Strategic Alliance
There are a number of reasons why companies engage in strategic alliances. Typically, these are rooted in the idea of comparative advantage, where the two companies bring their respective strengths to the project, theoretically these strengths complementing each other. There are some industries where the practice is quite common, in particular pharmaceuticals and defense. Indeed, in some of these industries, companies can have multiple strategic alliances at any given time. A good example of this is Boeing and Lockheed Martin, both defense contractors with expertise in aerospace. They have collaborated on an air transportation system for the commercial air industry (Boeing, 2007), and on jet fighters for the Department of Defense (Thompson, 2013). This paper will focus on the latter as the strategic alliance to be discussed. Ultimately, the long-range bomber project failed for the alliance, which actually highlights one of the major reasons why such alliances are common in the defense industry.
Company Histories
Boeing started as an aircraft producer for private use, and quickly became a supplier of aircraft for some of the world's first commercial airlines. By the Second World War, Boeing moved into military aircraft production, and it retained that position after the war. The Department of Defense typically wants to see competition so it ensures that all of its major defense contractors have enough business to survive. This is one of the reasons why Boeing was able to carve out a business as one of the handful of aerospace providers to the DoD. Boeing's defense business is today worth revenues of $30.9 billion, delivering 179 military aircraft, five satellites and 10,998 weapons systems. The company has a backlog of $62 billion in its defense business, spanning from those products to spacecraft and weapons. The company's...
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