When should firms use strategic alliances in their international operations?

Résumé du document

Club Med, Coca Cola, Microsoft or even Nestlé are companies that have already used strategic alliances in order to be more competitive. Companies generally recognize that to gain a competitive advantage they may have to enter into alliances with other firms. According to David A. Aaker, ("Developing Business Strategies", 2001), we may differentiate between alliances and strategic alliances. He stated that an alliance may be defined as "a voluntary association that furthers the common interests of the constituent members". On the other hand, a strategic alliance may be defined as "at least two companies or partners voluntarily combining value chain activities, architecture, and value chain linkages for the purpose of increasing individual and collective value addition, increasing competitive advantage and achieving agreed or common objectives". In this essay we will focus on strategic alliances.

Extraits

[...] In this essay, we will focus on circumstances which motivate firms to use strategic alliances in their international operations. We will point out those circumstances through the notion of international context which involves dealing with the access, the costs, the competition and the improvement of competencies but also the risk sharing. Modes of foreign entry During the internationalization process, all companies have to choose the most efficient and successful way to well enter on the targeted market. So many possibilities are given to the company like exporting, licensing, to make a direct investment. [...]

[...] Strategic alliances are regularly used in order to make faster the implantation in the new market. On the other hand, companies can use networks or infrastructures already used by each firm in order to be more efficient, competitive and also to avoid a loss of time. The rapidity is, nowadays, a key point in terms of success for companies because of the high competition which is particularly due to the globalization and the opening of new markets such as China or even India, the next super power of the world. [...]

[...] To conclude, strategic alliances offer great opportunities for companies in terms of international operations but they have operate carefully in order to avoid an important financial failure. To finish, Kalmbach and Roussel have demonstrated that percent of executives believe that alliances will be a prime vehicle for future growth”. They have also predicted that “within five years, strategic alliances will account for 16-25 percent of medium company value and 40 percent of the market value for about a quarter of the companies”. [...]

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