Types of Strategic Alliance Structures and Their Trade-offs

Running head: SPORTS LICENSE 8.1
SPORTS LICENSE 8.1
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SPORTS LICENSE 8.11
Q. Describe the different types of strategic alliance structures that can exist and some of
the trade-offs of each. How do you know that a strategic alliance is “successful”? What
criteria can you use to judge this?
A strategic alliance or partnership refers to an agreement of cooperation between two
or more independent organizations to develop, manufacture or sell services or products. The
strategic alliance helps in the possession of business assets and companies can enhance each
of their businesses with the help of an expertise. The types of strategic alliance are (Albers,
Wohlgezogen & Zajac, 2016):
Horizontal strategic alliances – They are formed by companies that happened to be
competitors but allied to improve their market position as well as market power. The
companies can access both tangible and intangible resources.
Vertical strategic alliance – It is the alliance between the organization and its
distributors and suppliers in order to enlarge the network of the company.
Intersectional strategic alliance – In this case, neither of the companies are in direct
touch with each other nor do they operate in the same business field.
Joint Ventures – Here two or more companies leads to the formation of a totally
new company having a different legal entity and is very essential for those who prefer long-
tem, business relationship. The trade-offs in this cases owners of the company formed would
have equal share of profits and losses, or in one word, no extra benefits or liabilities would be
enjoyed or suffered by them.
Equity alliances – They are formed when a company achieves the equity stake of
another firm and vice versa. Thus they can not only share common goals but profits as well.
Hence the competition is also reduced between the firms. The trade-offs between the
organizations in these alliances would be able to enjoy same amount of liabilities or benefits.