Strategic Alliance and Strategic Fit

Strategic Alliance and Strategic FitPhoebe Amalia C. EstradaACB-3Strategic AllianceIt is an option to taken by business organizations for the purpose of achieving mutual advantage and certain strategic or specific goals.How can it be done?It can be done through a process of exploration and negotiation with targeted business concerns leading to signing up an alliance document in the form of memorandum agreement, memorandum of understanding and/or contracts stipulating the specific objectives and expressing support for one another. Objectives of Strategic AllianceTo collaborate on technology development or new product development;To fill gaps in technical or manufacturing expertise;To acquire new competencies;Objectives of Strategic Allianced. To improve supply chain efficiency;e. To gain economies of scale in production and/or marketing;f. To acquire or improve market access via joint marketing agreements.Guidelines in Strategic Alliancepick an good partner, one that shares a common vision;Be sensitive to cultural differences;Recognize that the alliance must benefit both sides;Guidelines in Strategic Allianced. Both parties have to deliver on their commitments in the agreement;e. Structure decision-making process so actions can be taken swiftly when needed; andf. Parties must do a good job of managing the learning process. Adjusting the alliance agreement over time to fit new circumstances.Success in Strategic AllianceA. ability of an alliance to endure depends on how well partners work together;Success of partners in responding and adapting to changing conditions; andWillingness of partners to renegotiate the bargain.Failure in Strategic AllianceDiverging objective and priorities of partners;Inability of partners to work well together;Emergence of more attractive technological paths;Marketplace rivalry between one or more allies; andMerger and acquisition strategies.Strategic FitIt refers to the relatedness in making decisions concerning the appropriateness of the strategic moves vis--vis the various operating divisions or business units of the company.Concept of Strategic FitIt assumes that a corporation should pursue only those strategic alternatives which it has a certain level competence so that there will be no difficulty in running or managing the group of business concerns as they grow even if they are considered structurally independent.Categories of Strategic FitProduct FitOperating FitManagement FitProduct FitAchieved when distribution channels, sales forces, promotion techniques, or customers can be handled at the same time for more than one product of service.Operating FitIt involves economies being realized in certain areas like purchasing, warehousing, production and operations, research and development, or personnel from more than one product or services. Management FitOccurs when managers are given responsibility over areas of accumulated exposure from one line of business to another.