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Strategic technological allaince with a competitor

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Why might a firm form a strategic technological alliance with a competitor? What are the strengths and weaknesses of this approach to the development of new technological knowledge?

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The solution discusses why might a firm form a strategic technological alliance with a computer.

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Posting 29671 - Technological Strategic Alliances
Quite simply, a strategic alliance is a business relationship between organizations in which they share risks, pool strengths, or integrate business functions for mutual benefit. It is a formal and mutually agreed upon collaboration. There are many different types of alliances, including: manufacturing agreements, joint ventures, licensing, joint research and development ventures, technology swaps, buyer-supplier relationships, direct investments and technology transfers.
Strategic alliances are no longer just an option but a necessity in many industries. Markets for both end products and technologies, coupled with the increasing costs of doing business, have resulted in a significant increase in the use of alliances. The basic benefits are:
• Developing new skills sets
• Reducing the cost of investment and technology
• Increasing R&D opportunities
• Simplifying penetration into global markets
• Strengthening competitive advantage, and
• Diversifying product lines.
Some organizations have been quite successful in establishing and maintaining lasting alliances, which other firms seem to have a long list of failed alliances to their credit. From a strategic standpoint, some key facets of the behavior of firms relating to alliance formation and alliance performance can be understood by looking at a few interrelated factors, including, the characteristic of the organization that may influence the firm to enter into a strategic alliance, the choice of an appropriate partner, the characteristics of the alliance relationship and the success of the alliance over time.
Forming an alliance consists of three simple steps: 1) the decision to form an alliance, 2) the choice of an alliance partner and 3) the structure of the alliance. These steps are so simple that one must step back to answer other questions.
A. The decision to form an alliance.
The first step is the definition of the alliance rationale through: 1) formulating a business needs definition, 2) developing a strength and weakness matrix, 3) determining business opportunities, and 4) conducting market research. But what are some of the organizational and environmental factors that would drive a firm to think about entering an alliance? Literature suggest that the most common types of drivers can be grouped as follows:
• Environmental Characteristics - Forces outside of the firm that may affect the organization's attitudes, actions and outcomes. Some say that globalization mandate alliances, making an ...

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