Why Competitors Join In Strategic Alliances? Essay

803 WordsMay 6, 20124 Pages
Why competitors join in strategic alliances? One could view business as a total competition, another one as a sheer cooperation. And some people think, myself included, that business is both competition and cooperation. Many modern strategic alliances could serve as brilliant examples of it. Consider the alliance forming experience of TNCs. Such well-known competitors as General Motors and Toyota are producing automobiles together, Canon supplies Kodak with copy machines. Jack Welch, CEO General Electric, has once said, that “the least attractive way to try to win on a global basis is to think, that you can take on the world all by yourself”. This statement is quite fair in terms of globalization of the world economy and increasing competition. Even the biggest TNCs are now searching for successful partnership as a way to improve their activity, to back market positions and to gain competitive advantages. Strategic alliance becomes key competitive strategy of a company. The term “strategic alliance” can be defined as trading partnership that enhances the effectiveness of the competitive strategy of the participating firms by providing for the mutually beneficial trade of technologies, skills or products based upon them. (1) Strictly speaking, it is a relationship between firms in order to create more value that they can by their own. Nowadays we can observe not only vertical alliances appearing, but also horizontal strategic alliances, which are primarily formed by competitors. The main reasons that push competitors to form alliances are as follows: Access to technologies – it is sometimes more profitable to use already invented by some company technology, rather than spend lots of money for inventing it once again. Thus, interchange of technologies among partners in strategic alliances could economize their time and resources. Uniting forces –

More about Why Competitors Join In Strategic Alliances? Essay

Open Document