STEPHANIE JOHANA GASTELBONDO CALDERÓNCOD: 1520102028

ALEXI SAMPER BARREROCOD: 1520111046

INTRODUCTION

Forms of foreign market entry strategies move alonga of choice factors such as control, risk, investmentintensity, and potential profitability, starting from anexport activity and continuing with licensing(franchising, foreign manufacturing, contractproduction) and various forms of FDI (portfolioinvestments, JVs, and greenfield investments), andconcluding with strategic alliances options.

CONCEPT

Co-operative relationships between two companieseven competitors that have decided to share resourcesto undertake a specific, mutually beneficial project andachieve mutual goals while remaining independentorganizations and maintain theirs autonomy .

• Less involved and less permanent than a joint venture.

CHARACTERISTICS OF ACTUAL STRATEGIC ALLIANCES

Strategic alliances are currently gaining in popularity,partly due to the characteristics of the agreement (namelymaintaining independency while pooling forces togetherto achieve a common goal) and partly due to marketglobalization conditions that require access to resourcesand networking structures of a much larger scale andscope than ever before.

FACTORS PROMOTING ALLIANCES

Strategic alliances help companies:

• To find new market entries.

• To shaping of industry evolution.

• To develop a more effective process.

• To expand into a new market or develop an advantage over a competitor.

• Learning and applying new technologies.

• To rounding out a product line.

• To among other possibilities.

ALLIANCE PROCESS

TYPES OF STRATEGIC ALLIANCES

Collaborative agreements between businesses can take a number of forms and are becoming increasingly common as businesses aim to get the upper hand over their competitors.

The main types of strategic alliances are listed below:

• Profit strategic alliances

• Nonprofit strategic alliances

• Franchising

• Outsourcing: The 1980s was the decade where outsourcing really rose to prominence, and this trend continued throughout the 1990s to today, although to a slightly lesser extent.

• Affiliate Marketing: Affiliate marketing has exploded over recent years, with the most successful online retailers using it to great effect. The nature of the internet means that referrals can be accurately tracked right through the order process. Amazon was the pioneer of affiliate marketing, and now has tens of thousands of websites promoting its products on a performance-based basis.

• Technology Licensing: This is a contractual arrangement whereby trade marks, intellectual property and trade secrets are licensed to an external firm. It’s used mainly as a low cost way to enter foreign markets. The main downside of licensing is the loss of control over the technology – as soon as it enters other hands the possibility of exploitation arises.

• Product Licensing: This is similar to technology licensing except that the license provided is only to manufacture and sell a certain product. Usually each licensee will be given an exclusive geographic area to which they can sell to. It’s a lower-risk way of expanding the reach of your product.

• R&D: Strategic alliances based around R&D tend to fall into the joint venture category, where two or more businesses decide to embark on a research venture through forming a new entity.

• Distributors: If you have a product one of the best ways to market it is to recruit distributors, where each one has its own geographical area or type of product. This ensures that each distributor’s success can be easily measured against other distributors.

• Distribution Relationships: This is perhaps the most common form of alliance. Strategic alliances are usually formed because the businesses involved want more customers. It’s a win-win agreement – the bank gains through offering a great deal to their customers, the insurance company benefits through increased customer numbers, and customers gain through receiving an exclusive offer.

ADVANTAGESStrategically it is a strong alliance when is composed with the best in each field and the resulting solution is stronger than any of the part.• Get instant market access, or at least speed your entry into a new

market.• Exploit new opportunities to strengthen your position in a market

where you already have a foothold.• Increase sales.• Gain new skills and technology.• Develop new products at a profit.• Share fixed costs and resources.• Enlarge your distribution channels.• Expand your business and political contact base.• Gain greater knowledge of international customs and culture.• Enhance your image in the world marketplace

DISADVANTAGES

• Weaker management involvement or less equity stake.

• Less efficient communication.

• Poor resource allocation.

• Difficult to keep objectives on target over time.

• Loss of control over such important issues as product quality, operating costs, employees, etc.

EXAMPLES

For example, an oil and natural gas company might form a strategic alliance with a research laboratory to develop more commercially viable recovery processes.

A clothing retailer might form a strategic alliance with a single clothing manufacturer to ensure consistent quality and sizing.

A major website could form a strategic alliance with an analytics company to improve its marketing efforts.

EXAMPLES

STRATEGY ALLIANCE BY IBM

IBM, is an American multinational technology and consulting corporation, with headquarters in Armonk, New York, United States.

• strategic technology alliance formed by Monsanto Co. and International Business Machines Corp. to develop a genomics research database. Aim for the creation of an IBM/Monsanto solution center; Terms of the alliance; Products offered by the solution center.

• The Strategic Alliance between Nazi Germany and America's Most Powerful Corporation in the following way:

"[The book] tells the story of IBM's conscious involvement — directly and through its subsidiaries — in the Holocaust, as well as its involvement in the Nazi war machine that murdered millions of others throughout Europe.

Milly, Fred and James are all naturopaths located in different areas around a city. They decide to get together to help each other with promotion. They do a number of things together. They share a stand at an expo, they run a shared advertisement in a Natural Therapies magazine, they even do some of their purchasing together to reduce costs. All these are alliance strategies

The Joint VentureHowever over the course of their relationship as Milly, Fred and James get to know and trust each other they start to discuss new opportunities and they see the potential of offering natural therapies treatments to rural locations. So they decide to set up a Joint Venture to open a mobile natural therapies clinic to visit rural towns.