Question

Why are strategic alliances growing in popularity, and what are the considerations in devising an effective strategic alliance?

Answer 1

The reason for popularity of companies to undertake strategic alliances is when they are faced with specific circumstances in the external environment. The following are some of the most common for initiating and forming strategic alliances.

• Entering new international markets
• Circumvent foreign market barriers
• Extend the product line
• Entering new emerging industries
• Changing industry structure
• Reduce future competition
• Increase available resources
• Acquisition of new skills
• Gaining competitive advantage from alliances

Although additional benefits of partnering with other companies exist, these are the main reasons that companies engage in alliances. In most industries a critical mass is needed in order to become a serious competitor. Alliances provide you with a quick way to achieve a critical mass, the minimum required size that a company needs in order to be successful in a specific industry.

For effective strategic alliance need to follow as below,

Step 1. Align Resources

Step 2. Foster an Internal Culture That Builds Bridges

Step 3. Match Strategies and Rhetoric to Bridge-Building Goals

Step 4. Identify Target Audiences for Individual Goals

Step 5. Conduct a Strategic Assessment

Step 2. Find Common Ground

Step 3. Break the Ice Open the door to new relationships and the best options depend on circumstances

Step 4. Build the Relationship

• Prioritize
• Listen first
• Start early
• Set up face-to-face meetings
• Start with small steps
• Connect like-minded people.
• Develop a joint mission or goals statement
• Consider setting up a decision-making process to ensure trust and inclusiveness.
• Commit to the long term
• Don’t stray from the common ground
• Give before you get

Step 5. Set and Maintain Realistic Expectations