Strategic alliances are collaborative
partnerships where two
or more companies join forces
to achieve mutually beneficial
strategic outcomes.
Alliances have become so essential
to the competitiveness
of companies in many industries
that they are a core element
of today's business
strategies.
While a few companies have
the resources and capabilities
to pursue their strategies
alone, it is becoming increasingly
common for companies
to pursue their strategies in
collaboration with suppliers,
distributors, makers of complementary
products, and
sometimes even select
competitors.
The competitive attraction of alliances
is in allowing companies
to bundle competencies
and resources that are more
valuable in a joint effort than
when kept within a single
company.
Many alliances break apart
without reaching their potential
because of frictions and conflicts
among the allies.
A merger is a pooling of two or
more companies as equals,
with the newly created company
often taking on a new
name. An acquisition is a
combination in which one company
purchases and absorbs
the operations of another.
A vertical integration strategy—extending a firm's competitive and operating scope within the same basic industry--has appeal only if it significantly
strengthens a firm's
competitive position.
A company should generally
not perform any value chain
activity internally that can be
performed more efficiently or
effectively by its outside business
partners—the chief exception
is when an activity is
strategically crucial and internal
control over that activity is
deemed essential.
It is just as important to discern
when to fortify a company's
present market position with
defensive actions as it is to
seize the initiative and launch
strategic offensives.
Companies today must determine how to use the
Internet in positioning themselves
in the marketplace—
whether to use their Web site
as a way to disseminate product
information, as a minor distribution
channel, as one of
several important distribution
channels, as the primary distribution
channel, or as the company's
only distribution
channel.
Because there are often important
advantages to being a
first-mover, competitive advantage
can spring from when a
move is made as well as from
what move is made.
