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A strategic alliance is an agreement between two separate businesses to pool resources and achieve a common goal without forming a new entity. Participants can share knowledge, equipment, and expertise, reducing costs and accessing new business opportunities. This collaboration is increasingly used to become more competitive and gain access to new skills and technologies. Discussions include outlining goals and terms, and a well-designed alliance is mutually beneficial for all parties.
A strategic alliance is an agreement between two separate business entities to pool resources in order to achieve a common goal. In strategic alliances, the participants remain separate and do not form a new entity as with joint ventures and some other types of partnerships. They maintain autonomy and usually embark on limited projects, rather than an ongoing business relationship. Strategic alliances can be powerful and useful business tools when they are structured well and the participants take the time to work out a working agreement between them.
In a strategic alliance, participants can pool knowledge, equipment, and expertise. Companies can co-invent or co-produce a product by pooling their strengths. Similarly, companies can share orders from suppliers, share shipping containers, and pool available resources. Working together reduces costs for participants and can provide people with access to new business opportunities. Combining resources can allow individual companies in an alliance to outperform competitors outside the alliance.
Strategic alliances are increasingly used by companies that want to find a way to become more competitive. Working strategically, even with a competitor, gives a company access to more market share. As companies compete in a global business environment, smaller entities may find it difficult to thrive unless they are willing to work strategically. Forming strategic alliances also gives people access to new skills and technologies that may not otherwise be available.
This style of collaboration begins with a company-to-company approach to discuss the possibilities of a strategic alliance. The two companies outline the goals they would like to achieve and the terms of the alliance. Discussions may include working out intellectual property license details, allowing employees of one company to access secure areas of another, and so on. Once the goals are set, the companies can work together until the goals have been met or the companies feel the alliance is not working.
Corporations may be involved in strategic alliances with multiple corporations and other entities simultaneously. It is also possible for an alliance to include more than two companies. A well-designed strategic alliance will be mutually beneficial for all parties. Members stand to gain more by working together in a strategic alliance than they do by working alone or in opposition, whether they’re developing pharmaceuticals or working on the next generation of cell phones.
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