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Strategic Alliances

Strategic alliances are diverse. The forms vary according to the type of partner but also according to the target market. They are less committed to the organization, unlike a joint venture which is being set up in a sustainable manner. Before embarking on a joint venture, you have to take your time to assess the risks.  

A strategic alliance will then be an opportunity to measure the strengths and weaknesses of the future co-parent and its impact on its market. To have a global vision, our study has the merit of proposing the active dormant strategy which will allow us to experience interior events. We will briefly outline the strategic alliance and the joint venture first, and explain the contribution of the active dormant strategy in the second. 

1. Strategic Alliances

Strategic alliances are a means of conquering new markets, transferring or exchanging various technologies and skills. They also promote the sharing of risks and very often tax advantages
Strategic alliances are official cooperation between companies while retaining their strategic, legal and capital independence. They consist in the pooling of objectives previously determined and limited in space and time.
Bernard GARRETTE and Pierre DUSSAUGE, in the book "Alliance Strategies", describe strategic alliances as an association between several independent companies that choose to carry out a specific project or activity by coordinating the skills, means and resources required.

Whatever the nature of an alliance, they have advantages and disadvantages in common

Table 1: some advantages and disadvantages of strategic alliances (source, Doukouré, 2020

To take advantage of local taxation and have access to the regional market and have higher profitability, the joint venture represents for us an ideal option for a company wishing to remain permanently on an emerging market.

From a strategic alliance to a joint venture, you have to follow a decision-making process to succeed in this delicate transition.

 

2. Joint Venture


What is a joint venture? We can simply define the joint venture as a business jointly
created by at least two partners. This joint venture has advantages but also risks:

 

Table 2 : some advantages and disadvantages of a joint venture (source, Doukouré, 2020)

These alliances, whatever their nature, must take into account agreements signed with the country or economic zone of the target market (s).

3. Free Trade Agreements

There have always been blocks or economic zones. Globalization has accelerated the increase in numbers and every year new agreements are signed around the world. These are based on bilateral or multilateral agreements

Promoting international exchanges. The benefits drawn by the players range from flat-rate tariffs to their abolition in certain cases.

There is also a reduction in the terms of financial transactions and local establishment. All this leads us to admit that a strategic alliance obtained in an economic zone with which we have signed free trade agreements remains advantageous.

In 2018, there were 251 free trade agreements for goods and services in force worldwide (source: www.pourleco.com, its edition no.1 September 2018). These agreements are concluded between two or more countries, between two regions or at the level of larger geopolitical units.

Among these agreements, we will briefly recall a few and finish one which was recently created and which is linked to Africa. 

Table 3 : some free trade agreements in the world

A. Whatever the choice of internalisation, any organization must aim for a strategic and financial independence to perpetuate and minimize the risks.

We discussed strategic alliances and then advised that these alliances should evolve into a joint venture for the benefits it can offer.

We have also just noted that free trade agreements offer facilities for local establishment. This is a real opportunity to be self-employed and to be autonomous in strategic decisions.
But before launching yourself into an often risky and intense competition, you must take advantage of the moments of cooperation with potential competitors to gain skills and gain control of the target markets by apprenticeship.

We have implemented the sleep active strategy to meet this learning need. This strategy has two objectives: master the key success factors and capture the competitive advantages of market leaders. It can be used for curative purposes, to improve its competitive position in an old market or for preventive purposes, when conquering a foreign market.

Figure 2 : the deployment of the active sleep strategy (Source, Doukouré, 2020)

4. Comments on the strategy

Globalization has opened up economic frontiers and now local businesses are being challenged by foreign multinationals which make the intensity of competition even stronger. In addition, this economic opening is an opportunity to develop in emerging markets.

In both cases, you have to compete, but you have to avoid taking risks to invest.
We propose this matrix, to allow practitioners to minimize risks and a new strategic theory for academics. Like all reflective work, this strategy has limits, which will certainly emerge from the very day after its publication.

The objectives that drive us under tempt the interest given to the scope of our work. It must be used in two cases:

First case: As a curative, it can be used on an old market when the organization is drowned in a strong competitive intensity. You have to reinvent everything in the image of market leaders.

Second case: As a preventive measure, when the organization launches a new market, it must maximize its chances of success and avoid unsecured investments.
Why the term dormant, quite simply it is a strategy which consists in being made forget by the competition while seeking to identify the key success factors and the advantages of the competition. To be effective, it must target market leaders and must target 4 variables: products, services, management and processes.
The products and the services to target respectively the ranges, the composition and the positioning of the products and to know the actions carried out within the after-sales service. Here, we aim for the quality of customer satisfaction.

Regarding management and processes, you should enter the competition as a bogus employee (manager and non-manager) in order to master the methods of development, monitoring and evaluation at the level of strategic and operational management.

The final goal, far from being a spy, we consider as a capitalization of experience which aims at learning.

Knowledge of the key success factors resulting from this apprenticeship will allow us to know the resources and skills that are essential to maintain a lasting presence in the market

Regarding the advantages of competition detected and mastered during the learning experience, it is not enough to imitate them but to reinvent them by innovating.

5. Conclusion

With the saturation of domestic markets, companies are often forced to go abroad. They choose different modes of cooperation to achieve this. We believe that it is necessary to go gradually through strategic alliances, then consider the possibility of creating a joint venture and in order to set up on one's own account if conditions allow. One of the essential conditions is the economic zone and free trade agreements must be favorable. However, we offer our sleep active strategy, for a good learning of field practices and competitors' strategies.

We think we are original in the way we finish this study. We have chosen to summarize this work as a logical consequence of decisions mentioned more in a single diagram.

Author: Youssouf Doukoure, student at LIGS University, under the supervision of Prof. Vladimir Biruk

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