Synergistic Strategic Alliance - Definition & Meaning
What is Synergistic Strategic Alliance?
Synergistic Strategic Alliance is an agreement between two business entities where both of them work together and share their core strengths with each other such that their total output becomes more than collective individual outputs. Here, both the entities build up their weaknesses into strengths by synergistic efforts and thus become more powerful in the market.
In such strategic alliances, business entities have
- Shared Risks
- Shared Resources
- Shared Rewards
- Shared Values
Strategic alliances are less formal than JVs (Joint Ventures) and do exist for limited time. One can expect technology transfers, economic specialization in synergistic strategic alliance.
Stages undergone by the agreement while forming Synergistic Strategic Alliance:
- Strategy Development: Analyzing the feasibility of alliance and checking whether it is in alignment with company’s objectives
- Partner Assessment: Performing SWOT analysis of partner and looking for capabilities and resource gaps which can be filled by alliance
- Contract Negotiation: Making rules and regulations for alliance partners. Formulating guidelines to be followed and fines for intentionally poor performances
- Alliance Operation: Assessing the ongoing operations, its performance and rewarding for better results. Filling of resource and workforce gaps
- Alliance Termination: Termination of agreement after meeting the laid down objectives
Advantages of Synergistic Strategic Alliance
- Adequate resources availability due to sharing
- Strengthening in weak sectors by learning from other firm
- Concentrating on competitive advantage and making higher margins
Disadvantages of Synergistic Strategic Alliance
- Risk of losing confidential data to alliance partner
- Absence of common administration leads to instability and lose in control
- Increase in competition after break up with alliance partner
Hence, this concludes the definition of Synergistic Strategic Alliance along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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