Strategic Alliances Joint Ventures
Strategic Alliances And Joint Ventures
Building Strategic Alliances and Joint Ventures
In the modern business environment, the creation of sustainable value for shareholders and customers calls for the development of effective alliances. The alliances are critical building blocks for firms in the achievement of more efficient and stronger market presence. The alliances have been placed as facts of business life with important pieces of existing operations and future strategy. This paper provides essential and useful perspective regarding strategic alliances. Approaches, models, examples, among other tools have been discussed as ways of developing an understanding of the competitive advantage from agreements achieved.
The outcomes show that there are different ways of building competitive advantage while making dependence on the management of such alliances. The firms attach union management through centralized organization structures while others have a preference of distributing responsibility in alliances across various business units. The competitive advantages in strategic alliances depend on the strategic and organizational circumstances.
The option of forming strategic alliances varies based on the goals of firms involved and the national laws that they do business. The most appropriate partnerships take advantage of the core expertise and strengthen weaker business points (Sebahattin & Demirkan, 2014). Well-developed partnerships provide benefits such as sharing of business risks. Working in partnerships permits an approach of offsetting market exposure. Strategic alliances are successful where firms involved have complementary comfort and seeking to further their prospects of profitability. Joint ventures as examples of strategic alliances also promote the sharing of knowledge among collaborating firms. While partners make contributions of brands, skills, assets and market knowledge with synergistic effects (Ahlstrom & Bruton, 2009). The outcomes are set of resources that are valuable as compared to when firms were separate. Strategic alliances promote opportunities for growth. Increased access to a partner's distribution networks allows partners to take advantage of favorable brand images while helping them gain market share faster as compared to before. The focus on core strengths promotes good partnership as it offers complementary strengths while freeing up the focus on different areas of business. For instance, it is probable that product development shares partner focus on marketing and sales. Joint ventures increase access to resources. Partners are in a position of helping by giving greater access to resources including specialist staff, technology and finance (Doole & Lowe, 2008). In turn, this helps firms increase productivity through efficient and high-quality means.
Strategic alliances facilitate higher access to target markets. The works between local partners are one of the ways that people access target markets. This is especially evident through developing mutual goals to avoid being over-exploited of resources. Lastly, joint ventures and strategic alliances deliver on economies of scale (Ireland, Hoskisson & Hitt, 2008). This is achieved while various firms bring their resources together to cooperative strategies to allow smaller companies join in competing against the larger ones. Eli Lilly as a global pharmaceutical company has established diverse strategic alliances with various firms that have enabled it to carry out functions like innovation, product improvement, and marketing in the most efficient way. Its partnership with BioMS from Canada and Kyowa Hakko Kogyo Co., Ltd. from exemplifies this.
International collaboration among businesses is complicated making it hard before the right relationships are built. It is important to set clear objectives. This involves the venture objectives with total clarity and communication to people involved (Hitt, Ireland & Hoskisson, 2014). Ventures lack success in case the goals conflict with various objectives that are not identical. Setting mutual goals is also a challenge to successful alliances. If partners develop different goals in their joint ventures, achieve viable returns on investment as profits are split among partners. Strategic alliances and joint ventures have difficulties in finding a balance. For instance, the various levels of expertise, assets or investment brought within ventures are aimed at making partnerships work (Ahlstrom & Bruton, 2009). This requires higher levels of commitment in terms of management time and finance. In case, relationships break down, the ownership of the investment plan develops variances in products of the issue. Ensuring a smooth integration for work practices is also difficult. Working with companies from overseas could result in strained co-ordination and integration because of cultural issues of doing business. Partners should provide sufficient support and leadership early, as partners require the provision of adequate support and guidance in their early stages (Doole & Lowe, 2008). Further, the collaboration with larger companies is based on be pressures of going in directions that more major partner...
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