STRATEGIC ALLIANCES

AND PARTNERSHIPS
 Learning Objectives
01 02 03
Define the terms ‘strategic Differentiate between Discuss the importance of
alliances’ and ‘partnership’ strategic alliances and building strategic
partnership alliances

04 05
Explain the importance of Describe the types of
working in partnerships alliances and partnerships
that can be formed
Introduction
Strategic Alliances and Partnerships are now vital
instruments for success in the fast-paced
commercial environment. Through these
partnerships, businesses are able to pool their
resources, skills, and talents in order to accomplish
shared objectives. Strategic alliances provide a
route to expansion and competitiveness for
anything from breaking into new markets to
developing innovative products.
 Defining
Strategic Alliance
Roberts &Wallace, 2011
An alliance can be defined as a mutually
agreed association of two or more parties in
order to promote the common interest of the
parties

Triplett, 2013
A formal or informal agreement between two
or more individuals or entities to achieve a
common goal.

Steckel and Boyson, 2003

a strategic alliance is a mutually beneficial and
well-defined long-term relationship entered
into by two or more organizations to achieve
jointly defined common goals
 Types of Strategic Alliances

JOINT VENTURE EQUITY STRATEGIC NON-EQUITY

A business arrangement in ALLIANCE STRATEGIC ALLIANCE
which two organizations bring Is formed when one organization A partnership where the
their resources together for the purchases equity in another organizations agree to share their
purpose of achieving a organization, thus providing partial resources and expertise without
particular goal, which can be a ownership of the company. forming a separate joint venture or
new project or a new business purchasing equity
operation
 Invested 30 Million to Tesla in
accelerate battery technology for
electric vehicles

Coffeehouse company Retail company

Anytime you shop at the Kroger

grocery chain, there’s a Starbucks
This partnership eventually grew to stand near the door.
New Entity include building a lithium-ion
Google Earth battery plant in the state of Nevada.

JOINT VENTURE EQUITY STRATEGIC NON-EQUITY

ALLIANCE STRATEGIC ALLIANCE
 Why Do Companies Form a Strategic Alliance?
To fully understand the many reasons for forming a strategic alliance,
you must look at the different product lifecycles in business.

SLOW CYCLE
When a business has a slow product lifecycle, the
competitive advantages are shielded for relatively long
periods. This lifecycle is determined by the
need to continually create new
products and innovate in any given
STANDARD CYCLE
industry. For example, the software
In a standard cycle, a business launches a new product
industry operates in a fast product
every few years, and may or may not retain its customer
lifecycle, while the pharmaceutical
base and position in the industry.
industry operates in a slow one. Thus,
the reasons for their strategic
FAST CYCLE alliances are different.
A company’s competitive advantages are not protected in
a fast cycle. A business must constantly develop new
products/services to stay afloat.
 5 Key
Components
 Advantage & Disadvantage
Strategic Alliance

Advantage Disadvantage
Loss of Control
Share Resources Increased Liability
Drive Innovation Hidden Costs
Competitive Advantage Data Security
Increase Brand Awareness Commitment Issues
New-Market Penetration Other Disadvantages
i. Quality issues related to the production of goods
Economies of Scale ii. Institutional and cultural differences create challenges
iii. Partners may misrepresent themselves and their
Grow Revenue capabilities
Mitigate Risk iv. One party may not use its complementary resources
effectively
v. One party is not fully committed to the process or has
poor communication
 Definition of
Partnership

Roberts &Wallace, 2010

Partnership can be defined as a relationship
either, contractually supported or otherwise,
between two or more parties, each of whom
shares joint and several liabilities for the
actions of the whole

UK Department for International Development

Partnership involves an agreement to work
together to fulfil an obligation or undertake a
specific task by committing resources and
sharing the risks as well as the benefits
 What Is the Difference Between
a Partnership and a Strategic Alliance?

An alliance is a collaboration between two companies in

which each individual company is expected to profit or
benefit from the agreement.

A partnership is a more formal type of agreement in which

partners merge to create a single, shared economic
interest.
 Types of Partnership

GENERAL PARTNERSHIP LIMITED LIABILITY LIMITED

All parties share legal and PARTNERSHIP PARTNERSHIP
financial liability equally. The A common structure for Limited partnerships are a hybrid of
individuals are personally professionals, such as accountants, general partnerships and limited
responsible for the debts the lawyers, and architects. This liability partnerships. At least one
partnership takes on. Profits are arrangement limits partners' partner must be a general partner,
also shared equally. The specifics personal liability so that if one with full personal liability for the
of profit sharing will almost partner is sued for malpractice, the partnership's debts. At least one other
certainly be laid out in writing in assets of other partners are not at is a silent partner whose liability is
a partnership agreement. risk. limited to the amount invested.
 Principles of Partnership
Jain and Polman (2003) described the following as principles of partnership

Trust
the most important especially if the partnership Solidarity
crosses many boundaries interpersonal, inter- being sensitive and committed to the problems,
institutional, cross cultural at the same time. efforts and constraints of other partners. It
implies a readiness to respond appropriately and
Transparency in a timely manner to varied needs.
is the basis for a solid and honest relationship. A
relationship that involves the transfer of Accountability
resources requires that strict business principles Any partnership involves rights and obligations.
be followed, such as reporting, accountability It is a major challenge when one partner has the
and good stewardship resources and the other has to ask for it, or one
Mutuality has the power to decide who gets funds and how
respect is of utmost importance, the partnership much, and the other is accountable for their use.
relations are open to dialogue and exchange of
views
 Advantage & Disadvantage
Partnership

Advantage Disadvantage

Partners can pool their labor, Partners may bring additional debts
capital and expertise. or liabilities.
Partners can share tasks, allowing There is a greater chance of
greater work-life balance. disagreement or mismanagement.
More partners can bring their It may become harder to sell the
experience and new perspectives to business.
the firm.
In Conclusion
In the modern business setting, strategic alliances and partnerships are
essential components of success. Organizations may accomplish more
collectively than they could on their own by pooling their expertise,
resources, and knowledge. There will always be difficulties, however they
are able to overcome through effective communication and adaptability.
In the future, collaboration will only become more essential. Companies
can drive innovation and handle complexities by cultivating great
partnerships. let us continue to embrace collaboration, knowing that
together, we can achieve greatness.
 References
STRATEGIC ALLIANCE PARTNERSHIP
1.https://www.relevize.com/blog/strateg 1.https://edu.thecommonwealth.org/wp
ic-alliances-types-benefits-and- -content/uploads/2020/10/YDW-2006-
challenges Youth-Entrepreneurship-Unit-9.pdf

2.https://edu.thecommonwealth.org/wp 2.insights/articles/what-are-the-
-content/uploads/2020/10/YDW-2006- advantages-and-disadvantages-of-a-
Youth-Entrepreneurship-Unit-9.pdf partnership/

3.https://penmypaper.com/strategic- 3.https://www.investopedia.com/terms/
alliances p/partnership.asp

4.https://www.workspan.com/blog/strat 4.https://uplandsoftware.com/altify/reso
egic-alliance-definition urces/blog/5-principles-of-partnership/
 "I can do things
you cannot, you
can do things I
cannot; together
we can do great
things."

— Mother Teresa
THANK YOU