Discuss the advantages and disadvantages of strategic allian

Discuss the advantages and disadvantages of strategic alliances (i.e. cooperative strategy). What impact do these alliances have upon brand recognition/exposure? Are there any concerns with regard to quality control and/or brand loyalty?

Strategic Resource Allocation and Planning-is the name of the class

Solution

Answers:

A Strategic Alliance is a 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. This form of cooperation

lies between M&A and organic growth.

Benefits of Strategic Alliance

Nowadays, strategic alliance has become a common strategy to businesses. Two or more enterprises

choose to form a partnership and work cooperatively to achieve their mutually beneficial objectives.

Enterprises that enter into strategic alliance usually expect to benefit in one or more ways. Some of the

potential benefits that enterprises could achieve are such as:

An enterprise may want to produce something or to enquire certain resources that it lacks in the

knowledge, technology and expertise. It may need to share those capabilities that the other firms have.

Introducing the product into a new market can be complicated and costly. It may expose the

enterprise to several obstacles such as entrench competition, hostile government regulations and

additional operating complexity. There are also the risks of opportunity costs and direct financial

losses due to improper assessment of the market situations.

Choosing a strategic alliance as the entry mode will overcome some of those problems and help

reduce the entry cost.

Enterprises can make use of the strategic arrangement to reduce their individual enterprise’s financial risk.

Bringing a product into another country might confront the enterprise with political factors and

strict regulations imposed by the national government. Some countries are politically restrictive

while some are highly concerned about the influence of foreign firms on their economics that

they require foreign enterprises to engage in the joint venture with local firms. In this circumstance,

strategic alliance will enable enterprises to penetrate the local markets of the targeted country.

Synergy and competitive advantage are elements that lead businesses to greater success. An

enterprise may not be strong enough to attain these elements by itself, but it might possible by joint

efforts with another enterprise. The combination of individual strengths will enable it to compete

more effectively and achieve better than if it attempts on its own.

Disadvantages of Strategic Alliance

Brand Exposures