What is strategic alliance and types of strategic alliance?
Companies run their businesses in a market comprised of various competitors. The presence of other competitive businesses is good for your business and customers. Because healthy competition keeps you on track and customers would have more choices. Sometimes, businesses and companies join hands and share resources in order to deal with a certain situation. What is Strategic Alliance?A strategic alliance is an agreement between two or more business entities where they could enjoy the benefits while maintaining their independence. The nature of strategic partnership could be short or long-term depending upon the agreement. However, the agreement of strategic alliance is usually less complicated than a joint venture where businesses create something new. The strategic alliance could be formal or informal; it clarifies the roles and responsibilities of each partner in order to achieve mutual goals and benefits. The profit would determine the time period of alliance among partners. The alliance could help businesses to be efficient in their processes. Reasons behind Forming Strategic AllianceBusinesses create a strategic alliance for various reasons, and they’re as follows;
Types of strategic Alliances with detailed ExamplesHorizontal Strategic AllianceA horizontal strategic alliance is an agreement and alliance among companies that are operating their business in the same industry. The alliance is among the businesses that used to be the competitors; they join hands and share resources to achieve a competitive edge in the market. The strategic business partnership alliance between Nissan and Renault is a very good example of a horizontal strategic alliance. This helped both companies to limit the research and development cost, rationalize the logistic cost, and achieve economies of scale through bulk production. Vertical Strategic AllianceA vertical strategic alliance is stretching your business upward, downward, or both of the supply chain. For instance, an automobile manufacturing company makes a business partnership with a foreign distribution network while entering into a new market in another country. An ink manufacturing company makes a strategic alliance with the pigment manufacturer so that the company would have a consistent supply of raw material pigment. Joint VentureTwo companies share resources and create a new company through an agreement. In other words, thejoint venture is a Child Company of two big parent businesses. It could be short-term or long-term, but it has clear goals and objectives, and the partner companies share their profit. Google and GSK made a strategic alliance in 2016 to fund the research of treating a patient with electrical signals. The joint venture attracted the attention of many other firms and they share their resources in the development of the product. Equity Strategic AllianceEquity strategic alliance is when a business shares and equity of the other business. Two businesses purchase shares and equity of each other firm. The relationship between Panasonic and Tesla is a very good example of an equity alliance. Panasonic invested 30 million dollars in battery technology for electric vehicles. It resulted in the form of establishment of a lithium-ion battery plant in Nevada. Non-Equity Strategic AllianceA non-equity strategic alliance is when businesses make an alliance and agreement where they share resources without creating any separate business. It’s usually informal and flexible than a regular form of partnership and equity. A great number of companies usually make a non-equity alliance. The purpose of such a type of business alliance is to gain an advantage in sales, marketing, production, and research and development. How to Make a Successful Strategic PartnershipHere’s how you can build a successful partnership by keeping in mind the following steps; Your focus should on cost reduction, developing new products, and approaching more customers.
Advantages of Strategic Alliance
Disadvantages of Strategic Alliance
What is strategic alliance and types?There are three types of strategic alliances: Joint Venture, Equity Strategic Alliance, and Non-equity Strategic Alliance.
What are the types of strategic partnership?There are 5 types of strategic partnerships most commonly seen which include:. Strategic Marketing Partnerships,. Strategic Supply Chain Partnership,. Strategic Integration Partnerships,. Strategic Technology Partnerships, and.. Strategic Financial Partnerships.. What does the term strategic alliance mean?A strategic alliance is a partnership between two businesses to achieve mutual goals and growth, while still retaining independence. Such partnerships are usually long-term in nature, with each business bringing its expertise and resources to the table.
What is a strategic alliance What are the three major types of strategic alliances firms form for the purpose of developing a competitive advantage?A strategic alliance is a type of cooperative strategy where companies may combine a few resources or capabilities advantage. The three major types of strategic alliances that firms form for the purpose of developing a competitive advantage is, joint venture, equity strategic alliance and non-equity strategic alliance.
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