critical factor when companies decide to join with one another, and management on both sides examine if the partnership will deliver desired results (Dickson et al., 1997). Although partnering with businesses that offer

Equity-based alliances include co-marketing, research and development, contracts, turnkey products, strategic suppliers, strategic distributors, and licensing/franchising.

A joint venture (JV) means; “An enterprise, co-operation or partnership, formed by two or more companies, individuals, or organizations, at least one of whom is an operating entity that wishes to broaden its activities for the purpose of conducting a new, profit motivated business of permanent duration. Some researchers such as Adnan and Morledge (2003) define joint ventures as the procedure used to respond to specific business phenomena such as access to new markets, specific government policy, business capacity, technology transfer or economies of scale. In general the ownership is shared by the participants with more or less equal equity distribution and without absolute dominance by one party.” This entity is subject to the joint control of its parent firms, each of which is economically and legally independent of the other (Shenkar, Zeira, 1987).

For instance if a hospital want their patient to complete blood work before coming in for their appointments, partnering with a lab company will make it more convenient for the hospital and create new business for the lab company. There are two types of partnerships to include “strategic alliances that are defined as partnership arrangements that do not involve ownership and mergers and acquisitions that are ownership-based arrangements” (Yarbrough & Powers, 2006, p. 52). This allows the health care organization to achieve high quality patient care to many patients rather than to only those patients with illnesses that one hospital can provide. Partnerships allow hospitals to build relationships with other hospitals or health care organizations to provide an all-inclusive course of treatment to all patients. The end result is that the hospital can serve more patients and increase access to more patients. If you were to take a healthcare system, for instance, where numerous individual hospitals will form partnerships in order to make the resources of each hospital available to all of the patients. “Health care organizations hope to increase access to capital, gain access to management expertise and other knowledge, and benefit from expanded human resource programs through partnership strategies” (Yarbrough & Powers, 2006, p. 51). For many healthcare

the partners to establish good and clear structure of how the alliance is being operated.

A joint venture is characterised by the need to achieve a business transaction while remaining separate from each other. Each firm maintains its resources and independence while engaging in an activity, with the objective of achieving certain objectives. The need for joint ventures in the Pharmaceutical industry may be characterised by the need to reduce high R&D costs and by so doing, share costs through common equity (Roijakkers&Hagedoon,2005, p.8). Joint venture as a mode of market entry may

International joint ventures is an overseas business owned and controlled by two or more partners; starting such a venture is often as an entry strategy (Deresky, H. 2014.p.377), while joint ventures refers to an independent entity jointly created and owned by two or more parent company.

Strategic Orientation: This takes into consideration the motivation behind an organization’s partnership with other organizations. This helps other participating organizations to anticipate and respond to the way their partners behave. Under strategic orientation, there are three types of partnerships, namely; opportunistic partnership, resource dependency partnership and stakeholder partnerships (Novick, Morrows & Mays,

Partnering is the first step in a sequential process that fosters collaborative teamwork. Teams not only work well together, but they encourage individual growth and achievement. Define the goals of the partnership clearly at the outset, set and fill the agreed upon roles, and adhere to group norms, mission, and vision. Employees will commit to growth and achievement, especially when they see initial success.

It is because through the joint venture, the company is more familiar with the situation of the company there. The negative outcome is that the management system different between the company. So it is hard to make a decision making. It is because there is different opinion of each person.

Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. The alliance is cooperation or collaboration which aims for a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts. The alliance often involves technology transfer (access to knowledge and expertise), economic specialization, shared expenses and shared risk.