Factors Promoting The Rise Of Strategic Alliances (Or) Reasons For Forming Strategic Alliances

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(i)          To gain access to foreign markets – in the pharmaceutical industry, Pharmacia and Pfizer have formed an alliance for smooth market entry to accelerate the acceptance of a new drug.

(ii)         To reduce financial risks – IBM, Toshiba and Siemens have entered into an alliance to share the fixed costs of developing new microprocessors.

(iii)        To bring complementary skills – Intel formed and alliance with Hewlett- Packard (HP) to use HP’s capability to develop Pentium microprocessors.

(iv)       To reduce political risks – Maytag, a U.S company entered into alliance with Chinese appliance maker RSD to gain access to China.

(v)         To achieve competitive advantage – GM and Toyota established joint venture by name Nummi Corporation.

(vi)       To set technological standards – Philips entered into an alliance with Matsushita to manufacture and market the digital compact cassette.

(vii)      To shape industry evolution – Lucent Technologies and Motorola entered into an alliance to develop a new generation of Digital signal processing chips that is designed to power next- generation cellular phones and other consumer electronics.

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