Stargetic Alliance - a Way to Enter a New Market

STRATEGIC ALLIANCE

Introduction

Strategic alliance as the word itself explain is the alliance made my corporate houses in order to achieve a better position in the new market or create a new dimensions and better positioning in the existing market. As said “an alliance is a cooperative agreement or association between two or more independent enterprises, which will manage one specific project, with a determined duration, for which they will be together in order to improve their competences. It is constituted to allow its partners to pool resources and coordinate efforts in order to achieve results that neither could obtain by acting alone the key parameters surrounding alliances are opportunism, necessity and speed.”(Dussauge & Garrette, 1995) Alliances are not only formed by the companies but they are also formed between scientific institutes and companies implementing their innovations. Even large research houses form alliances so that they can form better and innovative products.

Factors affecting the success of alliance

Strategic alliance solely is not capable of achieving success. It is the prospective and the strategy behind the alliance which makes it successful. There are many factors which influence an effective and successful alliance. Finding a right alliance partner is one of the key factors influencing every strategic alliance. Partner helps in reducing the barriers of not being a local vendor; this is the reason why it is one of the most entrusted routes of entering into new market. Some of the most famous strategic alliances are M&S and Reliance in retail sector of India. In many countries foreign direct investment (FDI) is restricted and is only allowed in a joint venture even though the companies are capable handling the business themselves. Strategic alliances have gained importance in developing nations and some of the developed nations as well.

Countries and companies in which strategic alliance is popular

Strategic alliance is famous in developing nations such as India, China, Germany, Thailand, Korea, Taiwan, Netherland, Canada and major part of Europe. The companies have started designing their growth with identifying the prospective and potential alliance partners. In some countries FDI is restricted upto a certain extent and hence in order to enter those countries the only way out is strategic alliance. The competition has increased the risk exposure of the companies which is one of the main driving factors for increasing the strategic alliance. Effective utilization of resources is a relative term and hence can be understood with various implementations by the corporate houses.

Indian industrial sector is one of the hubs of successful strategic alliances. The growing Companies use strategic alliances for diversifying in allied sectors