Business Strategy Essay Example | Topics and Well Written Essays - 1500 words - 3

Business Strategy - Essay Example Jayesh (2012) further added that strategic alliances differ from mergers and acquisitions on the aspect that under strategic alliances, the partner companies maintain their autonomy or independence, which is not usually the case under mergers and acquisitions. Secondly, companies that form strategic alliances are not usually involved in direct competition but rather they offer related products and/ or services that are directed towards similar target consumers. According to Dorata (2012), there are various forms of strategic alliances and they include direct cooperation, which is the most common. The second form of strategic alliance is joint ventures whereby different companies come together and form a separate entity that they jointly own and manage together. The other form of strategic alliance is minority investments mostly in new and fast growing business organisations. Advantages Dorata (2012) in his writings listed the most common advantages of strategic alliances of which one of them is the fact that it enables companies to offer a wide variety of goods and/ or services to their consumers without incurring huge cost or spending lengthy durations in developing new products. Secondly, Dorata (2012) noted that businesses usually enter into strategic alliances to obtain competitive advantages that they would not have otherwise obtained if they operated on a solo basis. Therefore, strategic alliances enable businesses to expand more rapidly while still maintaining their autonomy unlike mergers and acquisitions strategy. Consequently, it is correct to assert that strategic alliances enable businesses to expand its customer base since it is able to reach a wide target market. Specifically to the car industry, Jayesh (2012) stated that among the companies that have recorded competitive advantages because of strategic alliances include Fuji and Toyota, which have jointly cooperated in various projects. Fuji gained an advantage from its strategic alliance with To yota based on the research and development that was conducted by Toyota that lead to the development of the Toyota’s gas-electric Prius hybrid model. Because of their strategic alliance, Fuji was also able to develop their first Subaru hybrid mainly based on the Toyota technology that was used in the manufacture of first gas-electric car (Hill, 2010). Another strategic alliance in the car industry is the one between Fiat and Chrysler that enabled the two companies to share their technology, distribution channels, and vehicle platforms. This strategic alliance was viewed to be of much benefit to Chrysler, which was struggling financially at the time when both companies where entering a strategic alliance and therefore, it was able to gain added advantages without losing its independence despite its financial position at that time (Hill, 2010). Another example of strategic alliance that demonstrated the advantages of strategic alliance over mergers and acquisition is the one be tween General Motors and Fiat that enabled both companies to benefit from reduced cost of operating, common architecture and platforms, increased efficiency in financial service operations, and cross-sharing of automotive technologies (Hill, 2010). Disadvantages According to the writings by Dorata (2012), the key disadvantage of strategic alliance is because of the fact that neither of the companies gains