Exporting and Global Sourcing
Strategic alliances have advantages and disadvantages, and thus an exporter should follow the relevant steps to ensure profitability and sustainability. There are four major steps to developing effective strategic alliances. Strategic alliances also have many benefits and challenges as well, and thus businesses should seek adequate information to boost success.
One of the steps to consider in promoting a successful strategic alliance is defining and communicating the strategy to use. Before allying, it is necessary to comprehend how it will impact the suppliers, employees, and relevant stakeholders. According to Jakada (2014), the other step is establishing a shared approach since an alliance offers partners equal authority. In such a partnership, the parties need to understand the mission, vision, and values of the enterprise. The third step is to ensure all the coalition partners fit in and increase the chances of success (Belal & Akhter, 2011). The partners should also adjust and evaluate the progress of the venture to ensure it sticks to the set goals and assess whether the set objectives are met.
When establishing strategic alliances, many issues might arise. An example is the lack of control when a business aligns with another. Additionally, as postulated by Berman et al. (2002), when a business forms a partnership with another, it may be judged based on the actions of the alliance partner. Liability may also arise in strategic collaboration since a business may be liable for the shortcomings of its partner. However, the mentioned alliances have significant benefits as well. For example, they encourage resource and knowledge sharing and present opportunities for growth and easy access to the target audience and markets (Bierly and Kessler (2002). Strategic alliances also result in large economies of scale and reduce the exposure to market risks.
A contractual alliance refers to a situation where businesses embrace a contractual agreement instead of taking cross-keeping or establishing new firms. An example of a contractual alliance between Saudi Arabia and a foreign country is the Saudi Arabia- Switzerland global business.
Strategic alliances have both advantages and disadvantages and thus need to be approached carefully. Some of the disadvantages include sharing resources and knowledge, reducing market risks, and accessing opportunities for growth. On the contrary, the issues that might arise from the association include loss of control over certain things and merged reputations.
Belal, M. U. and Akhter, B. (2011). Strategic Alliance and Competitiveness: Theoretical
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Berman, S.L., Down, J. & Hill, C.W. L. (2002),”Tacit knowledge as a source of competitive
advantage in the National Basketball Association”, Academy of Management Journal, Vol.
45, pp. 13-31.
Bierly & Kessler, (2002). The timing of strategic alliances, 303. “Borrego blurs traditional lines”,
Dallas Morning News, February 24.
Jakada’s (2014) article, “Building Global Strategic Alliances and Coalitions for Foreign
Investment Opportunities” on building global strategic alliances.