A strategic alliance is a partnership between two or more firms to allow every enterprise to attain their strategic goals. Businesses in strategic partnership share resources, organization’s competencies, and the skilled workers until the termination of the strategic alliance. The partners in strategic alliance maintain their business status as independent and separate entity from the partnership formed. This discussion will be divided into two main components that include the merits partners receive due to strategic alliance creation and the pitfalls of a strategic alliance.
Partners gain capabilities that were lacking. A firm may plan to develop a new product but may lack the necessary skills, technologies, knowledge, and expertise, thus, such a company may require to form an alliance to obtain those capabilities (Yang et al., 2014). Therefore, the partners in strategic partnership benefit from the opportunity of utilizing and expanding their skills from the combined capabilities to attain its set objectives. After the …show more content…
Based on an efficient alignment each party is expected to donate and apportion resources equally. However, this is not the case in many situations. Large firms tend to inject more inputs concerning capital and human resources compared to their small partners (Boone & Ivanov, 2012). As a result, the companies end up having different ideologies concerning the allocation of profits and revenues. Additionally, the differences in partners’ values regarding corporate culture, trust and secrecy may lead to strategic alliance problems. Partners may conflict on issues relating to cultural values to hold and the limit of information to share with one another. For example, some corporations may refuse to exchange information regarding production process as it would expose the institution to imitation
Partners gain capabilities that were lacking. A firm may plan to develop a new product but may lack the necessary skills, technologies, knowledge, and expertise, thus, such a company may require to form an alliance to obtain those capabilities (Yang et al., 2014). Therefore, the partners in strategic partnership benefit from the opportunity of utilizing and expanding their skills from the combined capabilities to attain its set objectives. After the …show more content…
Based on an efficient alignment each party is expected to donate and apportion resources equally. However, this is not the case in many situations. Large firms tend to inject more inputs concerning capital and human resources compared to their small partners (Boone & Ivanov, 2012). As a result, the companies end up having different ideologies concerning the allocation of profits and revenues. Additionally, the differences in partners’ values regarding corporate culture, trust and secrecy may lead to strategic alliance problems. Partners may conflict on issues relating to cultural values to hold and the limit of information to share with one another. For example, some corporations may refuse to exchange information regarding production process as it would expose the institution to imitation