In my view, a strategic alliance is a promising approach for assisting companies to address their limitations, serve their customers better, and expand their market share. In brief, a strategic alliance can be described as an arrangement between two firms that allows them to share resources in undertaking a specific project that brings mutual benefits. With the strategic alliance, businesses can mitigate risks while at the same time block a competitive threat. This is especially so when a rival company has a significant competitive advantage. Therefore, a strategic alliance has the potential of turning the table since the new company brings in resources that address the limitations.
As the term suggests, an alliance is not strategic unless it brings the desirable outcome. Therefore, it is critical to approach and carefully select the most suitable partner. For example, profit-sharing is an integral part of the strategic alliance. Therefore, the mutual benefit should always be significant enough to make economic sense for both partners. In my view, a strategic alliance is only possible under two conditions. First, conducting a thorough research on potential partners before narrowing down to the most suitable is a critical step. The idea is to assess the limitations of a business and select a partner that can address them based on their strengths. For example, establishing an alliance with a well-established firm allows a new entrant to expand its market by using the partner’s well-established network, brand popularity, or logistical capacity. Second, achieving the intended goals in a partnership deal is a critical stage that determines whether the alliance was strategic or not. For now, we need to categorize an alliance as either ‘strategic alliance’ or just an alliance. This will help in acknowledging the many alliances failed in terms of bringing the intended outcome.
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