FORMATION OF STRATEGIC ALLIANCE

Formation of strategic alliance

Executive summaryiv

Introduction1

Strategic alliance1

Strategic alliance's importance2

Challenges faced during the formation of strategic alliances3

Control4

Conflict5

Opportunism5

Communication5

Negotiations6

Case study example6

Selection of alliance partner8

Gerienger's classification for selection of partner9

Four C's Framework:10

Importance of Partner Selection Process:12

Importance of Partner Selection in Alliance from Case Analysis13

Company Benefiting From Right Partner Selection13

Case Studies13

Overcoming Problem Encountered During Alliance Formation14

Importance of Partner Selection14

Benefiting From Alliance16

Conclusion and Recommendations17

References19

Executive summary

In the current environment where the business is experiencing the huge modification in the corporate culture and the way in which business operates. It is observed that the now a days the function of business in not entirely based on ownership, instead it is based on alliances and shared partnerships for business's collective benefit (Elmuti & Kathawala, 2001, pp. 205-212). It is notable that now days the businesses relies on alliance to penetrate into new markets, introduce a new product, mutually divide the risk of business, share the cost cutting technology for the business and also for expansion of the business globally. There are various successful example of joint venture among businesses such as in 2001

For example the joint venture between Coca-Cola Company and Procter & Gamble in 2001that channels P&G for the use of Coca-Cola huge distribution system in order to increase reach and reduce time to market its products like Pringles and Sunny Delight and with Coca Cola benefiting from adding P&G nutritional supplement into its drinking product variety (The New York Times, 2001).

There lot of joint venture that have potential to grow, but not all alliance among business are successful and many strategic alliances fails. It is notable that these strategic alliances fails at the implementation stage not at planning stage, it all because of poor management. It is indicated in the study that among negotiation of hundred alliances approximately ninety fails to develop an agreement. And from those ten alliances five does not proceeds further as it does not succeeds to meet the expectations of the partners of strategic alliances. It is also notable that the remaining five alliances among companies just last for four to five years (Natalia, 2002, pp. 5-10).

This reality proves that it is important to select the right strategic partner is crucial based on the operational expertise and appropriateness of culture among firms (Elmuti & Kathawala, 2001, pp. 205-212). Therefore, the objective and purpose of this report is to focus on the problems that are faced when alliance among business is done. It also addresses the right selection of potential partner that could help in keeping the alliance from failure. In this report various theoretical model are discussed and analysed. Understanding with these theoretical models is also developed with various case studies on various organizations to explain how various alliances succeeded and if failed, how these alliances are unsuccessful. At the end of the report various techniques are defined for companies to create mutually beneficial environment in alliance with potential partner.

Introduction

Strategic alliance

There are various definitions of strategic alliance by various authors some are defined in this ...