strategic alliance


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Strategic alliance

Collaboration between two or more companies designed to achieve some corporate objective. May include international licensing agreements, management contracts, or joint ventures.

Strategic Alliance

Any agreement where two or more companies agree to cooperate with each other to achieve a certain, mutually beneficial goal. However, a strategic alliance is not a merger, and the involved companies remain separate. A common strategic alliance is a joint venture, where the involved companies partner together to conduct a certain project. Other strategic alliances include management contracts and licensing agreements.

strategic alliance

the combining together of the resources and competencies of two or more firms in a particular activity (but who continue to function separately in all other respects). Strategic alliances can be contractually based or ownership based (with each partner putting equity into the business) and can take a number of formats, for example, co-marketing (with one firm undertaking to market the product supplied by the other firm); co-production (with one firm undertaking to manufacture a product using components supplied by the other firm); and joint research and development (cross fertilization of ideas).

Strategic alliances can enable firms to obtain access to technologies, know-how, capital and markets to augment their own resources and capabilities. Pooling resources and capabilities in this way enables firms to achieve synergistic effects otherwise unobtainable on an individual basis. International alliances in particular can assist MULTINATIONAL ENTERPRISES to ensure that products reach the market place more quickly and more effectively, especially where products need to be modified to meet local regulations covering product standards and packaging, and the preferences of local customers.

While strategic alliances can yield positive benefits to partners there are some potential drawbacks. Arm's length cooperation agreements need careful planning and nurturing and involve ‘agency’ costs in negotiating, securing and monitoring CONTRACTS; they also require the establishment of mutual trust and commitment. Joint ventures go some way to implementing a stronger link between partners, but problems of joint control of operations may again limit the effectiveness of alliance. See JOINT VENTURE, FOREIGN MARKET SERVICING STRATEGY, EXTERNAL GROWTH, LICENCE.

strategic alliance

a partnership between two or more companies who combine their efforts in a particular business activity while retaining their independence as separate companies. Strategic alliances take two main forms:
  1. contractual agreements in which partners, for example, agree to cooperate to make components or complete products (coproduction), to distribute and market each other's products (co-marketing) and to develop new products (joint research and development). These are referred to as ‘nonequity ventures’;
  2. JOINT VENTURES involving the formation of a subsidiary company that is owned by the ‘parent’ firms, each of which provides a capital investment in the business. These are referred to as ‘equity ventures’.

Strategic alliances can enable firms to obtain access to technologies, know-how, capital and markets to augment their own resources and capabilities. Pooling resources and capabilities in this way enables firms to achieve synergistic effects otherwise unobtainable on an individual basis. International alliances in particular can assist MULTINATIONAL COMPANIES to ensure that products reach the market place more quickly and more effectively, especially where products need to be modified to meet local regulations covering product standards and packaging and the preferences of local customers.

While strategic alliances can yield positive benefits to partners, there are some potential drawbacks. Arm‘s-length cooperation agreements need careful planning and nurturing and involve ‘agency’ costs in negotiating, securing and monitoring CONTRACTS; they also require the establishment of mutual trust and commitment. Joint ventures go some way to implementing a stronger link between partners, but problems of joint control of operations may again limit the effectiveness of the alliance. See EXTERNAL GROWTH, LICENCE, FOREIGN MARKET SERVICE STRATEGY.

References in periodicals archive ?
training and educational programs, conferences, workshops and on-line exchanges Create awareness of the contributions of strategic alliances and strategic alliance professionals among corporate managers and executives and among the general public Sponsor, conduct, publish and disseminate research regarding advances and best practices in the field of strategic alliances and Serve as a repository and exchange for resources to support the professional development of its members.
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IBM and edocs has announced a global strategic alliance to offer telecommunications service providers a broad suite of e-business services and solutions for online account management and e-billing.
It formed a strategic alliance with the company instead.
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Many businesspeople consider Merck the master of the strategic alliance.
More than a marriage of convenience, a strategic alliance with your distributor can be a match made in heaven, but only if that relationship is based on real commitment and (gasp
SAN FRANCISCO -- The Association of Strategic Alliance Professionals (ASAP) today named the Northwest Airlines and KLM Royal Dutch Airlines transatlantic joint venture as recipient of its global 2007 ASAP Individual Alliance Excellence Award.
Discover how large and emerging companies are meeting the challenge of the global at the Association of Strategic Alliance Professionals' (ASAP) annual summit to be held February 7 - 9, 2007 at the Westin San Francisco Airport.
3) The free report - Eagle's Albatross: An Analysis of Eagle Hospitality Properties and Its "Strategic" Alliances with Corporex and Commonwealth Hotels - that details several problematic features of strategic alliance agreements that Eagle entered into with Chairman Butler and the companies he controls (Corporex and Commonwealth Hotels).
CHICAGO -- The Association of Strategic Alliance Professionals (ASAP) announced today that it has elected Debbie Clasen, Cisco Systems (NASDAQ:CSCO), as president of its Chicago/Midwest chapter for a one-year term.
CHICAGO -- GS1 Canada and 1SYNC today announced their decision to enter a strategic alliance to accelerate the adoption of the Global Data Synchronization Network (GDSN) across North America.

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