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Strategic Alliances
This week, we are looking at strategic alliances. Under what circumstances would you agree with someone who said that alliances are very risky?
A dubious strategic alliance is one when one partner is deceitful and inclined to reap a benefit for himself at the cost of other individuals who a part of the alliance. Examples of such a situation include concealing important information, not honoring promises, and shirking responsibilities. According to Williamson:
"opportunism extends the conventional assumption that economic agents are guided by considerations of self-interest to make allowance for strategic behavior (Mababaya, 2003, pg 138 )."
Thus, those people who lack in moral principles are prone to be deceitful and it is possible they would abuse a strategic alliance by seeking a gain for themselves at the expense of others.
It is common knowledge that most strategic alliances comprise of people who have some self-interest at heart and are not entirely honest in what they have committed to. But it is absolutely imperative that when an individual or a firm enters into a strategic alliance, they should gauge the attitude of whom they are getting involved with. When formulating alliance related investments, an organization becomes susceptible to any partner's future actions. These are the risks with a strategic alliance because of which I would agree with someone that they should avoid it.
Which alliance motivations do you think are the most compatible with each...
Alliances can also be very formal ones, resulting in the creation of an entirely new organization which is jointly owned by two or more parties. The common factor in all strategic alliances is that they can aid an entrepreneur to work on an idea, implement it, especially in the case when they are partnering with a resourceful, larger partner. Strategic alliances are generally created around the idea that the partners are working in a common industry, but rather than acting as competitors, they also have the same target market and are inclined to enhance each other's business benefits through complementing each other.
Having said this, there are three essential elements in a strategic alliance that are most compatible with each other. These are stated below:
1. Contribution: Each partner in a strategic alliance needs to contribute something to it. This contribution may be financial, functional and operational (contribution of time), or any other beneficial resource. Regardless of what the partner brings to the table it is imperative that he contributes something that the alliance can leverage.
2. Accountability: It is necessary that someone from each party in the alliance be recognized for his or her commitments as well as achievements in the strategic alliance.
3. Communications. Good communications entails more listening than telling. Partners in a…
References
Das, T.K. (2010 ). Researching Strategic Alliances. IAP. pg 249
Mababaya, M.P. (2003 ). The Role of Multinational Companies in the Middle East. Universal-Publishers. pg 138
Nations, U. (2009 ). Patterns of Internationalization for Developing Country Enterprises. United Nations Publications. pg 41
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