STRATEGIC ALLIANCES AND MODEL OF COLLABORATION
International business literature stipulates that companies that employ strategic alliances of the companies’ results to positive outcomes provided in their operation enjoys numerous benefits. These benefits include higher success rates, returns on equity, and better returns on investments. The strategic alliances and corroboration are far better than mergers and acquisition (Weaver, 2017). The knowledge of these facts about the strategic alliances are critical in the executive world to ensure conformity with the dynamics, formation process and inter-corporate relations for a successful business outcome
Firstly, strategic alliances refer to the agreement that are formed by two or more independent companies corporate in bid to enhance their manufacturing, developments, and the marketing of their products to achieve higher sales or attain efficacy of some levels (Li et al., 2017). The major subdivision of strategic alliances and models of corporations are broadly divided into three categories. The joint ventures are corporation that aims to bring about a common pool of resources to fiancé large scale projects. The ownership of the resulting projects is divided according to contribution of each party. The second type is equity strategic alliance where companies purchases a certain percentage of equity of a given company (Li et al., 2017). Finally, the third corporation is non-equity strategic alliance where two companies signs a relationship with promise to pull their resources and capabilities for overall good and benefits of each partner.
Strategic alliance and models depends on selection of partners, the effectiveness of transfer of knowledge through business co-operative ventures, trust, honesty, complementarities and combined effect amongst partners have dominated the majority of models and relations formulated. The major questions that are mostly enquired includes the following: Why or what is the importance of alliances being set-up? The situation strategic alliances? How to successful international strategic alliances are achieved? Among other critical questions explore in the research. Generally, the focus on both an insightful analysis of a specific issue selected contributes immensely to the field corporate alliances. This results to discovery of facts in the fields such as, technological knowledge transfer, the effect of familiarity ambiguity and methodological issues of filching generalizations of more universal magnitude as well as concept legitimacy in measuring strategic alliance performance. Benison’s (1999) outlined important executive procedures for the process. Firstly, integrate the proficiencies of your business partner secondly, develop notion that your today’s supporter and tomorrow’s opponent; wisely share power and resources information to the partner, and finally structure your association sensibly.
The focus of this paper to critically elucidate on the foundation, execution, and consequences of premeditated alliances and collaboration among various actors in an organizational field of business. To achieve these results or purposes, current theoretical and pragmatic research relating to strategic alliances and the issues of globalization of competition and collaboration are reviewed to give a clear insight (Van de Graaff Randolph, 2016). The motives and purposes of organizations that seeks to enter into strategic alliances is examined and the underlying driving forces for the process. Secondly, the issues of trust are assessed and how it affects the process of implementation of such allegiances in respect to opportunism that may be exploited by the partner selected. In this step, the impact of transformation of cultural, social, financial and human capital is examined as well. The success rate of the outcome recorded from the transformation to both partners in the alliance. Division of the labour in the organization is reviewed and the overall impacts to the society.
Finally, through the information, speculations and conclusion made, we critically develop theory of construction and basis of research for future strategic alliances. The concepts of organizational fields strategic alliances relies on search of new efficacies through established of these corporations for maximum benefits while avoiding the uncertainties and hierarchical rigidities of later business models. The exists various basic forms of interorganizational relations that are formed or identified in major theoretical and research literatures. They include;
Equity investments: this type of corporation implies that one firm relates to another via a direct stock acquisitions of shares in that firm. Tiered relations are made through either acquisition or merger, where one firm takes total control of another’s assets and acquires the rights to coordinates actions functions in matters relating to the ownership rights mechanism. Joint ventures are another critical relation utilised by firms where two or more firms jointly creates one legally owned business that serves persistence for its parents’ companies, for example marketing work only among other functions (Van de Graaff Randolph, 2016). Licensing is another critical tool of corporation. It refers to an instance where one company is granted the right to use patented know-hows in their production process and in returns give royalty fees. Action assets is where company come together for a short-term coordination of their efforts to influence public policy process that is likely to influence their operations (Van de Graaff Randolph, 2016). Franchising techniques is a business corroboration model where one company is granted to use brand name for identity purpose and exclusive rights too market, pricing and standardized critical services are under the control of the franchiser. Formation of cartels include corporation of business network where they control production or pricing of a particular industry (Li et al., 2017). Other critical inter-organization relations include market relations, industry standard groups, subcontractor networks among others.
The strategic alliances in business are viewed as appropriate since they improve current operation of the business, helps change competitive environment and ease the entry and exit in the business world. The operation of the businesses are improved in the sense that the economies of scale is scale is realized, knowledge sharing and risks and cost of operations are shared between the partners (Weaver, 2017). Further, the level of competition in the market is eliminated since new technologies are invented granting such company gain control of the market. Tacit collusion in the operation are introduced in the market. The ease of entry and exit of companies in the market is created in the sense that low costs are required to venture in the market and the companies can exit the market easily through granting take-over by another business.
Though strategic alliance are important to the business and partners involved, care should observed to avoid challenges of operation such as partners may lie on their contribution to the overall benefits of the cooperation (Weaver, 2017). Further, partners may fail to contribute resources and their capabilities to the success of the partnership formed. These factors make it difficult for alliances to perform effectively.
References
Weaver, M. (2017). Strategic alliances as vehicles for international growth. The Blackwell handbook of entrepreneurship, 387-407.
Li, L., Jiang, F., Pei, Y., & Jiang, N. (2017). Entrepreneurial orientation and strategic alliance success: The contingency role of relational factors. Journal of Business Research, 72, 46-56.
Van de Graaff Randolph, R. (2016). A multilevel study of structural resilience in interfirm collaboration. Management Decision.
Todeva, E., & Knoke, D. (2005). STRATEGIC ALLIANCES & MODELS OF COLLABORATION 1.