Synergistic Strategic Alliance

Posted in Marketing and Strategy Terms, Total Reads: 5385

Definition: 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


Looking for Similar Definitions & Concepts, Search Business Concepts