What Is a Strategic Alliance?

A strategic alliance is any two or more economic entities (generally refers to enterprises, this definition also applies if certain departments of an enterprise reach an alliance relationship) in order to achieve a specific strategic goal. Long-term alliance and cooperation agreements that bear risks and share benefits.

Enterprise Strategic Alliance

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A strategic alliance is two or more economic entities (generally refers to an enterprise, this definition also applies if certain departments of an enterprise reach an alliance relationship) in order to

Since J. Hopland, president of DEC Corporation and management scientist R. Nigel, put forward the concept of strategic alliance, strategic alliance has become the focus of attention in management and business circles. . Although the concept of strategic alliances in management and business circles is still controversial, from the summary of the various forms of strategic alliances, we can summarize it into the above-mentioned relatively appropriate definition.

The number of strategic alliances has surged in the past decade. Strategic alliances have become one of the most widely used strategies, which allows companies from different countries to share risks, share resources, acquire knowledge, and enter new markets. For example, the number of US joint ventures increased by 423% between 1986 and 1995. Strategic alliances include not only equity joint ventures, but also non-equity agreements involving production, marketing, distribution, and R & D. International strategic alliances are cross-border cooperation agreements that use self-organizing resources and governance structures from two or more countries.

Building alliances has become a common way to enter emerging international markets, and has become one of three strategies for companies to achieve rapid growth. In an increasingly competitive market economy, if a company cannot handle the issue of how to grow and grow carefully, then the company may stagnate or even decline. As R.P. Lynch, an American management consulting expert, said, companies have three basic ways to grow, and any company must choose from these three strategic ways.

American scholar David Lei and others inspected some strategic alliances of enterprises, and found that effective strategic alliances pay great attention to the following three stages in the establishment process.

Why do companies build strategic alliances? What are the advantages of strategic alliances? What factors should companies pay attention to when forming a "team" with other companies? Management guru Peter Drucker sees alliances as the most flexible means of "creating coordination from incoordination." Taiji and others see strategic alliances as a means to fill strategic gaps, but their views are too It is general, and Lynch elaborates on this in detail, and points out that there are some issues that need to be addressed in strategic alliances.

Strategic alliances, like any corporate strategy, have their unavoidable limitations. Most company managers believe that the biggest problem is the control of the alliance. According to the survey, US managers are more worried than their European and Asian counterparts about losing control of the alliance. They are more inclined to avoid reaching 50% joint venture projects on both sides because they are concerned that they will not maintain control. However, Lynch's point is that as long as the management mechanism is properly designed, the issue of control can be reasonably resolved. General Motors Corporation and Shanghai Automotive Industry Co., Ltd., each investing 50% of Shanghai General Motors Co., Ltd., will encounter such control issues. This will require China and the United States to strengthen trust and design a good management mechanism to operate together. The total investment amounted to 1.5 billion Big dollar project.

Strategic alliances are just like mergers and acquisitions. Finding the right partners is the biggest problem encountered in the process of building alliances. If the two sides do not match or even are incompatible, it is easy to have negative consequences. If this step goes smoothly and a suitable partner is found, as the alliance process develops, the cooperation between the two parties will become more and more effective, and it can further develop into mergers and acquisitions.

Enterprise Strategic Alliance Competition

Most alliance agreements stipulate that companies participating in the alliance must not compete directly with the areas covered by the alliance, but must be cautious when signing this agreement, because the strategic positions of the companies on both sides may change significantly in the future and conflict with the alliance What both sides do not want to see. The technology owned by the two parties of the alliance should be properly protected, otherwise, it may be used by one of them for private purposes or even used to form another alliance with its main competitors. Even with advanced technology, some companies are reluctant to immediately apply it to alliances with weak relationships. Therefore, they must invest in new technologies after the two parties have established a high degree of trust. This can avoid the infringement of each other.

Enterprise strategic alliance risk

Forming an alliance can share risks but cannot surpass them. No matter how careful the protocol development process is, technical failure is still one of the main reasons for the failure of the Technology Development Alliance. McKinsey Consulting found that the failure rate of the cooperative technology development alliance was 50% because the risk of technology development was high. In many technology alliances, the alliance itself has not failed, but the technology development has encountered breakthrough difficulties, so the alliance failed to achieve the ultimate goal.

Strategic transformation of corporate strategic alliances

Some alliances are established in order to overcome the inherent weaknesses of the two sides and learn from each other's strengths. However, with the passage of time and the transformation of the strategic environment, when the weakness of one of the companies no longer exists, its strategy should also be changed accordingly, so that the basis for the existence of the alliance has changed, and the other company will have to change Its cooperation strategy.

Enterprise strategic alliance operation

A common feature of alliances and other companies is that once the overall strategy is formulated correctly, success will depend on the managers' operation. Choosing poorly managed managers is likely to lead to the failure of the alliance. In addition, in the alliance, if a partner is too trusting in the other party's ability to deal with problems, especially when these problems are considered to be in the field of the other party's skilled operation, the result is often a failure. It is precisely because some managers ignore the commonality and personality of the alliance and the management of a single enterprise, and do not give enough attention and support to the alliance. The alliance often dysfunctions due to lack of strong support.