An analysis of strategic alliances: forms, functions and framework

Abstract

Defined broadly as any relationship between companies involving a sharing of common destinies, strategic alliances are cropping up across the global arena. Due to the maturation of several trends of the 1980s, such as: intensified foreign competition, shortened product life cycles, soaring cost of capital, including the cost of research and development, and ever‐growing demand for new technologies, alliances are becoming an attractive strategy for the future. Published material on the subject is vast, diverse and fragmented. Synthesizes this material and develops a common thread as to how these alliances are formed and the ingredients for their success or failure. Identifies six dimensions along which the alliances are formed and the change in management style needed for the success of alliances. Defines an interesting phenomenon termed the “Octopus Strategy” where multidivision companies from Japan, the United States and Europe are joining forces to create multiple strategic alliances. The end result of this strategy is that two divisions of the multidivision companies may have formed an alliance, while other divisions of the same organizations may be in fierce competition with one another. Develops a model of the working of strategic alliances based on the existing empirical evidence. Suggests some contributions that government, industry and education should make for the success of alliances.