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Business Policy Review

1. A strategic alliance is a formal relationship between two or more parties to pursue a main objective to meet a specific organizational need.

2. No...For Example, AOL and Time Warner, these companies merged together and have endured an unsuccessful union.

3. Contractual Agreement, Joint Venture, Equity and Non-Equity, and Global (Hutchison and Mason, 2000)

4. An equity strategic alliance is when two or more corporations own different percentages of the company and combine their resources to create a competitive advantage. A non-equity strategic alliance- is when two firms form a contractual relationship in order to share their resources and capabilities to create a competitive advantage.

5. Examples of non-equity strategic alliance: Sprint/Nextel, AOL/Time Warner, Disney/Miramax

6. Firms enter alliances to become a stronger unit within the marketplace in order to effectively compete in the chosen industry. "Teaming up with other corporations adds complementary resources and capabilities, enabling participants to grow and expand more quickly and efficiently. Especially fast-growing companies rely heavily on alliances to extend their technical and operational resources. In the process, they save time and boost productivity by not having to develop their own, from scratch. They are thus freed to concentrate on innovation and their core business." (Kotelnikov, 2001).

7. Contractual, Joint Venture and Global

8. These elements inform you of the potential partner's worth and positioning in the marketplace. These elements will determine whether the company is more of an asset or a liability, and whether or not the potential partner has the ability to generate wealth and add value to the corporation.

9. "In capitalist systems, strategic economic alliances are structured partnerships among corporations that offer both partners something that each company needs to succeed in the competitive marketplace. Examples of this "something" could include access to cutting edge technology, new high quality raw material, or new channels of product or service distribution. Strategic alliance partners may exist in a non-competitive, vertical arrangement, as in suppliers or distributors with manufacturers, in a competitive, horizontal arrangement, such as two manufacturers in the same industry or product line, or between a manufacturer and a university or federal government research laboratory, under an exclusive research and development (R&D) arrangement. Although the strategic planning function is usually carried out at the strategic business unit (SBU) level and coordinated at the corporate level, evaluations of potential strategic economic alliances are a primary function of the corporate strategic planning department. One important reason for this corporate-level responsibility is that strategic economic alliances often provide valuable inputs and opportunities that cross SBUs." (Hemphill, 1996).

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Chapter 9

1. A strategic alliance is a formal relationship between two or more parties to pursue a main objective to meet a specific organizational need.

2. No...For Example, AOL and Time Warner, these companies merged together and have endured an unsuccessful union.

3. Contractual Agreement, Joint Venture, Equity and Non-Equity, and Global (Hutchison and Mason, 2000)

4. An equity strategic alliance is when two or more corporations own different percentages of the company and combine their resources to create a competitive advantage. A non-equity strategic alliance- is when two firms form a contractual relationship in order to share their resources and capabilities to create a competitive advantage.

5. Examples of non-equity strategic alliance: Sprint/Nextel, AOL/Time Warner, Disney/Miramax

6. Firms enter alliances to become a stronger unit within the marketplace in order to effectively compete in the chosen industry. "Teaming up with other corporations adds complementary resources and capabilities, enabling participants to grow and expand more quickly and efficiently. Especially fast-growing companies rely heavily on alliances to extend their technical and operational resources. In the process, they save time and boost productivity by not having to develop their own, from scratch. They are thus freed to concentrate on innovation and their core business." (Kotelnikov, 2001).

7. Contractual, Joint Venture and Global

8. These elements inform you of the potential partner's worth and positioning in the marketplace. These elements will determine whether the company is more of an asset or a liability, and whether or not the potential partner has the ability to generate wealth and add value to the corporation.

9. "In capitalist systems, strategic economic alliances are structured partnerships among corporations that offer both partners something that each company needs to succeed in the competitive marketplace. Examples of this "something" could include access to cutting edge technology, new high quality raw material, or new channels of product or service distribution. Strategic alliance partners may exist in a non-competitive, vertical arrangement, as in suppliers or distributors with manufacturers, in a competitive, horizontal arrangement, such as two manufacturers in the same industry or product line, or between a manufacturer and a university or federal government research laboratory, under an exclusive research and development (R&D) arrangement. Although the strategic planning function is usually carried out at the strategic business unit (SBU) level and coordinated at the corporate level, evaluations of potential strategic economic alliances are a primary function of the corporate strategic planning department. One important reason for this corporate-level responsibility is that strategic economic alliances often provide valuable inputs and opportunities that cross SBUs." (Hemphill, 1996).

10. "Strategic alliances also have their risks, particularly if the parties are not financial equals. These risks include the loss of operational control and confidentiality of proprietary information and technology. Some alliances can involve a clash of corporate cultures or the perceived diminution of independence. In addition, the parties may deprive themselves of future business opportunities with competitors of their strategic partner. The parties must carefully consider a number of factors in the decision of whether to enter into a strategic alliance, and how best to govern the relationship once the alliance is formed. In addition to the parties' business objectives, the parties should consider a variety of accounting, tax, antitrust, and intellectual property issues when structuring a strategic alliance. A properly structured strategic alliance can bring many new opportunities and enhance the parties' growth potential. In addition, it can provide an alternative source of capital during difficult economic times."(Hutchison and Mason, 2000)

11. "Global companies are looking to emerging markets for growth. Companies in emerging markets are looking for ways into the burgeoning global economy. Alliances can seem the obvious solution for both sides.

For global companies, limitations on foreign ownership make an alliance the only route into some markets. In other markets, alliances provide an appealing way to accelerate entry and reduce the risks and costs of going it alone. The US company Aetna Insurance, for example, recently announced a joint venture with Sul America Seguros, ...

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Understanding Alliances and Cooperative Strategies

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