What is strategic alliances?
Answer:
A strategic alliance is an arrangement between two companies that combine resources to gain additional business. Strategic alliances are formed when one company alone cannot fill the gap in serving the needs of the marketplace. It involves two companies that pool together expertise and resources to enter new markets, share financial risks and get products and services to market faster.
Some strategic alliances are formal written agreements; others are informal as a handshake. With the Internet, some alliances are entered into after several email exchanges, even without the physical meeting of the parties concerned. Some alliances involve sharing of resources and an exchange of funds; or sharing of traffic between two dot.coms; others are as simple as a cooperative marketing arrangement. Whatever their structure, one goal prevails: strategic alliances are opportunities for small businesses to accomplish things that would otherwise take much more money or staff time.
Let's say you are a relatively small company that needs financing. Let's also say that there is a larger company out there interested in seeing you succeed (perhaps because they are your supplier or customer), but not enough to buy you outright. So you reach a strategic alliance agreement; they will buy, say 15% of your stock, appoint one person to your Board of Directors, and get some say in what your business strategy is (to ensure that you continue to work on things that are important to them).
Bang & Olufsen has a strategic alliance with its supplier, Philips. Infosys has a strategic alliance with one of its customers, Microsoft.
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