Strategic Alliance

Strategic Alliance in International Trade

Meaning of Strategic Alliance, according to the Dictionary of International Trade (Global Negotiator): A strategic alliance is an agreement between two separate business entities to pool resources in order to achieve a common goal. In strategic alliances, the participants remain separate and do not form a new entity as with joint ventures and some other types of partnerships. They retain autonomy and usually embark on finite projects, rather than an ongoing business relationship. Some of the objectives of a strategic alliance can be:

To explore the various synergies which may be obtained by working together, particularly in a certain field or industry.

To undertake joint research projects as may be agreed and consider the joint commercial exploitation of any new technology or products resulting from their joint research.

To share technical expertise in a certain field or industry to improve research and development results.

To explore commercial agreements that will be for the mutual benefit of the parties.

Strategic alliances are increasingly used by companies that want to find a way to become more competitive. Working strategically, even with a competitor, provides a company with an access to more of the market share. As companies compete in a global business environment, smaller entities may have difficulty thriving unless they are willing to work strategically. Forming strategic alliances also provides people with access to new expertise and technology that might not otherwise be available. Companies of different countries that enter into a strategic alliance govern their relationship through an International Strategic Alliance Agreement. See also joint venture.