Democratic Management Style

Sample Essay on Strategic Alliance

Strategic Alliance

Strategic alliance is a term that refers to the relationship between two or more entities that are in agreement to share resources in order to attain a mutual beneficial objective. For instance, a company that manufactures and distributes a product in the US and desires to sell that product in other countries and another interested in expanding its product line with the products created by the first company and it enjoys a worldwide distribution channel can form a strategic alliance.

These two companies can establish this kind of alliance in order to expand distribution of products from the first company and both will benefit. For any strategic alliance to be mutually successfully, then it must be mutually beneficial to the parties involved. Each should be in a position to see clearly how it will benefit from the arrangement and responsibilities of each company in implementation of the alliance must be identified clearly.

Both parties are supposed to reach an agreement on objectives of the relationship and be adaptable and flexible in operation of the alliance. In addition to this, each company should have a different method and culture of carrying out business.

In essence, partners can provide strategic alliance with resources like distribution channels, project funding, products, manufacturing capability, intellectual property, knowledge, expertise or capital equipment. The alliance is collaboration or cooperation aimed at synergy where both partners hope that the benefits accrued from the alliance will be greater or higher than those accrued as a result of individual efforts. Often, the alliance will involve transfer of technology, shared risk, shared expenses and economic specialization.

For strategic alliance to be effected, it is important to:

  • Define the kind of partner a business is looking for as well as the ideal characteristics.
  • Identify the strengths preferred in the other party
  • Determine why the other party is interested in creating an alliance with you
  • Develop a list of all the potential candidates for the alliance

Once all these steps are followed, it is important to set up a meeting with the potential partners and outline how the alliance is going to work as well as what expectations both parties should have.

There are several advantages associated with creation of a strategic alliance. Some of these include:
  • It makes it easy for a company to pursue its opportunities quickly.
  • Helps leverage resources and  knowledge of the other party
  • Few resources are needed than if the company was to pursue the opportunities on its own.
  • Alliance provides easy access to new opportunities
  • Lowers barriers to entry

A successful strategic alliance should be built on the strengths of each party and should be focused on nurturing and establishing relationships.

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