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Knox Case Essay

6464 words - 26 pages

One of the most important trends in industrial organization of the past quarter century has been the growth of collaboration between independent companies. As large companies have pulled back their collaboration boarders through outsourcing and divestment of ‘non-core’ activities, they have increasingly cooperated with other companies in order to engage in activities and access resources outside their own boundaries. The concept of strategic alliances has become widely used in the business language to refer to the types of partnerships agreements between two or more companies that pursue a clear strategic collaboration objective, with different levels of possible integration ...view middle of the document...

(Mowery, Oxley, Silverman, 1996). The alliance is a cooperation or collaboration which aims for a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts. The alliance often involves technology transfer (access to knowledge and expertise), economic specialization, shared expenses and shared risk. Doz and Hamel (1998) observed that strategic alliances are a logical and timely response to intense and rapid changes in economic activity, technology and globalization.

An essential feature of a strategic alliance is that it is intended to move each of the partners towards the achievement of some long term strategic goal or strategic objective. This distinguishes strategic alliances from other forms of inter-firm cooperation (Hynes & Mollenkopf, 1998). Therefore, strategic alliance is a formal and mutually agreed upon partnership that links two or more enterprises or organizations. It is a cooperative arrangement which enables partners to achieve goals together which they would otherwise not have achieved independent of each together. This is done through pooling, exchanging and integrating selected resources for mutual benefit while remaining separate entities. As such strategic alliances are generally viewed as mechanisms for producing a more powerful and effective mode for competing in a globalized market.

Strategic Alliances, Types and evolution:
In the evolution of an alliance there are usually three stages. In the first stage, the partners have an equal but different input. Operational activities, for instance research and development and manufacturing, take place on the premises of the partners. In many cases one can observe that in the course of time one partner becomes more dominant compared with the other. This is caused by a change in relative importance of each partner’s input. When this occurs the alliance has entered into stage two. In stage three, the alliance in itself has evolved into a mature organisation in its own right. 1ad hoc pool type of alliances never reach stage two in their development, since they are not intended to live long.
Dussauge and Garrette (1999) distinguish between two main alliances. The first concerns partnerships between non-competing firms, whereas the other pertains to alliances between competitors. Between non-competing firs, the alliances can have various forms. The first can be aimed at international expansion

Types of strategic alliances
Wyld (2011) cited four types of strategic alliances including: joint ventures, equity strategic alliance, non-equity strategic alliance and global strategic alliance. A joint venture is a strategic alliance in which two or more firms create an independent company to share resources and abilities to develop a competitive advantage. An Equity strategic alliance is an alliance in which two or more firms own percentages of the company they have formed together. On the other hand, a nonequity...

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