An Overview of Strategic

Alliances

Alliances are a big part of this game [of global

competition]... They are critical to win on a global basis....
The least attractive way to try to win on a global basis is to
think you can take on the world all by yourself.

Jack Welsh, CEO, General Electric

EMERGENCE OF GLOBAL INTEGRATION

Globalization of Demand

Globalization of Supply

Globalization of Competition

Globalization of Strategy
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CHANGING DYNAMICS

Triadization

North America
Western Europe
Japan

CONTINUUM OF STRATEGIC ALLIANCES

Mutual Service
Consortia

Weak
and
Distant

Joint Venture
Licensing Arrangement

Value-Chain
Partnership

Strong and Close

Strategic alliances are collaborative

partnerships where two or more companies
join forces to achieve mutually beneficial
strategic outcomes.
Joint Ventures are when two or more firms
create an independent business entity and
allocate ownership, operational
responsibilities, and financial risks and
rewards to each member, while preserving
their separate identity / autonomy.
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THREE SUFFICIENT AND NECESSARY

CHARACTERISTICS OF STRATEGIC ALLIANCE
Two or more firms that unite to pursue a set of
agreed upon goals remain independent subsequent
to the formation of the alliance.

Partner firms share the benefits of the alliance and

control over the performance of assigned tasks

Partner firms contribute on a continuing basis in

one or more key strategic areas e.g. technology,
products etc.

VALUE CHAIN PARTNERSHIP

A strong and close alliance in which

one company or unit forms a long-

term arrangement with a key supplier

or distributor for mutual advantage.

ALLIANCE NETWORKS

Delta
Airlines
SWISS-AIR

Toyota

GENERAL
MOTORS
SAAB

Isuzo
Singapore
Airlines
Suzuki

SAS

To increase bookings on Trans-Atlantic &

COMPETE
WITH
Nissan

FORD
MOTORS

European Asian flights & to combine the

procurement & maintenance of air-planes

Jaguar

Mazda
Kia

Maintain Flexibility
Protect Core Competencies
Enhance Learning
Maximize Value

Cooperation

Competition

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Market

Reason

Slow Cycle

Gain access to restricted market

Establish a franchise in a new market
Maintain market stability (e.g. establishing standards)

Fast-Cycle

Speed up development of new goods or services

Speed up new market entry
Maintain market leadership
Form an industry technology standard
Share risky R&D expenses
Overcome uncertainty

Standard Cycle

Gain market power (reduce industry overcapacity)

Gain access to complementary resources
Establish better economies of scale
Overcome trade barriers
Meet competitive challenges from other competitors
Pool resources for very large capital projects
Learn new business techniques

POLITICAL AND RESOURCES INFLUENCES ON STRATEGIC ALLIANCES

Resource Requirements
Low

Low

High

Quadrant 1

Quadrant 2

Quadrant 3

Quadrant 4

Political
Factors

High

EMERGING MARKET ALLIANCES

FOUR POSSIBLE FUTURES FOR ALLIANCES IN EMERGING MARKETS

Alliance
restructured to
restore balance
Power Shift Toward
Local Partner
Local partner may
acquire
May succeed or fail

Sustainable
Power Balance

Usually successful for both partners

May continue for decades

Initial
Alliance

Power
Collision

Power Shift Toward

Global Partner
Global partner
typically acquires
May succeed or fail

Alliance likely to be short-lived

Neither partner gains

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