Strategic Alliances

Introduction

In this paper, I will try to explain some of the situations that trigger a strategic alliance as well as the impact that it has on the human resources environment. Several articles related to strategic alliances and the factors behind their successes and their failures have been selected to help analyse their importance in the new business world.

In order to understand the situation within a strategic alliance, I will present a definition, and the advantages and inconveniences that they offer in contrast with other alternatives. Also, I will define the difficulty of directing and managing a strategic alliance, in which one has to control and co-ordinate the resources of several firms, the challenges existing when the alliance is operating on an international scale and the differences between national and corporate cultures.

I will mention the effect of asymmetries in strategic alliances on the realization of the goals and purposes of the alliance; the result of the challenge brought about by global competition and the changing emphasis on research and development (R&D).

Finally, I will suggest that internal tensions account for the instabilities of strategic alliances. Alliance instabilities refer to major changes or dissolutions of alliances that are unplanned from the perspective of one or more partners (Inkpen and Bearmish 1997).

Strategic Alliances

Psychologists Sue Cartwright and Cary Cooper use the metaphor of marriage in describing varying types of organizational combinations. They liken a strategic alliance to two people living together; the partnering individuals or organizations are content to accept each other as they are and all the while determined to maintain their independence. Rather than wishing to impose change or compromise, the partners see the relationship as essentially supportive, with differences and idiosyncrasies tolerated and frequently seen as desirable and beneficial to the long-term continuance of the association.

Definition

A strategic alliance involves a commitment and shared resources including money, technology, and people, but is defined by temporary business relationships among autonomous partners.

Alliances involve forming relationships between individuals or organizations that retain substantial independence, in contrast to one side's dominance over another in an acquisition. They feature less-hierarchical structures, more collaborative cultures, and somewhat equitable distributions of power and authority among the alliance's principal participants.

In the book "Joining Forces" from authors Marks and Mirvis, they state that, "[o]ne plus one equals three. Billions of dollars and millions of jobs hinge on fulfilling this equation and the hope that a combination of two organizations can produce something more than the sum of parts. Whether it's called synergy, leverage, or efficiency, the prospect of creating value through a combination is touted vigorously in boardrooms and executive suites where top managers and their financial, legal, and strategic advisers conjure up and put together deals." This understanding of a strategic alliance is similar to the one presented by researcher Carlos M. Rodriguez in his article called "[e]mergence of a third culture: shared leadership in international strategic alliances"

Partner selection and trends in strategic alliances

Depending on the needs from the different companies, alliances are created. Thus, different types of strategic alliances exist and the types of partners may vary.

This section presents how is it that the choice of a partner is an essential requirement for the strategic alliance's success. The partner chosen has to have the internal capacities needed to perform the activity which is the object of the agreement.

Some of the latest trends of strategic alliances will also be mentioned.

In order to understand strategic alliances first it is important to comprehend the meaning of combination. Combination is the ability of two companies to work together towards the same goal. A goal, they would not be able to obtain otherwise.

The presence of two companies joining efforts towards a same goal means change and therefore this change needs to be managed. Managing change in combination begins by asking why companies form an alliance. This constructs the basis of what has to be planned and prepared for, and then what has to be done, to create value through combination .

The first question that a company looking to create a good strategic alliance needs to ask is; what is essential when looking for a partner?

It is essential for a company that is interested in forming a strategic alliance that the partner chosen have the internal capacities needed for the performed activity. In other words, the competencies required to achieve the desired goal. In this sense, small differences in terms of management style and culture between the cooperating firms may end up becoming serious problems that make it difficult to create synergies. There are many characteristics (honesty, positive disposition, efficacy, etc.) that can only be appreciated after several years in the relationship. It is convenient for a firm to work informally with another company before formalising the strategic alliance. This can help to assess levels of compatibility and its potential evolution, since it is with daily contact that we can discover the partner's habits and tendencies .

In the last couple of years, strategic alliances have also been formed between business corporations and universities with the intent of mainly funding joint research programs in exchange for options on the results of the research that might solve their practical business problems.

Strategic alliances between institutions of higher education and corporations have numerous potential benefits. They link the intellectual resources of a university with the problem-solving needs of a firm. While universities primarily interact with industrial firms to obtain basic research funding, access to proprietary technology, research tools and an opportunity to develop and to bring technologies to the marketplace, they also collaborate to obtain industrial expertise, to get exposure to practical problems and to offer employment opportunities for university graduates (National Science Foundation, 1982; Ervin et al., 2002) .

Reasons