Business strategy Assignment PDF

Running head: BUSINESS STRATEGY
Business strategy
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Abstract
The major objectives of this research paper are to discuss about the current scenario and relevant
factors in strategic alliances in the global market and identifying the major gaps in the literature
in critically analyzing the current scenario of strategic alliances. In this paper, various authors
along with their views are being used to have a critical approach in the discussion. In doing the
research, different quality and authentic journals are being used, which denotes the usage of
secondary data. In addition, qualitative data analysis method is followed to have the penetrated
view based on the opinions given by the authors. In addition, initiation of the qualitative research
analysis method also helped in identifying the differences in the approaches of the authors. It is
identified that majority of the authors have given narrow and one sided view against the given
topic. In this paper, there is number of factors being discussed, which should be considered in
having a successful strategic alliance. In addition, it is also being identified that majority of the
articles have given an overview rather discussing on a single and specific element. This caused
difficulty in aligning the views of the authors with that of the research objectives. However, it is
also identified that strategic alliances are having a number of utilities for the business
organizations along with having the potentiality for long term sustainability considering all the
required factors being determined effectively. A few limitations are also there in doing this
research paper with the major limitation is the usage of only secondary data. This is due to the
reason that primary data will have more authenticity for the research paper, which is not used in
this paper. In addition, it is assumed that current business scenario is constant and based on that,
views of the authors are analyzed. It is expected that the research done in this paper will help in
having a critical view about the utilities of the strategic alliances and the important factors to be
considered by the business organizations prior to the initiation of the alliances.

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Table of Contents
Introduction......................................................................................................................................3
Current scenario of strategic alliances.........................................................................................3
Literature review..............................................................................................................................5
Utility of the strategic alliance.....................................................................................................5
Approaches to the strategic alliances...........................................................................................7
Factors consideration in initiating strategic alliances..................................................................9
Probable risks in initiating strategic alliance.............................................................................11
Research methodology...................................................................................................................13
Findings.........................................................................................................................................15
Conclusion.....................................................................................................................................18
Reference.......................................................................................................................................19
Appendix........................................................................................................................................23

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Introduction
The importance of strategic alliance has increased significantly over the past decade, and
it has been used as a response to the globalisation in the market. Alliance play a vital role in the
sustainability of different organisations as it facilitates in providing access to crucial resources
and gaining competitive advantage in the market. The economic environment in the global
scenario is turbulent, and market trends keep on changing rapidly. The companies are forced to
adapt to these changes by incorporating new strategies such as alliances due to the lack of
internal resources in the external market and the need of maintaining a strategic position in the
market. The changes in the market scenarios have made the competition intense at such a level
that the competition is no more between the individual companies but between the strategic
alliances. Collaborative agreements allow different firms to mitigate their shortcomings, bridge
the gap and effectively manage the complexities in the market. A strategic partnership has been
used by the companies for fortifying their resource endowments, managing the uncertainty in the
external environment and improves their competitiveness.
Current scenario of strategic alliances
Firms use strategic alliance as a means of improving the knowledge and availability of
complementary resources. There is a wide range of cooperative strategies both equity-based and
non-equity implemented by the companies based on their current needs. A strategic alliance can
be defined as the international relationship between two or more firms which involves sharing of
resources or exchange of resources to gain competencies in the market. As per the current
scenario in the global market, a strategic alliance is a critical factor in achieving a competitive
advantage in the market. The enhancement of the competitive position, transaction costs and new

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knowledge development are the key benefits of getting into an alliance (Brouthers, Nakos and
Dimitratos 2015). There are different reasons due to which firms can use the strategicalliance to
create competitive advantages such as effective management of risk, economies of scale and
cost-effective entries to the new market (Garg 2016). In addition, in the current business
scenario, it should also be noted that gaining competitive advantages is the one of the major
factor considerations for the contemporary business organizations. This is due to the reason that
current business scenario is highly competitive in nature with the presence of good number of
competitors in each of the business sectors. Thus, the more will be the competitive advantages
for the business organizations, the more will be their effectiveness in staying ahead in the
competition. With the help of the strategic alliance, business organizations gains competitive
advantages by leveraging on each other’s resources. In addition, initiation of the strategic
alliances also helps in reducing the intensity of the competition in the market. This is due to the
reason that if the competitors went for strategic alliance, then number of operating players in the
market will get reduced and average profitability will get enhanced.
However, even though strategic alliance has been a common phenomenon, the success
rates of alliances are quite a low due, and research statistics show that 50% of the alliances fail
(Albers, Wohlgezogen and Zajac 2016). The high failure rates indicate that it is challenging to
develop productive and successful partnerships which mean that the majority of the firms do not
have the capabilities of maximising their potential value creation. The dynamic nature of the
collaboration is one of the main reasons for the failure of alliances of different firms where the
firms are unable to balance between cooperation and competition simultaneously effectively.
This instance depicts that even though strategic alliances are one of the most effective strategies
for gaining competitive advantage in the current market, the chances of success are half. The

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competition between the firms and managerial complexity are two major reasons that firms fail
to form successful partnerships (Russo and Cesarani 2017). This literature review has identified
the current scenario of strategic alliances in the market to provide an in-depth understanding of
the positives and the negatives of the market scenario. The main objectives of the research are as
follows:
 Critical evaluation of the current scenario of strategic alliance in the global market
 Determining the literature gap from the existing research to examine the scope of
future research
Literature review
Utility of the strategic alliance
Prior to the further discussion regarding different aspects of the strategic alliance, it is
important to have the understanding about the overview and basic utility of the strategic alliance
for the business organizations. According to Lew and Sinkovics (2013), one of the major utilities
for the initiation of the strategic alliance is gaining competitive advantages. This is due to the
reason that initiation of the strategic alliance will help the business organizations to leverage the
competitiveness of their partnered firm and enhance the value proposition in the market.
However, on the other hand, it is also stated by the authors that innovation also plays an
important role in enhancing the effectiveness of the strategic alliance. This is due to the reason
that there are number of instances where it is seen that strategic alliance is failed due to the lack
of innovation among the involved entities. For instance, the strategic alliance between Nokia and
Microsoft got failed due to the lack of vision and innovation. It was reported that the major
objective of the merger between Nokia and Microsoft is leverage the brand recall of Nokia in the