Chapter 13: International Strategic Alliances

1. Benefits of Strategic Alliances and Pitfalls of Strategic Alliances

Potential Benefits of Strategic Alliances :

· Ease of Market Entry

· Shared Risk

· Shared Knowledge and Expertise

· Synergy and Competitive Advantage

Pitfalls of Strategic Alliances :

· Incompatibility of partners

· Access to Information

· Distribution of Earnings

· Loss of Autonomy

· Changing Circum-stances

2. Scope of Strategic Alliances

· Significant variation

- Comprehensive alliance

- Narrowly defined alliance

· Degree of collaboration depends upon basic goals of each partner

3. Types of Alliances
1. Comprehensive

- Participating firms agree to perform together multiple stages of the process by which goods or services are brought to the market

- Functional areas are intertwined between firms

- Organized as joint ventures

- Achieves greater synergy through sheer size and total resources

2. Functional

- Involve only a single functional area of the business

- Integration is less complex

- Does not typically take the form of a joint venture

4. Implementation of Strategic Alliances

- Selection of partners

- Compatibility

- Nature of potential partner’s products or services

- Relative safeness of the alliance

- Learning potential of the alliance

5. Form of Ownership

- Corporation

- Limited partnership

- Public-private venture

6. Joint Management Considerations

- Shared management agreements

- Assigned arrangements

Delegated arrangement