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Unit-11 Strategic Alliances

Program : MBA
Semester : IV
Subject Code : MB0052
Subject Name : Strategic Management and Business Policy
Unit Number : 11
Unit Title : Strategic Alliances
Lecture Number : 11
Lecture Title : Strategic Alliances
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C o n f i d e n t i a l
Unit-11 Strategic Alliances
Objectives

The objective of this lecture is to discuss:
Needs and benefits of strategic alliances.
Stages and types of strategic alliances.
Problems involved in strategic alliances.
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Objectives
C o n f i d e n t i a l
Unit-11 Strategic Alliances
Introduction
Strategic Alliances
Benefits of Strategic Alliances
Stages of Strategic Alliances
Types of Strategic Alliances and Business Decisions
Problems involved in Strategic Alliances
Summary
Check Your Learning
Activity
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Lecture Outline
C o n f i d e n t i a l
Unit-11 Strategic Alliances
Strategic alliances is a mutual agreement obtained by the co-operation
between organisations to achieve a common goal.

The characteristics of strategic alliances are:
The organisations involving in agreement with similar idea aim to
achieve objectives of common interest.
The organisations share the advantages and establish the alliance till the
end date of agreement.
The organisations contribute their own resources like technology,
production, R&D to increase the performance.
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Introduction
C o n f i d e n t i a l
Unit-11 Strategic Alliances
Strategic alliance provides a relationship between organisations and
and contribute in the successful implementation of the strategic plan.

The need for a strategic alliance between organisations is to:
Increase productivity ratio
Increase desire for global operations
Geographic expansion
Add and balance resources
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Strategic Alliances
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Unit-11 Strategic Alliances
The benefits of strategic alliances are:
Gaining resources and capabilities
Ease of market entry
Shared risks
Shared knowledge and expertise
Easier access to target markets
Winning political obstacle
Achieving synergy and competitive advantage
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Benefits of Strategic Alliances
C o n f i d e n t i a l
Unit-11 Strategic Alliances
Stages of Strategic Alliances
The five stages of strategic alliances are:
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C o n f i d e n t i a l
Unit-11 Strategic Alliances
Types of Strategic Alliances and
Business Decisions
The mutual agreements between organisations can occur in various
forms with the increase in desire to achieve a common goal.

The types of strategic alliances are:
Joint venture
Mergers and acquisitions
Horizontal and vertical merger
Market and product extension merger
Conglomerate merger
Collaborations and co-branding
Technological partnering
Contractual agreements
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Unit-11 Strategic Alliances
Types of Strategic Alliances and
Business Decisions contd
The other types of a strategic alliance are:
Outsourcing
Other methods:
Affiliate marketing
Technology and product licensing
Franchising
Sharing R&D
Distributors
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Unit-11 Strategic Alliances
Problems involved in Strategic
Alliances
Few of the problems faced by organisations with strategic alliances are:

The organisations suffer certain benefits due to incoherent goals.
The conflicts arising between organisation due to internal issues
creates problems to the strategic alliances.
The lack of trust between organisation declines the performance level.
The lack of commitment leads to termination of alliance contract.
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C o n f i d e n t i a l
Unit-11 Strategic Alliances
Summary
Strategic alliance is the process of mutual agreement between
organisations to achieve common goal.
The fast growing organisations adopt strategic alliances to expand
productivity and foreign collaborations.
Strategic alliances include various stages and forms various types to
meet the common objective.
Strategic alliance faces many problems during the period of contract.
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C o n f i d e n t i a l
Unit-11 Strategic Alliances
Check Your Learning
1. What are the characteristics of strategic alliances?
ANS. The organisations involving in agreement with similar idea aim to
achieve objectives of common interest, share advantages and establish
alliance till the end of agreement and contribute own resources.
2. What are the stages of strategic alliance?
ANS. Strategy development
Partner assessment
Contract negotiation
Alliance operation
Alliance termination
3. What is technological partnering?
ANS. It deals with associating technologies of two different companies to
achieve common objectives.
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C o n f i d e n t i a l
Unit-11 Strategic Alliances
Activity
Refer http://www.scribd.com/doc/26988589/Adidas-Reebok-Merger-
Case-Study and identify the need for Adidas to merge with Reebok and
also analyse the factors, issues and performance levels of both the
organisations.
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