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Exploring the Benefits of Strategic Alliances in Business

Learn about strategic alliances, their pros and cons, through real-life examples like Spotify and Uber, and understand how partnerships can lead to shared success despite potential challenges.

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Exploring the Benefits of Strategic Alliances in Business

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  1. Strategic alliance By: Tina Berzi

  2. Definition • An arrangement between two companies that have decided to share resources to undertake a specific, mutually beneficial project. • Less involved and less permanent than a joint venture. • Each company maintains its autonomy while gaining a new opportunity.

  3. Pros • Allows two organizations, individuals or other entities to work toward common or correlating goals.  • Strategic alliances allow involved organizations to pursue opportunities at a faster rate than if they functioned alone. • Reduces costs and risks by distributing them across the members of the alliance creating an economic advantage.

  4. Cons • Cultural and language barriers • Difference in management styles • Lack of trust • Damaged reputation • If the company or business you are allied with has poor public relations, it may bring a bad reputation to your company.

  5. Example • Spotify and Uber strategic alliance: The power to enter a car welcomed by your favorite playlist provides extra value, significant competitive advantage and exclusivity for Uber cars. For Spotify, it offers an incentive for users to upgrade to the premium level.

  6. example • Starbucks partnered with Barnes and Nobles bookstores in 1993 to offer in-house coffee shops, helping both retailers. Today, Starbucks is strategically allied with Chapters to provide coffee for readers.

  7. example • The HP and Microsoft global strategic allianceis amongst the longest standing alliances of this type, with well over Twenty five years of combined marketplace leadership aimed at helping customers and channel partners worldwide enhance productivity by using innovative technologies.

  8. Work cited • http://study.com/academy/lesson/strategic-alliance-in-business-definition-advantages-disadvantages.html • http://universalteacher.com/1/disadvantages-of-strategic-alliance/ • http://universalteacher.com/1/examples-of-strategic-alliances/

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