April 14, 2022

What Is a True Statement about Strategic Alliances


There are several ways to define a strategic alliance. Some definitions emphasize the fact that the partners do not create a new legal entity, that is, a new company. This excludes legal forms such as joint ventures from the field of strategic alliances. Others see joint ventures as possible manifestations of strategic alliances. Some definitions are given here: The “dark side” of strategic alliances has received increasing attention in various management areas such as business ethics[19], marketing[20] and supply chain management. [21] The term “dark side” has been commonly used to refer to the risks and negative dimensions of strategic alliances, ranging from negative outcomes to malicious behaviour or unethical practices. [22] Strategic alliances are formed to gain market share, replace other companies, pool resources for major capital projects, achieve economies of scale or access complementary resources. The globalization of business models and dramatic changes in the way companies operate and compete have led to a shift in the strategy and implementation of mergers and acquisitions (M&A). Mergers and acquisitions or organic growth are not always achievable, and it is not always the fastest way to achieve the desired goals in a competitive market. Companies and investors are increasingly moving beyond the traditional acquisition and divestiture model, leveraging joint ventures (JVs) and strategic business alliances to achieve their business development goals. Partners can provide the strategic alliance with resources such as products, distribution channels, manufacturing capacity, project financing, capital goods, knowledge, expertise or intellectual property. There are several ways to end a strategic alliance:[26] Strategic alliances have gone from an option to a necessity in many markets and industries.

Different markets and requirements are leading to an increasing use of strategic alliances. Integrating strategic alliance management into the company`s overall strategy is critical to driving products and services, entering new markets, and leveraging technology and research and development. Today, global companies have many alliances in domestic markets as well as global partnerships, sometimes even with competitors, which leads to challenges such as maintaining competition or protecting their own interests in managing the alliance. Today, managing an alliance focuses on harnessing differences to create value for the customer, managing internal challenges, managing Allianz`s day-to-day competition with competitors, and managing risk, which has become a company-wide concern. The percentage of revenue of the 1,000 largest U.S. public companies created by strategic alliances increased from 3 to 6 percent in the 1990s to 40 percent in 2010, demonstrating the rapidly changing need for partnerships. The number of stock market alliances has increased significantly in recent years, while the number of acquisitions has decreased by 65% since 2000. For statistical research, more than 3,000 alliances announced in the United States were examined between 1997 and 1997, and the results showed that only 25% of these alliances were stock-based. Between 2000 and 2002, this share increased to 62% of share-based alliances among 2500 newly formed alliances. [3] [9] Strategic alliances enable partners to evolve rapidly, develop innovative solutions for their customers, enter new markets and pool valuable know-how and resources. And in a business environment that values speed and innovation, that`s a game changer.

But true strategic alliances require effective management to realize their true potential, and given the time and energy required for traditional partnerships, this is more difficult than it seems. Choosing the right partner for the right project requires in-depth knowledge of partners` sales, marketing, and project data, as well as an understanding of their customers and the overall solutions they are looking for. Alliances are business relationships. It`s about knowing who you know in business, and as a personal network, they complement your skills and weaknesses with strengths. Each alliance is a joint venture in which two or more entities work together to achieve a common goal while remaining separate and independent. A company can form a strategic alliance to expand into a new market, improve its product range or develop an advantage over a competitor. The agreement allows two companies to work towards a common goal that benefits both. According to the Ivey Business Journal, a strategic business alliance needs five key elements to succeed.

As globalization and competitiveness intensify, more and more companies are likely to turn to joint ventures and alliances as an effective strategy to win in the market. Nevertheless, the complexity and commitment associated with these agreements should not be underestimated. Organizations that take a collaborative approach based on trust and sharing – combining it with formalized and well-planned execution – will significantly increase their chances of success and will be well positioned to leverage these agreements to create a sustainable competitive advantage. Michael Porter and Mark Fuller, founding members of Monitor Group (now Monitor Deloitte), distinguish the types of strategic alliances based on their objectives: Strategic alliances can come in many sizes and forms: Strategic alliances can fail if partners distort what they bring to the table, do not fully engage in the partnership, or effectively pool their resources. Forming a strategic alliance is a process that usually involves some important steps mentioned below:[11][26][27] Some types of strategic alliances are:[2][9][10][11] Over the past few months, I have seen various new alliances formed between the world`s largest companies. Strategic alliances are agreements between two or more independent companies to collaborate on the manufacture, development or sale of Accounting productsOur accounting guides and resources are guides at your own pace to learn accounting and finance at your own pace. .

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