Assignment On Startegic Alliance

Assignment On:
7/2/2020 Strategic Alliance:

Its different types:
Submitted To: Sir Ovais Umerkhel.
HASNAIN TARIQ:
KHUSHHAL KHAN KHATTAK UNIVERSITY, KARAK
Alliances:
Alliance and partnership are a key staple or predominant in business for the
organization’s large, medium and small. But while many partnerships begin with
big visions and aspirations, not all alliances turn out to be strategic.
Strategic Alliances:
A strategic alliance can be defined as an agreement between two or more
companies to achieve common business goals by sharing their strengths and
resources. However, the parties involved in a strategic alliance remain independent
in their business operations.
It is common for companies to come together to work for a mutually beneficial
project. The agreement of working together is referred to as a strategic alliance.
Companies involved in the strategic alliance share their resources for the same
purpose. A strategic alliance is a popular way of doing business in the modern
business world. This is happening because of globalization, rapid change
in technology, etc. as a result of which the business environment has become
complex and sheer competitive.
Many times, a strategic alliance is confused with joint venture by people. However,

there are many differences between a strategic alliance and joint venture.
One basic difference between a joint venture and strategic alliance is that in joint
venture all the companies involved set up a separate legal entity with new identity
whereas in strategic alliance companies involved in the agreement work as a
separate individual entity. Even though the strategic alliance is an informal alliance
between the companies involved, but the responsibilities and work are clearly
defined for each party involved. The duration of the strategic alliance is decided
based on the goals of the alliance and the gains and needs of the strategic partners.
With the help of strategic alliance, companies grow their business at a much faster
pace than they would not have grown working alone. Companies can learn about
new business techniques and methods by the alliance with other companies and
can use that knowledge to grow their business and to enter into new market space.
A strategic alliance is preferred by many businesses over joint venture these days
as because of its flexibility to do business. Companies involved in the strategic
alliance are not required to merge their capital and can work independently from
one another.
1
Types of Strategic alliances:
There are four types of strategic alliance.
1. Procompetitive Alliance:
This type of strategic alliance works based on low interaction and low conflicts. In
this type of strategic alliance, companies involved in the alliance have minimal
involvement, and they don’t merge their capital. An example of a procompetitive
strategic alliances can be seen in businesses between the distributors or suppliers
and manufacturers. These companies work with each other without merging their
capital in the business. This type of strategic alliances takes advantage of vertical
integration.
2. Non-competitive Alliance:
This type of strategic alliances results in high interaction and low conflicts. This
type of strategic alliances takes place among the companies which are part of the
same industry but does not consider themselves direct competitors. This is because
the operations of these companies are quite distinctive from one another. This type
of alliance takes place between companies whose businesses are same but operate
in different geographical areas.
3. Competitive Alliance:
This type of strategic alliances works on the principle of high interaction and high
conflicts. Companies which are direct competitors of each other come together to
form a competitive strategic alliances. Being direct competitors to each other, and
because of the high interaction, there is a high risk of conflicts between the
companies involved.
This type of strategic alliances takes place between the companies dealing in the
same industry but in different countries. Usually, companies get in a competitive
alliance with the local companies to establish their business in a new country.
4. Precompetitive Alliance:
2
This type of strategic alliances results in low interaction and high conflicts. This
type of strategic alliances is common between two companies from two completely
industries. Precompetitive alliance takes place when two companies work together
to develop a new product or to develop new technology. The best example to
explain precompetitive strategic alliances is the alliance between
an advertising company and a company using its services to develop its products.
Examples of Strategic Alliances:

1. Strategic Partnerships between Spotify and Uber:
The alliance between Spotify and Uber is an example of a strategic alliances

between two companies. These two companies, through this alliance, increasing
their customer base as they offer uber riders to take control of the stereo. In this
way, both companies are getting an edge over their competitors. Customers of
Spotify can play their favorite playlist while riding in the Uber ride by getting the
premium package of Spotify.
2. Apple Pay and Master Card:
When Apple Inc. decided to get into digital payment business. It became a big

competitor to all existing companies in this field. Rather than getting into the
competition, the second-largest digital payment company “Master Card” decided
to get into an alliance with the Apple Inc. in this way, both companies getting the
benefit of the alliance. Master Card become the first company to provide Apple
Pay’s services, and Apple Pay got the benefit of the Master Card’s reputation.
3. Google and Luxottica:
Luxottica is a leading luxury and sports eyewear company, and Google is

an international company which provides internet-based services and products.
There is no way that one can think of two such different companies getting into a
business alliance with each other. But these two companies get into an alliance to
set an example in the market. With each other’s alliance companies are both
companies expanded their business by combining technology with luxury.

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Assignment On:

7/2/2020 Strategic Alliance:

Submitted To: Sir Ovais Umerkhel.

Many times, a strategic alliance is confused with joint venture by people. However,

Examples of Strategic Alliances:

The alliance between Spotify and Uber is an example of a strategic alliances

2. Apple Pay and Master Card:

When Apple Inc. decided to get into digital payment business. It became a big

3. Google and Luxottica:

Luxottica is a leading luxury and sports eyewear company, and Google is

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