Alliances Strategy or Community Strategy
A Strategic Alliance or the Guild is where two or more companies or independent organizations that cooperate in the development, manufacture, or sell products or services.
Strategic Alliances are grouped into 3 categories:
- Alliances Non equity
- Equity Alliances
- Joint Venture
Non-equity Alliances are where the companies agree to cooperate in developing, manufacturing, or selling products or services, but they do not take their personal wealth or form an independent organizational unit to manage their joint venture.
Various kinds of agreements in non-equity alliances:
- Licensing Agreements, where one company follows another company to use its brand name in product sales.
- Supply Agreements, whereby one company agrees to supply to other companies.
- Distributions Agreements, where one of the companies agreed to distribute its products to other companies.
Equity Alliances are where firms cooperate with an agreement regarding property rights of the shares in the alliance partner.
Joint Venture is where the companies work together to establish a legally independent company with individual investments so as to produce a profit.
Strategic alliances add value by exploiting opportunities and neutralize threats that exist in the company.
Developing the Current Operations
One way to develop a current operation is to realize economies of scale, to be able to realize the company must have a large production volume or have sufficient production volume so that cost savings can be realized.
The Industrial are sometimes able to implement and sometimes not capable to implement, when enterprise is not able to make cost saving from economies of sale by itself, then allowed joining a strategic alliance with another company until the company has enough volume to be able to increase the cost advantages from economies of scale.
To realize economies of scale, the company may merge with another company as its partner. This is because to achieve the necessary economies of scale large volume production, so that large volumes of Company Production then the company should dominate the industry.
Generally one company is not able to dominate the industry, one of which is caused by the presence of anti-government regulation of monopoly. Although technology is a special section for the company in general, no single company is able to generate sufficient demand in realizing economies of scale, so that in such circumstances that the company should work together to form an alliance that is useful to realize economies of scale.
Another way in developing the current operations is learn from competitors. Each company has different resources and capabilities, from resources owned can become competitive advantages for companies compared with other companies.
The last way in developing the current operations is the sharing of costs and risks if the company produces its own product, not only will the cost is great but will also bear the risk. So with the alliance, then the cost of these can be shared with other companies, as well as the risk of failure.
Creating a Good Competitive environment
Companies can use strategic alliances to create a competitive environment is more conducive to performance leader.
Ease develop technology standards
Companies can use the alliance to help set the technology standard in the industry. By this standard, technology-based products can be developed and consumers can trust that the products they buy will be useful for some time to come.
The company formed strategic alliances with the aim of evaluating and selecting a technology standard. By setting this standard, the technology can be run on products that consumers like to buy these products, because consumers will know that they will conform to industry standards at the time. This alliance strategy can be used to create a better competitive environment (favorable).
Facilitating tacit collusion
Collusion occurs when two or more firms within an industry to coordinate their strategy choices to reduce competition in the industry. Reduction of competition makes it easier to improve company performance.
Collusion occurs when firms coordinate their production and pricing with no direct communication with the others, but with the exchange of signals with other companies regarding their intent to work together.