0712

Problem

What are the main reasons for strategic alliances?

a. What are the critical factors in choosing one partner versus another?

b. What are the most important factors for success in an alliance?

Step-by-step solution

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Step 1/4

The organization adopts various market entry modes depending on its functions, requirements, etc. Each market entry mode has its own advantages and disadvantages. The management of the organizations should carefully conduct research in order to determine the most effective market entry modes.

Step 2/4

The main reason for a strategic alliance has been discussed as follows:

• The partners involved in strategic alliances can remain independent from one another.

• The partners in strategic alliances share the profit generated as well as control the operations.

• The partners should make contributions to the operations of the organizations.

• Skills will be enhanced and can block competitors.

• It provides learning opportunities for both parties.

• Costs of procurement, production, technology, etc can be shared.

Step 3/4

a. Some of the critical factor in strategic alliance while selecting the partner has been discussed as follows.

• The past performance of the partner, like sales, market share, etc.

• Capabilities of the partners, like facilities, size of the firm, etc.

• Reputation and relationships that exist among its stakeholders.

• The goals and strategies of the partner.

• The compatibility of the partner, like product lines, markets, etc

Step 4/4

b. The important factors for the success of the strategic alliance have been discussed as follows.

• The effective and careful selection of the alliance partners.

• The organization's design

• Built-in flexibility

• Effective communication

• Effective leadership

• Balancing the authority of the management of both partners

• Careful negotiation, clear definition, etc