INTERNATIONAL STRATEGIC ALLIANCES Strategic alliance Strategic alliance is

INTERNATIONAL STRATEGIC ALLIANCES

Strategic alliance • Strategic alliance is an important mode of doing international business. An alliance is an inter-firm collaboration over a given economic space and time for the attainment of the participating companies’ goals. The use of strategic alliance has expanded dramatically over the past decade and it’s use will continue to increase in future. • Strategic alliances are partnerships in which two or more companies work together to achieve objectives that are mutually beneficial while parties remaining independent. Companies may share resources, information, capabilities and risks to achieve this. International Strategic Alliance is the combination of two or more firm’s agreed upon future objective, which achieved by together practices of the MNCs.

TYPES OF STRATEGIC ALLIANCE 1)Functional Alliance • • Production Alliances Marketing Alliances Financial Alliances R&D Alliances 2) Other Alliance • • Joint Ventures Outsourcing Technology Licensing Affiliate Marketing

Functional alliance: A functional alliance integrates certain basic “functions” between the two parties by pooling efforts to attain specific objectives. Types of Functional Alliances: There are four types of functional alliances. These are – Production alliances: Firms each manufacturer products or provide services in a shared facility.

Marketing alliances: Firms share marketing services or expertise. Financial alliances: Partners of firms share equally in contributing financial resources to the project or one partner may provides the majority financing while the other provides expertise. R & D alliances: Partners agree to undertake joint research to develop new product or services.

Other alliances: • Joint Ventures are agreements between parties or firms for a particular purpose or venture. Their formation may be very informal, such as a handshake and an agreement for two firms to share a booth at a trade show. Outsourcing and globalization of manufacturing allows companies to reduce costs, benefits consumers with lower cost goods and services, causes economic expansion that reduces unemployment, and increases productivity and job creation.

• Affiliate Marketing Affiliate marketing has exploded over recent years, with the most successful online retailers using it to great effect. The nature of the internet means that referrals can be accurately tracked right through the order process. • Technology Licensing This is a contractual arrangement whereby trade marks, intellectual property and trade secrets are licensed to an external firm. It’s used mainly as a low cost way to enter foreign markets.