Question

Select any RECENTLY announcement of the formation of an international strategic alliance in any industry. Predict its likely success or failure.

Answer 1

Strategic alliance - A strategic alliance is an mutual deal or agreement between two companies to undertake a mutually beneficial project while each retains its independence. The agreement is less complex and less binding than a joint venture, in which two businesses pool resources to create a separate business entity. Basically two companies come together and sign the agreement to work on a common venture or common project.

Example of international strategic alliances that are successful -

Spotify and Uber - Spotify and Uber have partnered to provide stereo control to Uber customers. Not every Spotify consumer uses Uber, nor does every Uber rider have a Spotify account. The strategic alliance allows each company to pursue prospects from the other’s existing customer base, all while continuing to promote both products.

Google and Luxottica - Luxottica can provide premium quality eyewear to the luxury market, with a justification that the technology is what is driving the price, and maintain and increase their market share by diversifying the customer base. Google on the other hand, can provide technology that has a touch of luxury, and reach consumers that may be seeking eyewear that has the premium look, regardless of the technology.

Hewlett-Packard and Disney - During the creation of Fantasia, Disney purchased some audio equipment from Hewlett-Packard. The strategic alliance continued onwards, as Disney relied heavily on HP’s development and IT team for it’s own infrastructure.

Example of international strategic alliances that are failed-

Cisco and Motorola - Formed a joint venture, Spectrapoint Wireless,However, after just one year, the partnership was called off. Because there was no one to sell to.

Staples and Office Depot - Staples attempted to buy out its competitor, Office Depot—and failed big time. The merger failed after antitrust issues surfaced, and the Federal Trade Commission (FTC) denied the companies the option. The FTC stated that there was a likelihood that the partnership would lead to higher prices and lower competition.