Introduction
One of the most important trends in industrial organization of the past quarter century has been the growth of collaboration between independent companies. As large companies have pulled back their collaboration boarders through outsourcing and divestment of ‘non-core’ activities, they have increasingly cooperated with other companies in order to engage in activities and access resources outside their own boundaries. The concept of strategic alliances has become widely used in the business language to refer to the types of partnerships agreements between two or more companies that pursue a clear strategic collaboration objective, with different levels of possible integration among the members. In today’s competitive global economy strategic alliances are a crucial option for achievement of competitive advantage. By developing strategic alliances, organisations can share their excess or complementary resources and capabilities so as to strengthen their position in the market and gain competitive advantage. When such alliances are effectively and efficiently managed the partnering firms can gain immensely towards mutual profitability.
In any cooperative relationship trust is key for success. Where mutual trust and synergies exists, partnering organisations can benefit substantially from opportunities that can be exploited through maximum utilization of combined resources. On the other hand, where there is no trust, extensive monitoring systems become necessary to monitor each partners’ contribution and this results in increased cost of operations that ultimately hamper the competitiveness of the alliance.
Definition
A strategic alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent. Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. (Mowery, Oxley, Silverman, 1996). The alliance is a cooperation or collaboration which aims for a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts. The alliance often involves technology transfer (access to knowledge and expertise), economic specialization, shared expenses and shared risk. Doz and Hamel (1998) observed that strategic alliances are a logical and timely response to intense and rapid changes in economic activity, technology and globalization.

An essential feature of a strategic alliance is that it is intended to move each of the partners towards the achievement of some long term strategic goal or strategic objective. This distinguishes strategic alliances from other forms of inter-firm cooperation (Hynes & Mollenkopf, 1998). Therefore, strategic alliance is a formal and mutually agreed upon partnership that links two or more enterprises or organizations. It is a cooperative arrangement which enables partners to achieve goals together which they would otherwise not have achieved independent of each together. This is done through pooling, exchanging and integrating selected resources for mutual benefit while remaining separate entities. As such strategic alliances are generally viewed as mechanisms for producing a more powerful and effective mode for competing in a globalized market.

Strategic Alliances, Types and evolution:
In the evolution of an alliance there are usually three stages. In the first stage, the partners have an equal but different input. Operational activities, for instance research and development and manufacturing, take place on the premises of the partners. In many cases one can observe that in the course of time one partner becomes more dominant compared with the other. This is caused by a change in relative importance of each partner’s input. When this occurs the alliance has entered into stage two. In stage three, the alliance in itself has evolved into a mature organisation in its own right. 1ad hoc pool type of alliances never reach stage two in their development, since they are not intended to live long.
Dussauge and Garrette (1999) distinguish between two main alliances. The first concerns partnerships between non-competing firms, whereas the other pertains to alliances between competitors. Between non-competing firs, the alliances can have various forms. The first can be aimed at international expansion

Types of strategic alliances
Wyld (2011) cited four types of strategic alliances including: joint ventures, equity strategic alliance, non-equity strategic alliance and global strategic alliance. A joint venture is a strategic alliance in which two or more firms create an independent company to share resources and abilities to develop a competitive advantage. An Equity strategic alliance is an alliance in which two or more firms own percentages of the company they have formed together. On the other hand, a nonequity strategic alliance Finally, a global Strategic Alliances working partnerships between companies across national boundaries.

Non-Equity Strategic Alliances
Non-Equity Strategic Alliances is an alliance in which two or more firms develop a contract relationship to share some of their resources and capabilities to create a competitive advantage. They range from close working relations with suppliers, outsourcing of activities or licensing of technology and IPRs, to large research and development consortia, industry clusters and innovation networks. Informal alliances without any agreements, or based on "Gentlemen’s agreement", are common among smaller companies and within university research groups. Another form of informal non-equity alliances are geographic clusters where concentrations of interconnected players, industries, universities and government agencies co-exists, increasing local competition and productivity.

Equity Strategic Alliances
In Equity Strategic Alliances agreements are supplemented by equity investments, making the parties shareholders as well as stakeholders in each other. The investments are passive so each firm retains fully its decision power. The cross-shareholding of companies may result in a complex network where company A owns equity in company B that owns equity in C, creating direct and indirect ownership. Intuitively, when firms share profits the incentives for competing are reduced and are often done to enhance control and make takeovers more difficult.

Joint Venture Strategic Alliances
A joint venture is a business agreement in which parties agree to develop, for a finite time a new entity and new assets by contributing equity. The parties agree to share revenues, expenses and control of the created company for one specific project only or a continuing business relationship.
Joint ventures are distinguished from Equity Strategic Alliances in that the participating companies usually form a new and separate legal entity in which they contribute equity and other resources such as brands, technology or intellectual property.

Global Strategic Alliances
Global Strategic Alliances working partnerships between companies across national boundaries. This type of alliance is usually established when a company wishes to edge into a related business or new geographic market, particularly one where the government prohibits imports in order to protect domestic interests. Typically, alliances are formed between two more corporations each based in their home country for a specified period of time. Their purpose is to share in ownership of a newly formed venture and maximize competitive advantages in their combined territories. The cost of a global strategic alliance is usually shared equally among the corporations involved and is generally the least expensive way for all concerned to form a partnership. Hence this type of alliance provides a good solution to global marketers that lack required distribution to get to overseas markets. Within an equity partnership, you can hold a minority, majority or equal stake. In a non-equity partnership, the host country partner has a greater stake in the deal, and thus holds a majority

According to Johnson, Whittington and Scholes (2005), there are three types of strategic alliances. He describes a continuum where on one extreme, there are loose arrangements of cooperation and informal networking between organizations with no shareholding or ownership involved while on the other extreme there are controlling interests or full merger with retained identity of subsidiary. The continuum defines the degree of commitment and infrastructure linkage and are differentiated by the forms and intensity of relationship amongst the partners. These are ownership relationship, contractual relationship and loose forms of relationship.
2.2.1 Ownership Form of Relationship
Here there are two forms i.e. Joint ventures and consortium. Joint Ventures are relatively formalized alliances. The organizations remain independent but set up a newly created organization jointly owned by the parents. Joint ventures are a favored means of collaborative ventures in China. For example local Chinese firms provide labor and entry to markets; Western companies provide technology, management expertise and Finance, Sony- Ericsson a joint venture established in 2001, KQ – KLM joint venture formed in 1996.

Consortia may involve 2 or more organizations in a joint venture arrangement typically more focused on a particular venture or project. Examples include large civil engineering projects, major aerospace undertakings such as Airbus. In Kenya Rift Valley Railways is a consortium of initially six partners but have now come down to three partners.

2.2.2 Contractual Form of Relationship
These refers to a strategic alliance that exists usually on a contractual nature and is unlikely to involve ownership. The contractual strategic alliances here include; Licensing agreements, Franchising and subcontracting.

Licensing is common in science based industries where for example the right to manufacture a patented product is granted for a fee. Glaxo Smithkline Kenya manufactures drugs under license from the parent company. Another form of licencing is where one fim licenses another to distribute its products in a particular region. In Kenya, Hot Point Kenya has a license to be the sole distributor of LG household appliances in Kenya.

Franchising involves the Franchise holder undertaking specific activities such as manufacturing, distribution or selling while the Franchiser is responsible for the brand name, marketing, and probably training. Examples are Coca Cola bottling companies that are franchised by Coca Cola, Mc Donald’s outlets, Kentucky Fried Chicken among others. Subcontracting; With Subcontracting a company chooses to subcontract particular services or part of a process. Example Increasingly in public services responsibility for waste removal, cleaning and IT services may be subcontracted or outsourced to private companies, companies undertaking large civil engineering projects may subcontract portions of the project to other smaller firms.

2.2.3 Loose Form of Relationships
With loose forms of relationships, organizations gain mutual advantage by working in collaboration without relying on cross ownership arrangements and formal contracts. Such networked arrangements may exist between competitors in highly competitive industries where some form of sharing is none the less beneficial. Opportunistic Alliances are an example of a loose form of relationship formed purely to exploit an opportunity from the environment.

These can be formalized inter organizational relationships or loose arrangements of cooperation and informal networking between organizations with no shareholder or ownership involved.
Joint Ventures
These are the most interactive form of alliances. This agreement results into a formation of a new company in which the parties have shares.
Equity alliances
A firm owns a meaningful portion of another
Contractual alliances
Have the lowest degree of structural integration among the three alliances types. They are operated basically based on arrangements for partners firms to work together in a certain way.(Gulati 1995)

UNDERLYING PHILOSOPHIES AND RELEVANT THEORIES
According to Niki Hynes and Diane Mollenkopf (1998), two basic philosophies underlie the theories of firm behavior: companies either adapt to their environment or they attempt to influence their environment. While in practice firms develop and implement strategies without necessarily following these philosophies, the philosophies are however used for explanatory purposes whereby they are viewed as the point of departure for examining various theories of firm. Several theories of firm behavior can be used as a basis for explaining strategic alliance formation: transaction cost theory, resource dependency theory, organizational theory, relationship marketing, and strategic behavior theory. The theories can be related to the underlying philosophies.
2.1. Theoretical Perspectives
2.1.1 Transaction Cost Theory
Transaction cost theory suggests that companies form alliances in order to minimize their costs and/or risks. Being in a strategic alliance a firm avoids market price vagrancies and risks In the original transaction cost theory (TCT), Coase (1937) classified transactions according to whether they happened within a firm or in an open market. Williamson (1975) subsequently examined the transaction cost advantages of internally-organized and market transactions. He argued that, if markets were efficient, then firms would not exist, since there would be no reason to internalize the function of the market and there would be no reason for a firm to produce anything. Williamson (1985) went on to argue that the transaction cost consists of small numbers bidding and of idiosyncratic transactions that involve asset specificity. He defined asset specificity as durable investments that are undertaken in support of particular transactions, the opportunity cost of which is lower in best alternative uses or by alternative users should the original transaction be prematurely terminated.

TCT has been criticized, however, for its inability to explain buyer-supplier relationships that have evolved from transaction processes, based on arms-length agreements, to collaborative processes that are based on trust (Hoyt and Huq, 2000). Nooteboom (2000) has gone further in stating that one of the two major criticisms of TCT is the lack of a role for trust. Gulati (1995) commented that the TCT has erroneously treated each transaction as independent in inter-firm alliances and has ignored the role of inter-firm trust that emerges from repeated alliances between the same partners.
2.1.2 Resource-Based Theory and Knowledge-Based View
Resource dependency theory asserts that firms are not self sufficient in terms of resources, thus they depend others for some important resources. The deficiency forces firm to collaborate as way to reducing uncertainty and managing this dependency (Hynes & Mollenkopf, 1998). Resource-based theory (RBT) focuses on the analysis of various resources that are owned by the firm (Das and Teng, 2000). The theory attempts to describe, explain and predict how firms can achieve a sustainable competitive advantage through the acquisition of, and control over, resources. Tsang (1998) stated that a firm’s resources consist of all its assets, knowledge, organizational structure, procedures and other items that are controlled by the firm. Barney (1991) grouped resources into three different categories: physical capital resources, human capital resources and organizational resources. Barney added that the firm’s resources are usually valuable, rare, imperfectly imitable and not readily substitutable.

According to the RBT, the rationale for alliance formation lays in the creation of value that result from pooling and jointly utilizing the firm’s resources (Das and Teng, 2000). Firms are viewed as attempting to find the optimal resource boundary through which the value of their resources is better realized than through other resource combinations. Lavie (2006), however, has pointed out that the proprietary assumption underlying most conventional RBT studies presumes that value-creating resources are owned and controlled by the focal firm and makes little or no room for the notion of a “cooperative type of interaction, in which the superior resources of counterpart firms can actually contribute to the focal firm’s performance. He has also argued that the mechanisms of value creation should be regarded as different for shared and non-shared resources and that the value of internal resources can be affected by complementarities in the resources of partnering firms.
2.1.3. Contingency Theory
Ranganathan and Lertpittayapoom (2002) stated that the contingency theory (CT) deals with the role of external environments in determining the content, as well as the process, of various strategic actions within a firm. Since environmental uncertainty is a primary construct that influences the interactions among businesses, and those between firms and their environments, it is believed that alliance formation represents one way that a firm can adapt to an uncertain world.
The application of CT to the study of strategic alliances seems to draw strength from the point that firms seek collaboration and alliances as a means to reduce environmental uncertainties. However, this theory has been weak in explaining the form, structure and developmental process of the collaborative relationship. More importantly, the CT has failed to address some fundamental firm behavior issues such as trust and commitment, even though these elements have been identified in prior studies (Kwon and Suh, 2005; Perry, Sengupta and Krapfel, 2004; Spekman et al., 1998; Spekman et al., 1996;) to be the main building blocks of effective alliances.
2.1.4. Social Exchange Theory
Derived from the norm of reciprocity (Gouldner, 1960), which states that people ought to return the benefits given to them in a relationship, social exchange theory (SET) has been accepted as a component of business marketing strategy and organizational behavior since the 1990s and has more recently been applied to the study of inter-firm networks (Holmlund and Törnroos, 1997). Social exchange has been defined as “voluntary actions of individuals that are motivated by the returns they are expected to bring and typically do in fact bring from others” (Moore and Cunningham, 1999; p. 106). Young-Ybarra and Wiersema (1999) suggested that two specific aspects of organizational context – (1) trust between the partner firms and (2) dependence of the partner firms on the alliance may affect the way firms conceptualize the strategic flexibility of their interrelationships.
2.1.5 Organizational learning theory
Organizational learning theory explains how firms learn alongside each other. The knowledge gained could be seen as a way of retaining or acquiring competences hence facilitating adaptation to the changing environment. It could also be seen as a way of companies arming themselves to compete, hence changing the structure of the industry in which they operate (Hynes & Mollenkopf, 1998).
2.1.6 Relationship Marketing
Relationship marketing is about the tendency of firms in industrial markets to form strong relationships with their customers and suppliers. The focus of relationship marketing is that firms act in order to provide superior customer value. Marketing alliances, therefore, can least risky and most effective means of providing goods and services that enhance the relationship with the customers. Strategic behavior theory explains the behavior of a firm from a managerial perspective, rather than a marketing one. As such, companies form cooperative arrangements to enable them meet their strategic objectives and more so to maximize on their profits (Hynes & Mollenkopf, 1998).

2.2 Types of Strategic Alliances
According to Johnson, Whittington and Scholes (2005), there are three types of strategic alliances. Some may be formalized inter-organizational relationships. At the other extreme, there are loose arrangements of cooperation and informal networking between organizations with no shareholding or ownership involved. These are differentiated by the forms of relationship amongst the partners. These are ownership relationship, contractual relationship and loose forms of relationship.
2.2.1 Ownership Form of Relationship
Under this type we have two forms i.e. Joint ventures and consortium. Joint Ventures are relatively formalized alliances. The organizations remain independent but set up a newly created organization jointly owned by the parents. Joint ventures are a favored means of collaborative ventures in China. For example local Chinese firms provide labor and entry to markets; Western companies provide technology, management expertise and Finance, Sony- Ericsson a joint venture established in 2001, KQ – KLM joint venture formed in 1996.

Consortia may involve 2 or more organizations in a joint venture arrangement typically more focused on a particular venture or project. Examples include large civil engineering projects, major aerospace undertakings such as Airbus. In Kenya Rift Valley Railways is a consortium of initially six partners but have now come down to three partners.

2.2.2 Contractual Form of Relationship
These refers to a strategic alliance that exists usually on a contractual nature and is unlikely to involve ownership. The contractual strategic alliances here include; Licensing agreements, Franchising and subcontracting.

Licensing is common in science based industries where for example the right to manufacture a patented product is granted for a fee. Glaxo Smithkline Kenya manufactures drugs under license from the parent company. Another form of licencing is where one fim licenses another to distribute its products in a particular region. In Kenya, Hot Point Kenya has a license to be the sole distributor of LG household appliances in Kenya.

Franchising involves the Franchise holder undertaking specific activities such as manufacturing, distribution or selling while the Franchiser is responsible for the brand name, marketing, and probably training. Examples are Coca Cola bottling companies that are franchised by Coca Cola, Mc Donald’s outlets, Kentucky Fried Chicken among others. Subcontracting; With Subcontracting a company chooses to subcontract particular services or part of a process. Example Increasingly in public services responsibility for waste removal, cleaning and IT services may be subcontracted or outsourced to private companies, companies undertaking large civil engineering projects may subcontract portions of the project to other smaller firms.

2.2.3 Loose Form of Relationships
With loose forms of relationships, organizations gain mutual advantage by working in collaboration without relying on cross ownership arrangements and formal contracts. Such networked arrangements may exist between competitors in highly competitive industries where some form of sharing is none the less beneficial. Opportunistic Alliances are an example of a loose form of relationship formed purely to exploit an opportunity from the environment.
Formation of strategic alliances
Reasons for the formation of strategic alliances
For organizations to be successful in future they must achieve and maintain a competitive advantage. This can greatly be achieved by forming partnerships with competitive complementary products in the market. This has led to cost reduction, improved customer offering and allowing each partner to concentrate on activities that best match their capabilities. Strategic alliances are formed for a variety of reasons which include entering new markets, reducing manufacturing costs, and developing and diffusing new technologies rapidly. Alliances can also be used to accelerate product introduction and overcome legal trade barriers, making alliances a fast and effective method to achieve objectives especially when entering to global markets.
Strategic alliances have at least three distinct purposes according to Doz & Hamel (1998).One is Co –option ,potential competitors turn to alliances and providers of complementary goods and services, therefore creating new demand and market. This neutralizes potential rivalry and threat.Co-specialisation is the second option that results from value creation from former separated resources to successful alliances. Thirdly alliances are avenues to learn and internalize new skills and exploited to become all the more valuable.
There is economic value in strategic alliances(Barney, 2007).
1. Low cost entry new markets, New industry, new industry segments
Alliances are used to enter new geographical markets where an organization needs local knowledge and expertise in distribution, marketing and customer support.Similary alliances with organizations in other parts of the value chain as suppliers and distributors are common .Learning from partners and developing competencies is key in strategic alliances.
2. Exploiting Economies of scale
Organizations get into alliances so as to take advantage of economies of scale which they would otherwise not have if they acted independently (Barney, 2007).This enables organizations to be cost effective and gained cost advantages which results to competitive advantage having an edge to their competitors.
3. Learning from competitors
Organizations learn important skills and capabilities through strategic alliances with their competitors. Although this can be a source of success for an organization it also has its risks; the instructor firm could be disadvantaged if the learner uses the skills to compete with them, violation of antitrust laws, can develop a learning race(Barney, 2007).
4. Managing risks and sharing costs
Strategic alliances help firms to manage risk and share costs associated with new business investments.Sometimes the investment required to exploit an opportunity could be too large and acting alone, a firm may not be able to exploit it,
5. Facilitating tacit collusion
By joining in strategic alliances organizations are able to collude without having legal restrictions and this can be a source of competitive advantage by keeping away new entrants to the market.

2.3 Factors that can influence Types of Alliance
According to Johnson et al, there are three factors that can influence the type of an alliance. These three factors hinge on Market factors, Resource factors and Expectations as explained below.
Speed of Market Change will require strategic moves to be made quickly. So less formal arrangements may be more appropriate than a joint venture which could take long to establish.

The Management of Resources and capabilities; If a strategy requires separate dedicated resources then a joint venture will be appropriate. If however the strategic purpose and operations of the alliance can be supported by the current resources of the partners, this favors a looser contractual relationship or networks.

The expectations and motives of Alliance Partners will play part. If the alliance partners see the alliance as a means of spreading their financial risk, this will favour a more formal arrangement such as joint venture.
Benefits of Strategic alliances
Limitations/challenges of strategic alliances

1. Clash of cultures
These cultural problems consist of language, egos, and different attitudes to business can make the going rough.(Kilburn, 1999)
2. Lack of trust
3. Lack of clear goals and objectives
4. Lack of coordination between management teams
2.4 Advantages of Strategic Alliances
Strategic Alliances have various benefits for the partner companies, which relate to market penetration, economies of scale, technology, competition and cost benefits. From the discussion above it is possible to identify some benefits from strategic alliances such as ease of market entry, shared risk, shared knowledge and expertise, synergy and competitive advantage.

2.4.1 Ease of Market Entry
Strategic alliances enable partner firms to easily access a new market. When a company builds strategic business alliance with for foreign partners, they gain better access to the market of their partner’s country hence can import and market products locally. This implies reduction of costs and more efficiency to penetrate the market through joint research efforts, technology-sharing, joint use of production and distribution facilities and marketing or promoting one another’s products. In some cases economies of scale and scope in marketing and distribution confer benefits on firms that aggressively and quickly enter different markets. Yet the costs of speed and boldness are often high and beyond the capabilities of a single firm. A strategic alliance allows firms to achieve the benefits of rapid entry while keeping costs down.

2.4.2 Shared Resources
As partners in a strategic alliance, firms share both technical and financial resources to enhance their economies of scale in production and marketing. For instance, when firms operate together they may use same machines and equipment to produce and market their products. They also share technical expertise or knowledge of the market as well as learning technical knowledge from one another. They also share distribution facilities and dealer networks, whereby they use the same agent or retailers to reduce logistic costs and penetrate the market more easily. Having combined their resources strategic, alliances have stronger competitive energies to attack and defeat rivals. They also join efforts to set up standards for their products with ease.

2.4.3 Shared Knowledge and Expertise
Through strategic alliances a firm may acquire certain knowledge and expertise that it lacks. The firm may want to learn more about how to produce something, how to acquire resources, how to deal with local government’s regulations, or how to manage in different environment information that a partner often can offer. The knowledge gathered could be useful elsewhere. Another advantage of strategic alliances is that by partnering with a foreign firm, the alliance is able to take advantages of the partner’s local market knowledge and working relationships with key government officials in host country, or rather social capital.

2.4.4 Shared Risk
Today’s major industries are so competitive that no firm has a guarantee of success when it enters a new market or develops a new product. Strategic alliances can be used to either reduce or control an individual firm’s risk. That way they share the risk. Shared risk is an especially important consideration when a firm is entering a market that has just opened up or that is characterized by much uncertainty and instability.
2.4.5 Synergy and Competitive Advantage
Firms may enter into strategic alliances to attain synergy and competitive advantage. Through -some combination of market entry, risk sharing, and learning potential, each collaborating firm will be able to achieve more and to compete more effectively than if it had attempted to enter a new market or industry on its own.
Effective technology
2.5 Disadvantages of Strategic Alliances
Strategic alliances on the other hand have some drawbacks and encounter certain challenges. Such drawbacks render the alliances difficult to operate and reduce their chances of reaching their goal or achieving their objectives. Among them include the possibility of being stuck with the wrong partner, partner opportunism and distrust, rivalry between partners, cultural differences and cost of coordination. We shall now address each of these disadvantages.

2.5.1 Being Stuck with the Wrong Partner
When forming a strategic alliance there is a possibility of being stuck with the wrong partner. It is important for a prospective alliance partner to choose a partner with caution. Yet, the partner should also be sufficiently differentiated to provide some complementary (non-overlapping) capabilities. Failure to address these issues, results to the detriment of the individual firms.

2.5.2 Partner opportunism and Distrust
While opportunism is likely in any kind of economic relationship, the strategic alliance may provide strong incentives for some (but not all) partners to be opportunistic.(Peng 2001,p.225) There are also situations whereby some firms depend too much on other firms’ essential expertise over the long term, hence straining their relationship as an alliance. Since alliances always entail trust among members involved, such trust may be easily abused and therefore distrust sets in. Building trust among the partners is often an issue of concern. There are cases of mistrust when collaborating in competitively sensitive areas.

2.5.3 Rivalry between Partners helps Competitors
Traditionally, the sources of firm-specific competitive advantage, by definition, lie within firm boundaries and firms are advised to make their capabilities hard to imitate. By opening their doors to outsiders, alliances and networks make it easier to observe and imitate firm-specific resources and capabilities. In horizontal alliances between competitors, there is a potential learning race in which partners aim to outrun each other by learning the tricks from the other side as fast as possible. Probably the most challenging alliances to manage are those with competitors also known as dancing with the wolf.

2.5.4 Cultural Differences and High Coordination Costs
A clash of egos and company cultures can be a huge drawback to the success of strategic alliances. At times, managers differ due to their diversity of interests and cultural backgrounds. Thus, dealing with conflicting objectives, strategies, corporate values, and ethical standards can hinder the success of strategic alliances. At times alliances encounter language and cultural barriers whenever entering into a new territory. The culture difference also points to diverse and conflicting operating practices. As a result, the managers of strategic alliances consume too much time in term of communication, trust-building, and coordination costs.
2. The advantages of strategic alliances are:
*The capability to allow each partner to concentrate on activities that best match their abilities.
*Learning from partners & developing abilities that may be used in other countries.
3. The disadvantages of strategic alliances are:
*Cultural/Language barriers when conducting business in foreign countries
*Can be time consuming and costly to try to learn culture, language etc. for optimal performance
4. Businesses use strategic alliances to:
*reach advantages of scale
*increase market access
*enhance competitiveness
*enhance product development
*develop new business opportunities through new products and services
*expand market growth
*increase exports
*diversify
*create new businesses
*reduce costs

CHAPTER FOUR: CONCLUSION
4.0 Conclusion
Conclusion
Evidence suggest that an effectively and structured alliance can create value for the firm. However not all alliance achieve their potential to create value for the partners with alliance failure rate remaining high.
Strategic alliances have been widely viewed as an effective and efficient alternative to acquisitions and internal development in dynamic markets. They provide immediate and temporary access to the complimentary resources needed to compete in markets demanding innovation.
In the competitive global economy strategic alliances are a crucial option for achievement of competitive advantages. Cooperative strategy with partnering firms like customers, suppliers, creditors, service agencies etc. is important to develop alliances. By developing strategic alliances firms shares their excess and/or complementary capabilities and resources with others and create a new entity to get competitive advantages. When alliances are effectively managed, the participating firms can gain several benefits that ultimately bring profitability. Mutual trust and interdependency are increasingly becoming important for cooperation. Firms recognize the value of partnering with companies known for their trustworthiness. In a cooperative relationship, when mutual trust exist firms can use the opportunities of maximum utilization of resources. On the other hand, in a formal contractual relationship if there is no trust, extensive monitoring systems are used to controlling purposes. It increases the cost of operations that ultimately hamper the competitiveness of the alliances.

Strategic alliances can be effective ways to diffuse new technologies rapidly, to enter a new market, to bypass governmental restrictions expeditiously, and to learn quickly form the leading firms in a given field. However, strategic alliances are not simple or easy to create, develop, and support. Strategic alliances often fail because of tactical errors made by management. By using well labeled managed strategic alliances agreements, companies can gain in markets that would otherwise be uneconomical. Considerable time and energy must be put forth by all involved in order to create a successful alliance. It is essential that organizations enter into alliances with a comprehensive plan outlining detailed expectations requirements, and expected benefits.
5. For small businesses, strategic alliances are a way to work with other businesses toward a common goal. These alliances are a way of reaping the benefits of a team effort. Companies participating in alliances report that at much as 18 percent of their revenues come from their alliances.
6. Alliances can be as formal or informal as the business owner would want. Some have written contracts, others are just understood, expected contracts.
7. Strategic alliances are becoming more prevalent in today’s business world because of the expanding global market. Many companies are growing rapidly and expanding overseas. Therefore, it is vital to the company that they are able rely on the partnerships and alliances they have formed.
9. Alliances are becoming increasingly appealing to smaller businesses. The partnerships that are formed can provide the small business with the resources and information they need to be successful and competitive in the industry.
10. Strategic alliances offer customers a wide range of services, therefore customers are satisfied. It has been found that the more services that are provided, the higher the clientele.

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