Strategic Alliance between two companies Essay Example | Topics and Well Written Essays - 2000 words - 2

Strategic Alliance between two companies - Essay ExampleConsequently, the company sets up a strategical conjunction with the latter that already has an established dispersion network in the desired orbit of trade. This is a beneficial arrangement for both as the former company is able to expand its dispersal network and the latter can improvise its existing product lines (Papageorgiou, Rotstein and Shah, 2001). The benefits that a company derives from a strategic alliance are the ability to hedge against uncertain and unprofitable situations, tap the potential of a bleak market, increase the knowledge base and obtain access to exclusive and critical information, which in turn strengthens its competitory position in the international market. A company is able to minimise on the transaction and distribution costs by way of engaging in strategic alliance. A strategic alliance similarly enables a company to be prompt and effective in pursuing an opportunity and to obtain resourc es that are absent. A company stabilises its resource base by leveraging the knowledge and resource base of the other. As a result, the company is able to gain easier access in the new markets and face lesser barriers to portal during an expansion plan. Strategic alliances, however, has to be formed in a very careful manner as these often fall through owing to mistrust between the two partners, especially when a abundant amount of competitive or exclusive information is involved. The benefits that a company derives from a strategic alliance are the ability to hedge against uncertain and unprofitable situations.