Success factors for strategic alliance

Abstract

Strategic alliances are a popular cooperative arrangement of development and propagation in international business systems. With most companies competing in global field, alliances are important form of business activity in many industries. It is defined as “A strategic alliance is a partnership between two or more firms that unite to pursue a set of agreed upon goals but remain independent subsequent to the formation of the alliance to contribute and to share benefits on a continuing basis in one or more key strategic areas, e.g. technology, products”( Yoshino & Rangan, 1995) It is contractual and temporary arrangement between the companies who coordinate and jointly execute several business activities and share costs, profits and risk, while retaining their independence. Each partner benefits from the strengths of the others, overcomes its own weakness and gain competitive advantage. Alliances may be formed as single alliance between two companies or as multi-firm alliance. A company may be involved in multiple alliances at a given point in time. As per the latest statistics, IBM, Siemens, Mitsubishi, GE and GM are few of the organizations with maximum number of alliances.