A strategic alliance differs from a joint venture in that in the former, the companies are less involved and less binding. It is not necessary for either company to yield ownership stakes, which can consume a large amount of time and be complicated to go through. Pursuing opportunities can be done at faster and cheaper rates.
 |
The purpose of a strategic alliance is to create or contribute value to all the organizations involved through the following:
- Improved operations: By combining different expertise, economies of scale can be achieved, and partners can learn from one another. Through these, revenues can be maximized, and costs minimized.
- Blocking a competitive threat: Whenever competition arises, and a company is ill-equipped to address it on its own, a strategic alliance may provide a solution. For example, a firm that produces and distributes premium goods is vulnerable to low-priced entries in the market. To remain competitive and flexible, it can partner with another company in an adjacent market to be able to block the threat.
- Ease of entry and exit: Companies looking to enter or exit an industry can do so more easily by forming a strategic partnership with another firm.
 |
