The concept of strategic alliances is the commitment between two or more companies to

work at obtaining common objectives. The formed alliance goal may be to product a product or
service that gives the advantage to the companies involved in the venture. This means that the
companies may be entering into new markets and by sharing the cost of the venture lower the
risk factor and increase profitability. The use of strategic alliance is increasing competitiveness,
developing new products and services, increasing exports and reducing cost.
The advantages of alliances benefits all companies involve by creating access to aspects
of an entry into the international market that may elude a single company. Companies have
access to new distribution channels due to the joint venture because of the lower costs that are
otherwise expensive for one firm to manage (Nicoleta, Liana, and Maria, 2009). The
multinational alliance allows a company access to the foreign market and a mentoring company
that understands the cultural and local competition of the market. Another advantage is access to
new or creation of new products and services.
Firms in joint ventures find new resources for funding that increase the companys
growth and allows for expansion to other markets outside of the joint venture (Nicoleta et al.,
2009). The increase in credibility strengthens a firms positioning in the global market as well as
the domestic market. The technological aspects of an alliance means is beneficial in
developing standards (Hill, 2011) that may become a benchmark standard for other companies
that provide comparative services or products.
While the advantageous mean growth, global positioning, and profits, the disadvantages
need to be contemplated of a strategic alliance. A firm having the lack of control in a partnership
means that the objective of the firms will not be reachable. The problems that arise are
miscommunication between alliance partners (Nicoleta et al., 2009). The possibility of failure

is high due to the differences of organizational culture, unrealistic expectations or irreconcilable

differences with business decisions or directional flow of the alliance. A strategic alliance may
adversely limit the flexibility of a firm to enter into other joint ventures that means a loss of
potential profits or growth (Nicoleta et al., 2009). If both partners are not equal in strength then
the weaker of the partners may become too depended on the stronger partner to carry the joint
venture to completion.
The advantages or a disadvantage of a strategic alliance is risky in that it cause
irreversible damage to the firms involved if proven to be unsuccessful. It is only beneficial if the
venture is successful on all levels and provides an increase in profits, growth and global
positioning within the international community. When a strategic alliance is agreed upon
between companies that my otherwise be competitors, the value of the alliance is reduction in
cost in developing and distributing new products or services.