Strategic Alliance
Alliance
• The alliance is a cooperation or
collaboration which aims for a synergy.
The alliance often involves technology
transfer (access to knowledge and
expertise), economic specialization ,
shared expenses and shared risk.
“The whole is greater
than sum of parts”
Strategic alliance
• A Strategic Alliance is a formal
relationship between two or more
parties to pursue a set of agreed
upon goals or to meet a critical
business need while remaining
independent organizations.
Strategic alliance
• Partners may provide the strategic
alliance with resources such as
products,
distribution
channels,
manufacturing capability, project
funding,
capital
equipment,
knowledge, expertise, or intellectual
property.
Ex : Star Alliance
Strategic Alliances
Firm A
Partnerships between firms
where their
Firm B
Resources
Capabilities
are combined to pursue
mutual interests to
Core
Competencies
Develop
Manufacture
Distribute
Goods
Services
Reasons for Alliances
Slow Cycle
Market
Gain access to a restricted market
Establish franchise in a new market
Standard
Cycle
Market
Fast
Cycle Market
Gain market power
Gain access to complementary resources
Meet competitive challenge
Pool resources for large projects
Learn new business techniques
Increase speed of product, service or market entry
Maintain market leadership
Form an industry technology standard
Share risky R&D expenses
Types of Strategic Alliances
Joint Venture
Independent firm is created by the joining assets from two
other firms where each contributes 50% of the total
Example: Dow Corning from Dow Chemical and Corning Inc.
Equity Strategic Alliance
Partnership where the two partners do not own equal shares
Example: Chrysler and Mitsubishi Automotive
Non-Equity Strategic Alliance
Contract is given to supply, produce or distribute a firm’s
goods or services (without equity sharing)
Example: Chrysler’s supplier network
Few Strategic Alliances
HeroHonda
Reliance and Samsung
Reliance and Aaj Tak
MarutiSuzuki Ltd.
Microsoft and Nokia
WHAT NEEDS TO BE DONE?
• Suggest suitable Strategic Alliances for Praxis
Business School
– E.g. Spencer’s+ Praxis Retail
Program/Concentration
– E.g. ICICI + Praxis Analytics Concentration