External Growth Methods: Strategic Alliances

Evaluating if your existing resources (products, capabilities) are similar to those needed in the target market.

Comparing your resources to competitors in the target market using the VRIO framework to determine if they offer superior advantage.

When you need to access resources or capabilities that another company possesses.

Considering whether you need to be physically close to a partner to get their resources.

The ability to seamlessly blend your company with a partner's company.

Strategic alliances that involve working directly with a partner company.

A formal agreement where two companies work together to achieve a common goal.

Buying out another company to expand your own business.

Companies form strategic alliances to gain access to resources they might not have themselves, such as distribution channels, after-sales services, or specialized expertise.

Strategic alliances can strengthen a company's position in the market by combining forces with another company to address common challenges.

Collaborations between competitors can be a type of strategic alliance where businesses work together to increase market share and reach a wider audience.

Strategic alliances between companies are legal and encouraged, while collusive agreements are illegal and constitute a violation of competition laws.

A strategic alliance is a formal agreement between two or more companies where they share resources and expertise to achieve a common business objective.

Companies form strategic alliances to enter new markets, expand their reach, or gain access to new technologies and expertise.

Strategic alliances can help companies gain access to new customers and distribution channels, which can lead to increased market share and sales.

Strategic alliances can help companies reduce costs and increase efficiency by sharing resources and expertise.

Rival companies agree on specific prices and quantities of products they will offer.

Companies indirectly coordinate their actions by observing each other's behavior and responding accordingly.

Partners in a strategic alliance share knowledge and resources to improve their capabilities and competitive advantage.

A strategic alliance where partners do not invest in each other's equity.

A strategic alliance where at least one partner invests in the equity of another partner, including cross-shareholdings.

A form of strategic alliance where a company invests in a start-up or emerging business.

These alliances involve sharing resources and expertise without capital investment. They are often based on licensing agreements, where one company grants another the right to use its intellectual property. These alliances are quick to establish and are typically flexible, allowing for easier adaptation to changing circumstances.

These alliances go beyond simply sharing resources and involve capital investments. Companies might form joint ventures, where they create new entities together, or invest in each other's operations. These partnerships are typically more committed and require a longer-term vision.

A type of strategic alliance where one company grants another the right to use its intellectual property, like a patent or trademark. This can be a quick and efficient way for companies to utilize each other's strengths and expand their market reach.

One of the main advantages of strategic alliances without capital is their flexibility. Companies can adapt to changing market conditions and exit the partnership more easily compared to alliances involving capital investment.

Strategic alliances without capital can be established quickly, enabling companies to capitalize on opportunities promptly. This can be crucial in fast-paced industries where reaction time is essential.

A key drawback of alliances without capital is the potential for weaker ties between the partners. This can make it harder to build trust and commitment, which are essential for long-term success.

Strategic alliances with capital often involve a longer negotiation process due to the complex nature of the financial arrangements. This can delay the implementation of the alliance and impact its effectiveness.

The process of uniting two or more companies into a single new entity, often involving companies of comparable size.

The ability of a company to effectively choose, manage, and sustain partnerships that align with its strategic goals and create mutual value. This involves selecting the right partner, designing the alliance effectively, and managing the relationship actively.

A situation where companies agree on the acquisition, often involving negotiations and mutual benefits.

A company's strategic choices that involve expanding their operations by acquiring or merging with other companies, aiming to increase market share, resources, or expertise. This is a significant decision impacting the company's future direction.

Factors such as compatibility and commitment that are crucial for successful alliances. These factors are carefully assessed during the selection process to ensure a good fit between partners.

Companies merge with competitors to gain a larger market share, reduce competition, and potentially influence industry prices. This can be seen in industries like banking, mobile telecommunications, and airlines where oversupply is common. It also helps them gain access to their competitor's resources, distribution channels, and customer base.

Merging or acquiring a competitor can lead to reduced competition within a market by eliminating a rival and reducing the number of players. This can make it easier for the merged company to control pricing and market share.

A hostile takeover occurs when a company tries to acquire another company without the target company's consent. This can happen through various methods, including a tender offer or a proxy contest. The target company may resist the takeover actively, leading to a conflict between the two companies.

A merger is a combination of two companies into a single new entity. Both companies agree to join forces, often leading to shared ownership and control of the new combined company.

An acquisition occurs when one company purchases the other, taking control of its operations. The acquiring company may purchase a majority or all of the target company's shares, making it a subsidiary or fully integrating it into its own operations.

Vertical integration occurs when a company expands its operations along its supply chain. This can involve acquiring companies that supply raw materials or components, or companies that distribute or retail its products.

Horizontal integration occurs when a company acquires another company at the same stage of the value chain. This is commonly seen in merging with competitors to increase market share, reduce competition, and potentially influence pricing.

A company may use a variety of tactics to acquire another company, including a tender offer, a proxy contest, or a merger agreement. The particular tactic chosen depends on the circumstances and involves legal and financial elements.