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Alliances

May

16

2015

Alliances
A strategic alliance is a formal and mutually agreed to commercial collaboration between companies .Te partners pool , exchange or integrate specific business resources for mutual gain yet they remain separate business. It is a synergistic arrangement whereby two or more organsations agree to cooperate in the operation of a business activity, where each involved company brings different strength and capabilities to the arrangement. Alliance can be either equity or non equity based and typically start with one cooperative agreement tat evolves into a portfolio of arrangements built overtime.
Alliance contagious is an excellent vehicle to obtain market growth amid the rapidly changing market conditions .Alliance can also help construct broader business systems by linking a company’s internal core competencies with the best of breed capabilities of its allies
But not all alliance succeed .Almost one in two fails “problematic alliance can be the result of many factors ,including industry dynamics, new technologies , new entrance or economic cycles.
The ability to weather external forces as well as maximize internal alliance potential is heavily driven by establishing a solid alliance foundation that includes experience , mutual trust , strong relationship and sound business rational .Alliance that are managed well can create tremendous value .strategic alliance and collaborative approach , as an alternative to merger and acquisitions , could be attempted to reduce transaction costs through outsourcing ,leverage synergies in operation and thus avoid problems related to cultural integration.If merger is difficult to achieve ,this knowledge of local economic conditions could increase vulnerability of individual banks and hence , a strategic alliance with a local player could be a better solution .
Benefits
Strategic alliance brings enterprises the following benefits
Increase in capital for research and product development and yet lower risk
Decrease in product lead times and life cycle
Ability to bring together complementary skills and assets that neither company could easily develop its own.
Access to knowledge and expertise beyond company borders
Rapidity achieve scale critical mass and momentum
Expansion of channel and international market presence
Building credibility in the industry and brand awareness
Providing added value to customer s
Establishment technological standard for the industries that will benefit the firm

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