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CREATING GROWTH OPPORTUNITIES IN THE INTERNATIONAL MARKET

Strategic alliance is one of the most rapidly growing trends in the construction sectors. Bierly and Coombs (2009) marked strategic alliance as an effective method for neutralising the competition and also ensure sustainable future business prospects. Gulati (2009) argued that strategic alliance is an agreement for sharing common goals that would benefit all the parties to the agreement. Dussauge and Garrette (2008) explained the nature of strategic alliance by comparing it with joint ventures which is a more stable form of alliance.

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CREATING GROWTH OPPORTUNITIES IN THE INTERNATIONAL MARKET

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  1. OZ PAPER HELP CREATING GROWTH OPPORTUNITIES IN THE INTERNATIONAL MARKET MIA JACKSON 12/20/2018

  2. 1.0Introduction: Strategic alliance is one of the most rapidly growing trends in the construction sectors. Bierly and Coombs (2009) marked strategic alliance as an effective method for neutralising the competition and also ensure sustainable future business prospects. Gulati (2009) argued that strategic alliance is an agreement for sharing common goals that would benefit all the parties to the agreement. Dussauge and Garrette (2008) explained the nature of strategic alliance by comparing it with joint ventures which is a more stable form of alliance. Hofstede (2008) described that apart from proving scope for new business opportunities strategic alliance maintains the identity of the firms in the alliance. Reuer (2011)noted that organizations are entering into strategic alliances because organic growth alone is insufficient to accomplish desired growth for the organization. All these definitions reflect different characteristics of strategic alliance. The construction industry has witnessed extensive merger procedures throughout its duration in the corporate sector. This study will focus on evaluating the reasons behind the growing trend of strategic alliances. The research will understand the concept thoroughly and disadvantages of strategic alliance. The case study selected for the research include two companies specialised in construction business and well known as Shaca Construction and Urban Fabrik. The researcher will connect the research questions with the case study for analysing the practical implications of strategic alliance on the organisational growth and development. 2 discuss the benefits and 1.2 Background of the study: Strategic alliances have gained importance in the corporate sector as they have comprehensively reduced the effects of geographic boundaries in the business operations (Sim and Yunus, 2007). The necessity of strategic alliances is different for each organisation. For few, strategic alliance is a weapon to attain competitive success by effective utilization of the resources of both the companies, while most of the business firms consider alliance as a superior method of investing corporate resources OZ PAPER HELP Page 2

  3. (Todeva and Knoke, 2005). Studies have shown that there is a steady increase in the number of strategic alliances between 1979 and 1985 (Mockler, 2009). The period between 1980 and 1989 marked the increasing trend in strategic alliances between companies. However, more strategic alliances between global companies were noted 1981 and 1990. However, Hamel (2007) opined that there has been a noticeable lesser number of UK companies venturing into alliances in the early 1980s. The U.K. construction industry after being badly hit by the recent economic recession is on a state of recovery. However, as per the Construction Industry Forecasts Construction Products Association, construction sector may fall by 6% in the following two years. The decline in growth is due to slash in the capital budget as well as lack of revival from the private sector.Despute several government initiatives, the contribution of the construction industry to the U.K. economy will remain negligible until the first phase of 2014. Output in the public sector construction was increased by 11% in the last 5 years but private sector experienced a loss of 15%. Housing and non housing projects in the private sector collapsed due to withdrawal of finance as a result of credit crunch http://www.academia.edu/170677/ Accessed on 3rd May 2013]. published U.K. by the of the output [Available from In the words of Seaden et al. (2011), the construction industry is a very competive and high risk business. In order to sustain in a volatile economy, firms form differentiate from the competitiors, organisational innovation and technology and for better strategic planning. Slaughter (2008) adds that creating efficiency through economies of scale, capitalize on the use of facilities and build complementary competencies. Egan (2008) believes that construction firms enter into partnerships in order to spread financial risks and cost sharing. The proposal to establish strategic alliance between Shaca Construction Construction Construction and Urban Fabrik is perceived to be for pooling the resources and achieve common objectives. strategic partnerships access to to better OZ PAPER HELP Page 3

  4. Strategic alliances for purchasing cooperation have enabled the companies to act as global purchasing organizations taking optimum advantage of joint expertise, volume, platforms and standard parts. Shaco would get the benefit of sourcing raw materials at the right time through the alliance with Urban Fabrik. Combining the best practices of both the companies, it would bring improved efficiency and value to their purchasing operations. 1.2.1 Background of the chosen organisations (Shaca Construction and Urban Fabrik): Shaca Construction Ltd was founded in the year 2002 by Spencer Heydon and Anthony Carr. The company offers a range of contruction services and is well known for aligning their activities with clients needs. Shaca Construction Construction Construction is specialised in groundwork and structural alterations. The company has carried out structural alterations while doing refurbishements within the House of Lords, construction work at the Palace of Westminster, including underpinning and pile caps at Westminster Hall. Shaca Construction Construction Ltd has also carried out the concrete framework, basement excavation, groundwork and other external work for a new residential complex at 144 Ilford Lane, U.K. Urban fabrik is a London based company, specialised in construction business. An effective combination of knowledge, experience and adaptability is reflected in their projects that they deal in hotels, residential and commercial sectors. Some of the best projects they dealt with are ShoreditchRooms and Spa, Rochester Place, Pizza East, Eccleston Square hotel, Soho Hotel, Berlin etc. Urban Fabrik considers itself to be a traditional contractor that utilised its own in house tradesmen, plant, equipment, workshops and site offices. The company is able to manage its costs, quality and time and carry on with a sustainable business. 1.3 Rationale of the study: OZ PAPER HELP Page 4

  5. Mockler (2009) mentioned that strategic alliance is aimed to create opportunities for growth in the intentional market; on the other hand, the alliance could have certain disadvantages on the working of both the companies. Dussauge and Garrette (2008) stated that alliances could be costly, not only because of cash leaving the concern but also due to division of returns between the partners. Alliances in the construction sector reduce the possibilities of generating financial viability by cooperating with competing companies. Alliances managerial time resources needed for developing an alliance, managing it and resolving potential conflicts between firms. require involvement of Hofstede (2008) opined that often failure of the parties to act simultaneously might hamper in alliances success and operations of the other company. Poorly defined goals such as return on investment, market expansion, cost attainment leads to potential difficulties on the company's operations. Finally, poor choice of partner could also result in Shaca Construction and Urban Fabrik unable to reach the desired target or vice versa. To ensure success through strategic alliance it is necessary for the companies to form disciplined, structured and systematic alliance with each other. The author selected this topic because evaluating the positives and negatives of strategic alliances in the corporate may give rise to a new era of sustainable business practices. 1.4 Problem Statement: Strategic alliance is effective for developing the business status in the industry but there are certain critical issues related to it. Gari (2008) focused on the impact of strategic alliance over the workforce of the organisations and stated that strategic alliance initiates changes in the organisational structure and culture which may have positive as well as negative influence over the employees. However, strategic alliance has reflected the growth for the majority of the firms opting for it. It has brought a new revolution in the corporate industry by unifying the business houses and reducing the competition in the market. Mockler (2009) explained that the influence of strategic alliance on OZ PAPER HELP Page 5

  6. reducing the competition may hamper the quality of products and services produced by the firms. Faulkner (2009) stated that longevity of an alliance depends on the viability of the conditions on which the alliance was formed. Change in market situations and business stature may also hamper the alliance. Issues like change management, business growth, goal setting, etc. are influential in the developing an alliance. The alliance between Shaca Construction and Urban Fabrik has taken place mainly on the basis of business expansion and revenue earnings. The terms and conditions of the alliance have to be honoured by both the parties for sustaining the alliance and making fruitful. Strategic alliance without doubt comes with added advantages for the firms in the treaty but the organization should ensure that the firms are capable of holding up the alliance for a prolonged time to reap the full benefits of the procedure. Hofstede (2008) explained that increasing alliances among the corporate construction industry are creating a global community that aims to develop a stable economic condition in the world. The problem is their diverse cultures and structure which may create dispute and hamper the entire process. players, particularly in 1.5 Research Aim: The study aims to reveal the causes that are urging the construction industry towards creating strategic alliances. The benefits and disadvantages of the alliance process and its effect on the stakeholders of the firms will also be discussed in the study through a case study of the impact of the alliance of the firms i.e. Shaca Construction and Urban Fabrik. 1.6 Research Objectives: To study the effectiveness of strategic alliances in the international market. To critically analyse the rationale behind adopting strategic alliance techniques. OZ PAPER HELP Page 6

  7. To assess the impact of strategic alliance between Shaca Construction and Urban Fabrik to evaluate the benefits and pitfalls for the firms. 1.7 Structure of the Research: Introduction: The chapter deals with brief introduction of the topic to the reader. The chapter includes the aims, objectives, research questions, rationale, background. and purpose and study Literature Review: It deals with the studies and the theories of previous authors on the present topic. Various models on the present topic are studied in the chapter. Research Methodology: It involves the philosophy, approach, and sample size and data collection process of the study. Presentation of Data: This chapter presents the raw data collected from the respondents via survey. Analysis of Data: The chapter involves analysing the data collected through primary research. Discussion and Interpretation of the Findings: This chapter deduce information from the primary data and discuses about the possible outcomes of the study. Conclusion, Implications and Recommendations: in the final chapter of the study, the researcher connects the objectives with the data collected and provides suitable recommendation in respect to strategic alliance process. 1.8 Conclusion: The chapter follows a brief introduction of the topic. Aims, objectives and questions would help in conducting the research methodically. The chapter also includes the rationale and purpose behind conducting the study. It can be concluded that strategic alliance between the two construction companies (Shaca OZ PAPER HELP Page 7

  8. Construction and Urban Fabrik) would help to recover from the recent credit crunch and achieve strategic goals. OZ PAPER HELP Page 8

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