Companies enter into partnerships with other firms to achieve objectives and goals quicker or more effectively than they can on their own. According to a paper published by Indiana State University, six percent of total revenues come from strategic alliances. Global strategic alliances, which generally have a broader scope and international focus, impact the partners’ competitive positioning in their target market niches or segments.
A strategic alliance is an agreement between two or more companies to work together to accomplish goals that mutually benefit all parties. A committed strategic alliance or partnership is contractual — all parties involved in the alliance sign an agreement committing to specific objectives generally over a given time period. Although a strategic partnership can lead to a joint venture it is not one. In a joint venture, the companies form a new entity in which all parties to the agreement have a stake.
Global – Geography
A global strategic partnership is a type of strategic alliance or partnership with far-reaching scope. “Global” generally refers to the international location and scope of the companies involved in the partnership. For example, a United States-based services company may enter into a global strategic partnership with a trading company from Japan to establish and build market share in their respective home countries and countries in the Americas and Asia.
Global – Scope
“Global” may also refer to the broadness of scope and depth of interactions between the firms. For example, a sales software application provider may enter into a global strategic partnership with an accounting software application provider to broaden their respective client base and compete more effectively against their larger competitors. They may choose to integrate their software to allow the user of one application to seamlessly transfer data to the other application. The companies may co-market the applications as one integrated product, build a joint sales force and field joint implementation teams. The depth of this partnership makes it “global” even if both companies have a limited international presence.
Companies can buy, build or partner to grow their market share. Companies therefore partner on a global scale as a growth strategy to increase existing market penetration and enter new markets. It takes time to build a team and create new products or services and position existing products and services for a new market. The correct global strategic alliance can reduce this time-to-market significantly. Global strategic partnerships also help companies spread the risks and costs associated with research and development.
- Business Dictionary: Strategic Alliance http://www.businessdictionary.com/definition/strategic-alliance.html
- Eastern Illinois University: An Overview of Strategic Alliances https://www.yumpu.com/en/document/view/8808890/an-overview-of-strategic-alliances-eastern-illinois-university
- University of Central Arkansas: Strategic Alliances: Are They Relational By Definition http://www.sbaer.uca.edu/research/sma/1995/pdf/73.pdf