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Monday, October 25, 2010

You have to write the assignment for “What are the four main areas of Strategic Alliances among two or more Companies? Explaining the purpose/s of each, briefly” question. It is the solved assignment for Strategic Management and Business Policy of MB0036 Sikkim Manipal University. I have already written an assignment of MBA MB0036 - Business Plan and its Purpose.

Strategic alliances constitute another viable alternative. Companies can develop alliances with the members of the strategic group and perform more effectively. These alliances may take in 4 main areas with their purposes:

a) Product and/or service alliance: Two or more companies may get together to synergies their operations, seeking alliance for their products and/or services. The product or service alliance may take any of the following forms:

A manufacturing company may grant license to another company to produce its products. The necessary market and product support, including technical know-how, is provided as part of the alliance. Coca-cola initially provided such support to Thums Up.

Two companies may jointly market their products which are complementary in nature. Chocolate companies more often tie up with toy companies. TV channels tie-up with Cricket boards to telecast entire series of cricket matches live.

Two companies, who come together in such an alliance, may produce a new product altogether. Sony Music created a retail corner for itself in the ice-cream parlours of Baskin-Robbins.

b) Promotional alliance: Two or more companies may come together to promote their products and services. A company may agree to carry out a promotion campaign during a given period for the products and/or services of another company. The Cricket Board may permit Coke’s products to be displayed during the cricket matches for a period of one year.

c) Logistic alliance: Here the focus is on developing or extending logistics support. One company extends logistics support for another company’s products and services. For example, the outlets of Pizza Hut, Kolkata entered into a logistic alliance with TDK Logistics Ltd., Hyderabad, to outsource the requirements of these outlets from more than 30 vendors all over India – for instance, meet and eggs from Hyderabad etc.

d) Pricing collaborations: Companies may join together for special pricing collaborations. It is customary to find that hardware and software companies in information technology sector offer each other price discounts. Companies should be very careful in selecting strategic partners. The strategy should be to select such a partner who has complementary strengths and who can offset the present weaknesses. The acid test of an alliance is greater sales at lesser cost. It is a common practice to develop organizational structures or modify them, if necessary, to support the alliance and make them successful.

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