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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
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Petersburg, Fla., has named Peter Halenar as its vice president of business development, partnerships and strategic alliances. Halenar will be responsible for developing, managing and growing the CUSO's alliance and partner programs that will deliver new product offerings and strengthen revenue generation for PSCU's credit unions.
"Strategic alliances decision-makers turn to people they know to find others looking for deals," says Frank Osborn, marketing manager, MWAGIA, Inc./Modern Woodmen of America, and ICMG president.
* Strategic alliances that focus on marketing or publicity usually do not build substantial value.
Law firms have seen an uptick in M&A activity this year, but the corporate world is increasingly turning to smaller deals and strategic alliances to grow their companies, according to a new survey from professional services firm Deloitte.
The survey, with more than 70 responding companies, is the fourth conducted by ICMG on networking and strategic alliances topics since 2010.
Dallas, TX, May 06, 2010 --(PR.com)-- ReportsandReports Announce it Will Carry Strategic Alliances: Synergistic Path to Value Creation Market Research Report in its Store.
Strategic alliances are popular both in business actions of enterprises and as a research object in the articles of business research.
We still, however, miss empirical evidence relative to the implications of collaborative arrangements, like strategic alliances, for the innovative capabilities of companies involved in such collaborative arrangements.

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