Strategic
Alliances
Strategic alliances
(SA) are inter-firm cooperative arrangements
that extend beyond the scope of any contracts
that is completed in the ordinary course of
business. Firms involved in the SA remain independent.
Example of cooperative
arrangement : the
CARTEL
The
alliances are strategic in the sense that
:
- they involve significant irreversible
investments of time and money
- and are vital to the strategies
of the SA partners
SA differ from contracts
in the following ways :
- they involve irreversible investments
of time and money
- they involve greater sharing
of information on technology, products and
custumers
- They involve barter rather
than an exchange of goods for money
The SA focus on the development
of new markets or products rather than the service
of existing ones.
SA differ from acquisitions
in the following ways :
- They allow firms to remain
independent
- They only cover a part of each
partner's total operations
- They involved greater flexibility
- They involved reciprocity
SA can be categorized
as :
- Horizontal vs Vertical alliances
- Domestic vs International alliances
Type of SA
:
SA may be formed to pursue various
ends, including :
- R & D of products and processes
- Setting new standards
- Marketing and distribution
new products
- Forming new lobbies
- Sharing facilities
- Exchanging proprietary knowledge
- Allowing private and government
institutions to work together
Motives for pursuing
a SA
A Strategic Alliance :
- gives a firm the opportunity
to create
value in a way that it cannot
do so alone
- allows firms to access
resources and know-how when the markets
for these do not exist or are inefficient
- makes collusion possible (
be aware to anti-trust policies)
- allows synergies and cross-fertilization
of know-how and resources among firms
- capture a partner's knwoledge
SA allow firms to :
- access to complementary resources
- share costs and risks
- shorten development times
- share knowledge in order to
reduce incertainties (of technology, of competition,
of demand)
- increase capacity to absorb
new developments in technology and markets
- enter foreign markets with
a foreign partner's expertise
- expand their product range
- Set coordinated, shared standards
- form more powerful lobbies
- learn about a potential acquisition
target
- form more powerful bargaining
units
- create an entry barrier
- form larger networks for servicing
and marketing products
- enter new markets
- innovate
Types of alternative
arrangements to strategic alliances
- Acquisitions
& Mergers
- Equity Alliance
: cooperative contracts are supplemented by
equity investments by one partner in the other
partner. Sometimes these investments are reciprocated.
- Nonequity Alliance
: cooperation between firms is managed directly
through contracts, without cross-equity holdings
or an independant firm being created.
- Joint
venture : cooperating firms form
an independant firm in which they invest.
Profits from this independant firm compensate
partners for this investment.
- Licences
- Franchising
Sources :
Gaining and Soustaining Competitive Advantage, Jay. B. Barney, Addison-Wesley, 1997
Strategic Management, Raphael Amit, Professor at Wharton University of Pennsylvania, US
(c) ECOFINE.COM, Bernard Jaquier, Professor in Economics and Finance, Switzerland, 2020
