| What is a strategic alliance? | An alliance is defined as:
“An organisational structure to govern an incomplete contract between separate firms an in which each firm has limited control.” |
| What are the motives for strategic alliances? | The motives for strategic alliances are the same as for mergers and cartels. Namely profit maximisation, market power and limiting risk. |
| How does an alliance differ from a cartel? | An alliance has a loose architecture. Not all operations are covered:
• In contrast to a merger where 'things' internalized here parties keep some freedom
• However, loose, flexible arrangement as an alliance bears risk of opportunistic behavior |
| What are some examples of alliances? | Examples of alliances: Star Alliance, Skyteam, One world, Maersk Shipping |
| Where does alliances fit in the "increasing integration continuum"? | As can be seen in the model, firms can cooperate on mainly 3 levels: Outsourcing Alliances M&A.
• Strategic alliances must be approved by the competition authorities
• Motive for the alliance is – as often - primarily cost savings
• Alliances can have similar effects on the market as ordinary mergers. |
| What are the 3 synergies of alliances? | LWG mentions three synergies of alliances:
1. Modular synergies derived from resources that are managed independently, but giving value when they are pooled to a solution
2. Sequential synergies, which are tasks that once completed you are forwarding to alliance partners, leading them further and create additional value.
3. Reciprocal synergies arising through continuous adjustment of resources. |
