Strategic Alliance

Description of Strategic Alliance. Explanation.

Definition Strategic Alliance. Description.

A Strategic Alliance is a significant long/term partnership and collaborative agreement entered into two or more companies to pursue a set of agreed upon critical goals while remaining independent organizations. These collaborations can come in many shapes and sizes, including contractual and equity forms. It normally is a synergistic arrangement whereby the participating organizations each brings different strengths and capabilities to the alliance.

Steps in the formation of strategic alliance. Procedure

1. Strategy Development. This involves studying the alliance’s feasibility, objectives and rationale, focusing on the major issues and challenges and development of resource strategies for production, technology, and people. It requires aligning alliance objectives with the overall corporate strategy.

2. Partner Assessment. This involves analyzing a potential partner’s strengths and weaknesses, creating strategies for accommodating all partners’ management styles, preparing appropriate partner selection criteria, understanding a partner’s motives for joining the alliance and addressing resource capability gaps that may exist for a partner.

3. Contract Negotiation. This involves determining whether all parties have realistic objectives, forming high caliber negotiating teams, defining each partner’s contributions and rewards as well as protect any proprietary information, addressing termination clauses, penalties for poor performance, and highlighting the degree to which arbitration procedures are clearly stated and understood.

4. Alliance Operation. This involves addressing senior management’s commitment, finding the caliber of resources devoted to the alliance, linking of budgets and resources with strategic priorities, and measuring and rewarding alliance performance.

Compare with: Acquisition Integration Approaches  |  Joint Venture  |  Coalition  |  Organization Chart  |  Special Purpose Vehicle  |  Virtual Business  |  Spin-Off  |  Synergy  |  Alliance Network  |  Disaggregation  |  Relational Capital  |  Vendor Managed Inventory

Return to Management Hub: Change & Organization  |  Strategy  |  Supply Chain & Quality

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End of description Strategic Alliance. An explanation.