Alliance Agreement Meaning

Alliances and partnerships are an essential staple food for business strategies for large and small organizations. But while many partnerships begin with broad visions and aspirations, not all alliances are strategic. To understand the reasons for strategic alliances, we examine three product life cycles: slow cycle, standard cycle and fast cycle. The product lifecycle is determined by the need to develop innovations and continuously develop new products in a sector. For example, the pharmaceutical industry works with a slow product lifecycle, while the software industry works on a fast life cycle. For companies whose product falls under a different life cycle, the reasons for strategic alliances are different: a strategic alliance (see also the strategic partnership) is an agreement between two or more parties to pursue a set of agreed objectives that are necessary, while remaining independent organizations. Partners can provide strategic alliance with resources such as products, distribution channels, manufacturing capabilities, project financing, capitalization, knowledge, expertise or intellectual property. The relationship may be short-term or long-term and the agreement may be formal or informal. Michael Porter and Mark Fuller, founding members of Monitor Group (now Monitor Deloitte), distinguish between strategic alliances according to their objectives: strategic alliances have evolved from one option to necessity in many markets and sectors.

Different markets and requirements are leading to a growing relied on strategic alliances. Integrating strategic alliance management into the company`s overall strategy is essential to promote products and services, open new markets and use technology and research and development. Today, global companies have many alliances in domestic markets, as well as global partnerships, sometimes even with competitors, which creates challenges such as safeguarding competition or protecting their own interests while leading the alliance. Thus, the management of an alliance today focuses on using differences to create added value for the customer, to face internal challenges, to manage the day-to-day competition of the alliance with its competitors and to manage risk management, which has become a company-wide company. The share of revenues for the 1000 largest U.S. state-owned enterprises generated by strategic alliances increased from 3 to 6% in the 1990s to 40% in 2010, demonstrating the need for rapid focus on partnerships.