Question

What are the advantages of forming a strategic alliance to enter a foreign market?

Answer 1

Strategic alliance refers to the strategic partnership is nothing but agreement between two or more parties to meet the set goals and objectives while functioning as the independent organization.

The advantages of forming a strategic alliance to enter a foreign market are: -

• they can concentrate on activities based on their own capabilities.
• competitive advantage can be developed and maintained by both the firms.
• firms can gain knowledge from each other and can develop competencies.
• firms will get access to new customer base.
• Firms will get opportunities to reach new market
• brand awareness will increase because market size will increase for both the firms.

The best perspective of strategic alliances that I favor the most is developing or maintaining the competitive advantage of the firm. With this type of alliance, the partners learn things from each other. The skills and experience of all the partners helps in building competitive advantage. The organizations benefits from this because

• The objectives are shared openly
• There will be very less competition among the partners.
• The organizations will have similar culture which will help them to coordinate effectively.
• The strategic alliance promote learning to all levels of the organization.