Strategic alliances for innovation

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Strategic alliances for innovation

Introduction

The increasing need for innovation is causing business people venture into partnerships where they combine their resources with other businesses to create synergies in the production of specific products As the global markets become increasingly competitive the need for innovative products is increasing to create products which are competitive . The creation of a strategic alliance requires several businesses to come up with joint ventures where the parties retain their original status (Lewis , 2000 . The parties forming

the business relationship do not dissolve but retain their original mandate . The parties provide resources towards the joint business venture and the gains are divided according to the agreed criteria (Rangan , Michael Srinivasa 1995 . Companies have different reasons for creating strategic alliances . There are benefits and disadvantages of operating strategic alliances . The focuses on the reasons for creating strategic alliances , their advantages and disadvantages as well as focusing on a few types of strategic alliances established by businesses in the global markets

Reasons for strategic alliance

Businesses combine their resources together to acquire synergies from each party . Specialization in the business world has encouraged businesses people provide specific products in the market . The production of certain products may require special skills from different companies . The strategic alliances allow the parties share the risks involved in a certain venture . Doing risky business alone may become risky but when different organizations are involved in the business they can share the losses which may be incurred...