Strategic alliances are cooperation arrangements between two or more companies for achieving a common objective.
Strategic Alliances – Defined
Strategic alliances are cooperation arrangements between two or more companies for achieving a common objective. Yoshino and Rangan define strategic alliances in terms of three necessary and sufficient characteristics
1. Two or more firms unite to pursue a set of agreed upon goals but remain independent subsequent to the formation of the alliance,
2. The partner firms share the benefits if the alliance and control over the performance of assigned tasks –perhaps the most distinctive characteristic of alliances and the one that makes them so difficult to manage,
3. The partner firms contribute on a continuing basis on one or money key strategic areas, for example, technology, product, and so forth.
In similar words , Lando Zeppi, Managing partner of Booz, Allen and Hamilton, defines strategic alliance as :
a cooperative arrangement between two or more companies where:
1. A common strategy is developed in unison and a win-win attitude is adopted by all parties
2. The relationship is reciprocal, with each partner prepared to share specific strengths with each other, thus lending power to the enterprise.
3. A pooling of resources, investments, and risks occurs for mutual (rather than individual gain)
Strategic alliances can be defined simply as:
“a cooperation between two or more independent firms involving shared control and contributing contributions by all partners for mutual benefit”.
Some alliances are short term and some are long term leading to full mergers of companies.
Tags : Strategic Management - Strategy Formulation
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