Organizational Alliances

Monthly Journal Strategic & Operational Planning

ISSUE 1 APRIL 2011

this issue Advantages of Strategic Alliances

FORBES.COM
A Forbes.com article entitled Partner or Perish highlights a number of corporations previously involved in strategic alliances and discusses this trends link to improve productivity in a global market. Positive impacts are noted from giants like Coca Cola and Proctor & Gamble, Sony and Erickson, IBM, Pfizer and BEA Systems, Eli Lilly and others. Read more

No Strategic AlliancesHow Can You Compete?

Creating sustainable value in todays globalized marketplace for customers, employees and shareholders requires companies form effective strategic alliances. Expanding into various markets and attaining a

FORBES MAGNETIC 40
Takes an in-depth look at more than 10,000 alliances formed in 2000 by industry. Forbes explores a variety of partnerships from co-marketing or licensing to joint ventures and R&D. Read more

competitive advantage are some mutual benefits of partnering with another organization. According to Cojohari (n.d.) alliances are essential building blocks for companies to achieve a stronger and more effective market presence. It is an important piece of current operations, as well as, future strategies. As the competitive environment continues to grow, companies are finding it more difficult to manage the flow of resources, technologies, information, and capabilities.

Strategic Alliances
Alliances come in different shapes and sizes.

Strategic alliances simply allow companies to become better together than they are alone. Managed properly, the benefits of these unions can dramatically improve a companys performance, minimize the difficulties associated with overall operations and technology and increase their flexibility. Alliances can develop in several forms, but are generally classified as trading, functional or dynamic. A trading alliance is basically a contractual agreement between buyers and sellers establishing large sales and distribution arrangements. A functional alliance is designed to meet specific goals for example, improving research and development, dividing costs, increasing sales or expanding access into new markets. Dynamic alliances encompass obscure capabilities both organizations possess that contributes to its strength in the market (Cojohari, n.d.). The key argument for strategic alliances is competitive advantage. The development of these relationships are a common strategy in the global market.

Some benefits are (Zarifi, 2008): Gaining capabilities offers an opportunity to gain knowledge and expertise in areas that your organization may lack. Easier access to target markets allows entry into markets at potentially lower costs; offering opportunities to compete in highly competitive markets by lessening government operational competitor obstacles. Sharing financial risks share organizational costs to reduce risks. Winning the political obstacle entering international markets may have political restrictions, however, establishing joint ventures with local organizations would allow foreign businesses to access these local markets. Synergy advantage create and competitive joint ventures for the impact of and regulations, difficulties MICROSOFT AND NORTEL
In 2006, Microsoft CEO Steve Ballmer and Nortel President & CEO Mike Zafrirovski announced a strategic alliance between the two companies that would link communications (email, instant messaging & multimedia conferencing) positioning both organizations to drive growth, reduce costs, simplify communications for customers and improve efficiencies (Microsoft, 2011).

COCA COLA AND PROCTOR & GAMBLE

Since 2001, the beverage giant focused on global strategic planning, alliances and new ventures which spurred its teaming with P&G to utilize the companys impressive research capabilities, while P&G gained access to Cokes extensive distribution network (Forbes Magnetic 40, 2001).

ELI LILLY AND BOEHRINGER INGELHEIM

In January 2011, Eli Lilly and Germanowned Boehringer Ingelheim announced a strategic alliance to further advance their pipeline of diabetes pharmaceuticals as they get closer to losing patents exclusivity. This union will position both organizations to expand their offerings, strengthen diabetes care and increase revenue opportunities (Lilly, 2011).

SAMSUNG AND DREAMWORKS ANIMATION

Samsung and Dreamworks teamed up in January 2011 to expand their alliance. As a leading innovator of 3D entertainment, Dreamworks will join forces with Samsung to market its 3D television along with some exclusive Dreamworks 3D blu-ray movie titles. The companies will work jointly to examine R&D opportunities and develop co-marketing plans (Samsung USA, 2011).

opportunities

businesses to combine strengths to help each other achieve better results.

REFERENCES

Strategic & Operational Planning ISSUE 1 APRIL 2011

References
Cojohari, N. (n.d.). The competitive advantage of strategic alliances. Retrieved April 15, 2011 from http://www.upm.ro/proiecte/EEE/Conferences/papers/S421.pdf. Forbes Magnetic 40. (2001). Retrieved on April 15, 2011 from http://www.forbes.com/best/2001/0521/064.html. Lilly. (2011). Lily and boehringer ingelheim announce strategic alliance to bring new diabetes treatments to patients worldwide. Retrieved April 16, 2011 from https://investor.lilly.com/releasedetail2.cfm?ReleaseID=542971. Microsoft. (2011). Retrieved April 15, 2011 from http://www.microsoft.com/presspass/press/2006/jul06/0718UCGNortelPR.mspx. Samsung USA. (2011). Samsung and dreamworks animation expand strategic alliance for more immersive 3D tv viewing experience in 2011. Retrieved April 16, 2011 from http://www.samsungusanews.com/2011/01/samsung-and-dreamworksanimation-expand-strategic-alliance-for-more-immersive-3d-tv-viewingexperience-in-2011/. Zarifi, M. (2008). Five potential benefits of strategic alliance. Retrieved April 15, 2011 from http://infosky.wordpress.com/2007/03/06/five-potential-benefits-of-strategicalliance/.

Understanding Organizational Alliances

April 15, 2011