FabricateIt Inc is a mediumsize manufacturing company that u

Fabricate-It, Inc., is a medium-size manufacturing company that uses standard assembly lines to produce its products. Its employees tend to be poorly educated and perform monotonous work. Think-It, Inc., is a software design firm that writes customized programs to solve its customers’ problems. Its employees tend to be highly educated and perform highly creative work. Both are reconsidering their current organizational designs. How might each of these organizations benefit by entering into strategic alliances with other organizations?

Solution

Strategic alliances are agreements made by two firms that have resources that complement each other. Such agreements are short of mergers/ acquisitions as there is no change in their legal entity. This is typically done to add capacity, enter new markets, share costs, etc.

In case of Fabricate-It, they have an assembly manufacturing line with low skilled employees. By entering into strategic alliance, the firm may benefit in the following ways:

In case of Think-It, the firm can have strategic alliance with enterprise technology firms provide hardware servers and data storage. Think-It being a software design firm can benefit by having an alliance with server storage firms in the following ways:

There are also synergies for Fabricate-It to have a strategic alliance with Think-It.