International Strategic Alliance in Business

This report discusses the concept of international strategic alliances in business and explores the case study of Google and Luxottica alliance. It highlights the motivations behind forming such alliances and the benefits and challenges associated with them. The report also discusses alternative market entry strategies, with a focus on franchising. Overall, it provides insights into the importance of strategic alliances in international business expansion.

International Business

EXECUTIVE SUMMARY
This present report is based on the international strategic alliance. This is necessary mode
of doing the international business. Alliance is inter- firm collaboration over provided economic
space as well as time for achieving for participating goals of company. It is related to the
partnerships under which two or more than forms work to attain the objectives which are
beneficial mutually while the parties are independents remaining. The international strategic
alliance is combination of two or more than two forms which are agreed upon the future
objectives. The main purpose behind conducting this report is to know about the international
strategic alliance. In the literature review, there has been secondary sources of data collection
consists for an instance books, internet sources, scholars, journals and others. There has been
discussed about the international strategic alliance and use of international strategic alliances in
foreign market expansion. In this, there has been examined regarding understanding of
motivations behind formation of Google and Luxottica International strategic alliance.
Franchisee has been chosen as the alternate market entry strategy. The findings stated that
partnership among the Google and Luxottica has been beneficial for both the business. It
develops the positive impact on sales of business and also improve brand awareness among the
consumers.

Table of Contents
EXECUTIVE SUMMARY.......................................................................................................................2
INTRODUCTION.....................................................................................................................................4
LITERATURE REVIEW.........................................................................................................................4
ANALYSIS AND DISCUSSION..............................................................................................................8
CONCLUSION........................................................................................................................................10
REFERENCES........................................................................................................................................11

INTRODUCTION
International business is defined as the transfer of commodities, services, technology,
capital and/or information all over national borders but on global or multinational scale. It entails
the exchange of goods and services among two or more nations. International business is related
to the transactions which are successfully carried out beyond national borders to meet the goals
of individuals, businesses and organizations. These transactions come in a variety of shapes and
sizes and they're frequently linked. When an organization wants to break into related business
or new geographic market, especially one where government restricts imports to safeguard native
industry, a worldwide strategic alliance is frequently formed (Aydinli and Erpul, 2021). For a
certain length of time, alliances are often established between two or more corporations, each
located in their own nation. Global strategic alliance is generally the least expensive approach for
all parties involved to create a partnership since the costs are usually spread fairly among the
companies involved. In the given literature review, will be discussing about use of the
international strategic alliances in foreign market expansion. There will be discussing regarding
understanding of the motivations behind the formation of chosen International strategic alliance
(Tower, Hewett and Saboo, 2021).
LITERATURE REVIEW
According to Daniella D'Alimonte (2019) strategic alliance is defined as arrangement
among two organizations in order to undertake mutually beneficial project while the recalls its
independence. An agreement is minimum complex as well as minimizing the binding than joint
venture under which two business pool resources in context to develop separate business entity.
Strategic alliances entail the exchange of information and experience among partners and the
reduction of risk or costs in areas including such supplier relationships and creation of new
goods and technologies. Companies can gain faster access to different overseas markets through
forming several global alliances. Furthermore, having numerous worldwide allies reduces firm's
risk, while also providing the benefit of gathering information and relationships relevant to other
markets. Unlike legal partnership entity, agency or business affiliate connection, a strategic
alliance frequently falls well short. When two firms have two business assets or capabilities that
will benefit each other by increasing their respective businesses, they create a strategic alliance.
Strategic alliances can arise in outsourcing contracts when parties wish to generate long-term

win-win benefits or innovation based on mutually desired goals (Christofi and et. al., 2021).
Among mergers & acquisitions but also organic growth, this type of collaboration exists. Use of
the international strategic alliances in foreign market expansion mention below:
Enhancing competitiveness- Many international commerce ventures need the
participation of experts from several sectors. Businesses have always attempted to create or keep
all essential talents in-house. Organizations recognize how they can accomplish everything on
their own as technical and administrative complexity grows. As result, most competitive
businesses are focusing on keeping their core competencies.
Setting new standards- New technological advancements open up totally new
commercial prospects. Because this is the first to develop new technology, first firm to do so
may set the benchmark for its sector (Chu, Ko and Liu, 2021). Several rivals, on the other hand,
may develop comparable technology at same time. This is impossible to foresee which
technology will establish the industry standard, thus being the first one to market with such new
technology can be quite dangerous. One method of developing industry standards would be to
form partnerships.
On the basis of Nicki Kamau (2021), there has been strategic alliance among the Google
and Luxottica Group. Google is international firm that delivers internet-based services as well as
products and Luxottica is leading luxury and sports eyewear corporation. This is impossible to
imagine two such disparate businesses forming a business partnership. Eyewear with a high level
of luxury & cutting-edge technology. While may not expect them to collaborate, the alliance was
just what each firm required to gain a competitive advantage (Chubb and McAllister, 2021).
Luxottica can retain and grow their market share through broadening their client base as well as
providing high quality eyeglasses to luxury market with the argument that technology is
controlling the cost. On the other hand, Google can deliver technology with a touch of elegance
or attract people who, independent of technology are looking for glasses with a premium
appearance.
According to Brandon Gaille (2021), The partnership with Luxottica gave Google a
benefit over other inventors, allowing them to be the first to enter the futuristic eyewear market.
This will be the only player in the still-developing wearable computer sector. Finally, the make
sure the system Google to bring together technology, fashion and societal norms. Google is

American multinational technology form that mainly specializes in the Internet related products
as well as service. It consists the online advertising technology, cloud computing, hardware and
also search engine. This company was founded in year 1998 and its headquarter is in United
States. On the other hand, Luxottica Group is Italian eyewear conglomerate and largest company
in eyewear sector. This firm was founded in year 1961 in Italy. This company makes the
prescription frames as well as sunglasses for the designer brand for an instance Prada, Giorgio,
Burberry, Chanel and others. Luxottica handles a diverse variety of brands, within each own
position to appeal to a certain target market. Luxottica has indeed been highly effective in
allowing each of them to flourish as a unique fashion or eyewear brand till date. Luxottica has
still yet to decide to either incorporate Glass through an existing brand or create new brand
specifically for Glass. Value chain study reveals the benefits of the partnership with Luxottica.
The relationship benefits Google by giving aid in two ways such as making trendy eyeglasses to
make Glass more adaptive to consumers and taking benefit of Luxottica's enormous distribution
channel. Google's value chain is bolstered by Luxottica's superior distribution capabilities
and fashion appeal of brands such Ray-Ban. Google and Luxottica have formed hybrid alliance
(Daiser and Wirtz, 2021). There are some benefits and challenges of international strategic
alliance mention below:
Benefits
Drive innovation- Partners can outperform competition with innovative solutions which
are a full package for their clients if they form the proper relationship. These alliances are
innovative and revolutionary, and they have a significant impact on the market environment
(Dean and et. al., 2021).
Positive brand awareness- When two firms join alliance, good brand awareness efforts
taken through single of the firms will be replicated in other alliance members. Even though
this, requires levels of responsibility from all concerned parties to guarantee clients receive
outstanding quality services with each and every transaction, this is significantly less expensive
to establish a great reputation inside global strategic alliance (Draghi, 2021).
Improve products quality- Global partnerships bring new perspectives and ideas to
established product lines or services. As outcome, the quality of specific products or services

may be able to improve over time. This not only gives the business as well as alliance a
competitive edge, but it also gives them the possibility to raise income (Keller and et. al., 2021).
Challenges
Create conflicts in the ownership claims- When two companies work together to bring
new goods to market, there is sometimes a disagreement about who owns the product, the
production sites, or the patents as well as trademarks involved. A worldwide strategic alliance
can devolve into litigation and lawsuits, reducing all of advantages that this sort of arrangement
might provide (Puthan Purayil, 2021).
Improve quality of individual goods- This is customary in worldwide strategic alliance
for the one business to bear larger portion of cost of alliance than others. Not every firm is eager
to aid others when time comes, which might result in one firm reaping all of benefits while the
other struggles to stay successful (Jha, 2021).
Avoid import/export controls- Depending on the home nation of the firm involved,
guidelines may permit firms with documented global strategic alliances to avoid constraints
connected with exporting or importing items. Certain firms may be able to avoid tariffs fees into
new markets if this type of arrangement is reached (Risse-Kappen, 2021).
As per perspective of Bob Gappa (2021) a market entrance strategy is defined as the
targeted distribution & delivery technique of goods or services to a new target market. Many
businesses can thrive in a particular market without ever extending into new territory. Some
firms, on the other hand, can boost revenue, brand awareness and business stability by entering
new market. Creating market-entry strategy necessitates a detailed examination of prospective
rivals and clients. Trade obstacles, localized expertise, price localization, competitiveness, and
exchange controls are all important factors to consider when determining viability of entering a
given market (Suvathi, Gulthawatvichai and Gulthawatvichai, 2021). There has been strategic
alliance used among the Google and Luxottica. Other than this, there has been franchising
considered as the alternative market entry strategy. Essentially, Franchises as a contractual entry
option may be viewed as a type of licensing agreement that signifies a company's desire to enter
a foreign market quickly and with the least amount of risk and resource commitment. In addition
to the usual licensing procedure, a business may help with design, tackle, company and

marketing of contractual partners throughout the target market. The selling firm in contractual
partnership is known as the franchisor, while partner firm is known as the franchisee (Tran and
Vu, 2021)
ANALYSIS AND DISCUSSION
It has been analyzed that an international strategic alliance is often defined as a
collaboration between enterprises headquartered in different countries. The collaborating firms
retain their legal freedom after forming a partnership, and the alliance is often long-lasting.
Strategic alliances may be adaptable and they can take on some of responsibilities that joint
venture would. Strategic partnerships are useful tools for businesses looking to expand into new
markets. For a variety of reasons, businesses build strategic worldwide business collaborations.
One of most essential motivations is to obtain access to knowledge and resources of another
organization. Businesses might also opt to work together to develop new goods or enter markets
that neither of them could enter on their own. Globally competitive companies have stronger
motivation to form global partnerships. These contribute to a faster rate of internationalization
and thus are especially beneficial to businesses that compete on a worldwide scale. Partners may
help by providing proven marketing and distribution networks and also market expertise,
enabling that items reach the market faster and are much more likely to be bought. They may
assist with document translation, translation from metric into imperial measurements, conversion
of the power needs and compliance with packaging rules, among other things. The two
companies Luxottica and Google do not require to pool their funds and can continue to operate
independently. This collaboration's first collection will blend high-end technology
with the avant-garde design, giving the finest in terms of style, quality and performance.
Strategic alliances have become increasingly common in today's world. Alliances have become
more important in business world these days as organizations strive to become more successful
and efficient in marketplace. Organizations can achieve their aims and objectives more
effectively by cooperating rather than competing in this type of cooperative arrangement. These
innovative products will be outcome of a fresh and distinct strategic strategy that emphasizes
attention to the detail, uncompromising quality and also worldwide market technology. This new
generation of goods' complexity and also elegance will be significant step forward in a
developing industry, elevating consumer experience throughout this sector. Strategic

partnerships are useful tools for businesses looking to expand into new markets. Globally
competitive companies have a stronger motivation to form global partnerships. These contribute
to a faster rate of internationalization and are especially beneficial to businesses that compete on
a worldwide scale. Companies frequently follow a typical market entrance and development
plan. In the previous two decades, there has been tremendous growth in international commerce
and cross-border financial activities, which has been accompanied by an expansion in
the international banking in the recent years. This has resulted in a rise in both number of
international bank acquisitions as well as the size of foreign branch operations. When evaluating
the benefits and drawbacks of strategic partnerships, keep in mind that extending target market is
among the most effective ways to ensure long-term success. One of most important advantages
of forming a strategic partnership is that this allows to enter a new market through
leveraging resources and market knowledge of a firm that has already established itself in that
area. When multiple organizations get together to achieve shared goals, they form strategic
alliances. Businesses want to go global and join foreign markets for number of reasons, and these
aims should result in diverse strategies, performance targets and even types of market
participation at the moment of entry. Strategic global business alliances are a viable strategy to
break into new international markets. When the market conditions or government regulations
create market entry obstacles, strategic partnerships might be beneficial. Working with local firm
can assist in overcoming these obstacles.
Luxottica and Google will form team of professionals to work on the Glass product
design, development, tooling and engineering which straddles the border among high-fashion,
lifestyle and revolutionary technology. The agreement with Glass will include Luxottica Group's
two largest proprietary brands, Ray-Ban and Oakley. This has been analyzed that Luxottica and
Google, which are leaders in their respective sectors, will use this partnership to connect high-
tech engineers with the fashion designers & eyewear specialists. The two companies will form a
team of professionals to collaborate on design, development, tooling and engineering of Glass
goods that fall somewhere among high-fashion, lifestyle and innovation. Group's two key
proprietary brands, Ray-Ban and Oakley, which have a 10-year history in wearable technology
that has progressed from MP3 to HUD devices, will be part of partnership with Glass, according
to Luxottica; however, specifics regarding these innovative technologies will be revealed at later
point. There has been analyzed that franchising has been considered as alternative market entry

strategy. The franchisee is required to pay lump sum payment and percentage of his future
income as royalty payments in exchange for both the franchisor's services. The success of
operations is interconnected due to this contractual tie, however the franchisor benefits more
from the collaboration than franchisee. Other than this, Google will have direct access to
available eyewear customers thanks to a partnership with Luxottica. Luxottica's renowned
fashion and eyewear expertise, including its robust international distribution network, will be
extremely beneficial to Google. Furthermore, Google also isn't taking any chances with the
destiny of Glass. Wearable electronics demand in year 2014 will be dominated by the United
States and few other developed markets. United States seems to be the world's largest and
also most sophisticated eyeglass market and firm has demonstrated its strategic planning caution
through partnering with VSP, which has significant presence in US. Individuals and businesses
in the North America can benefit from VSP Vision Care's vision insurance products. VSP offers
training programs for optometrists on how to install the Glass device on the frames and fit Glass
on people's faces, in addition to subsidizing a part of the revenue of eyeglasses. Despite the fact
that each company brings unique talents and knowledge to the partnership, mass-produced Glass
will remain one-of-a-kind product that blends technological knowledge with health benefits,
especially in the wild fashion world.
CONCLUSION
It has been concluded from above mention report that strategic global business
relationships are indeed a good method to break into new international markets. Partners may
help by providing proven marketing and distribution networks and also market expertise,
enabling that items reach the market faster and are much more prone to be affected. There has
been strategic alliance among Google and Luxottica and it was a great partnership. The literature
review has been conducted by using the secondary sources such as journals, scholars, internet
sources and others. There has been discussion about the international strategic alliance and its
use in the foreign market expansion in a better manner. Some of the advantages and challenges
are determined related to the international strategic alliance. The advantages consist drive
innovation, positive brand awareness and improve products quality. Other than this, there are
some challenges examined for an instance Create conflicts in the ownership claims, improve
quality of individual goods and avoid import/export controls in a detailed manner. The

franchising has been chosen as the alternate market entry strategy because it has high rate of
success.

REFERENCES
Books & Journals
Aydinli, E. and Erpul, O., 2021. Elite Change and the Inception, Duration, and Demise of the
Turkish–Israeli Alliance. Foreign Policy Analysis, 17(2), p.oraa021.
Christofi, M. and et. al., 2021. Agility and flexibility in international business research: A
comprehensive review and future research directions. Journal of World Business, 56(3),
p.101194.
Chu, J.A., Ko, J. and Liu, A., 2021. Commanding Support: Values and Interests in the Rhetoric
of Alliance Politics. International Interactions, pp.1-27.
Chubb, D. and McAllister, I., 2021. The Alliance with the United States. In Australian Public
Opinion, Defence and Foreign Policy (pp. 43-76). Palgrave Macmillan, Singapore.
Daiser, P. and Wirtz, B.W., 2021. Strategic corporate governance factors for municipally owned
companies: an empirical analysis from a municipal perspective. International Review of
Administrative Sciences, 87(1), pp.135-153.
Dean, C.R. and et. al., 2021. A patient–clinician James Lind Alliance partnership to identify
research priorities for hyperemesis gravidarum. BMJ open, 11(1), p.e041254.
Draghi, M., 2021. He Saved the Euro. Can He Now Save the Atlantic Alliance?. The
International Economy, 35(1), pp.5-5.
Jha, V., 2021. ‘Soft Law in a Hard Shell’: India, International Rulemaking and the International
Solar Alliance. Transnational Environmental Law, pp.1-25.
Keller, A. and et. al., 2021. Alliance governance mechanisms in the face of
disruption. Organization Science.
Puthan Purayil, M., 2021. THE RISE OF CHINA AND THE QUESTION OF AN INDO-US
ALLIANCE: A PERSPECTIVE FROM INDIA. Asian Affairs, 52(1), pp.62-78.
Risse-Kappen, T., 2021. Cooperation Among Democracies. Princeton University Press.
Rosenbaum-Elliott, R., 2021. Strategic advertising management. Oxford University Press.
Suvathi, S., Gulthawatvichai, T. and Gulthawatvichai, S., 2021. Factors Affecting Managers’
Decision-Making in Thailand Professional Sports Sponsorship Alliance. Psychology and
Education Journal, 58(4), pp.2001-2007.
Tran, T.B.H. and Vu, A.D., 2021. Effect of university-enterprise alliance orientation on
university’s innovation performance and market performance: evidence from Vietnam. Journal
of Marketing for Higher Education, pp.1-21.
Online

D'Alimonte, D., 2019. 6 Reasons for forming strategic global business alliances. [Online].
Available through: < http://www.tradeready.ca/2014/fittskills-refresher/8-reasons-
forming-strategic-global-business-alliances/>.
Gaille, B., 2021. 15 Global Strategic Alliances Advantages and Disadvantages. [Online].
Available through: <https://brandongaille.com/15-global-strategic-alliances-advantages-
and-disadvantages/>.
Kamau, N., 2021. Successful Strategic Alliances: 5 Examples of Companies Doing It Right.
[Online]. Available through: <https://www.allbound.com/resource-center/successful-
strategic-alliances-5-examples-of-companies-doing-it-right/>.