Not All Strategic Alliances Are Successful : Failed Strategic Alliances Teach Valuable Lessons

Topics:
Strategic Management Tools
Tags:
Alliance,
Bricker & Eckler,
Business Consideration,
Management,
Strategic Alliance,
Strategy
Source:
Bricker & Eckler

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Overview: A strategic alliance is a form of affiliation that involves a mutual sharing of resources. It differs from a traditional capital transaction as it is more than just an investment by one party in another and does not have an objective of a change in control. Large companies have used strategic alliances to retrench to their core businesses. This article presents some business and legal considerations, based upon companies’ reported failures and successes, to take into account before entering into an alliance. The business considerations are anticipatory, requiring business due diligence in advance so problems will not arise. Although the legal considerations reinforce the business considerations, they are typically reactionary, providing a means to resolve a problem after it arises. However, from failed alliances, one know that they require hard work, even before the formalization of the alliance. To promote successful alliances, companies must ensure that (1) there is sufficient mutuality, (2) competing interests can be avoided, (3) resources will be dedicated exclusively to the alliance rather than divided with one of the partners, and (4) a form of governance familiar to each party can be implemented. All these have been discussed in detail.

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Format: PDF | Size: 80KB | Date: Sep 2001 | Pages: 4

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