The Strategic Alliance
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These section seeks to clarify on how a strategic alliance should be undertaken in this case the answers will be based on the case study of the companies plan toys and Brio whereby plan toys wishes to form an alliance with the Brioo company in order to utilize the market demand of Brio. This will take place in the form of answerig four questions:
Basically plan toys wishes to get engaged in this alliance for one big reason of utilizing the market presence of the Brio company. It is reported that brio is a large company with links which are far and wide. The criteria therefore for forming an alliance with such a company is clearly to get assistance in market establishment. Plan toys are planning and are in actually trying to get global through the assistance of Brio company. Plan toys should therefore view the alliance as a method of giong global as such should ensure that all the benefit that accrues from a company going global.
The two companies stand a chance of gaining much experience from the alliance which will be formed. The alliance will form an organization which has a competitive advantage over the other companies which will be dealing in the same line of production. Competition among the two companies will be relatively reduced especially for the case of plan toys which is less established as it will be exposed to new markets by the established company. Other benefits which plan toys stands to gain from alliance include the economies of scale which result from economies of scale since resources will be pooled together by the two companies. Again plan toys are standing a chance of gaining more from this joint since Brio probably has more experience being a big company with a large market presence. Such an alliance will also make it possible for the plan toys company to access the complementary assets of Brio Company, knowledge and skills.
Plan toys should take precaution to ensure that some critical issues concerning the alliance are taken care of. The first important issue to be taken care of is the “No Partnership” provision. It should be understood that a strategic alliance is quite different from a partnership; this is especially in the purpose of the alliance. Plan toys should ensure that the agreement reflects this in the agreement between the two companies.
Another key issue that plan toys ought to look out for is the agreement for the two companies to ensure that all the confidential information is kept confident by the two companies and that there will not be any leaking of information to third party companies. This can be done by the two companies promising each other that there will be no leaking of confidential information to outsiders. There are other factors on which agreements have to be made, for instance, the contribution to be made by the two companies in relation to the capital, intellectual contributions, market access and generally the transfer of resources (Kuglin & Hook, 2002).
The third important key issue that should not be overlooked in the alliance should be the setting of a mechanism on how internal dispute should be solved. In most cases the mechanism of solving internal disputes involves the setting up of some dispute committee which is made up of members from the two companies: in this case it will be plan toys and Brio. Plan toys should also negotiate well for the sharing of the risks and rewards which are involved in the alliance. Though Plan toys is young as compared to Brio there should be a fair sharing of the rewards as well as the risks involved (Kuglin and Hook 2002).
A personal opinion on the issue of the above alliance will be for the plan toys to do their best to ensure that the alliance agreement does not undermine the position of Plan toys being the lesser company. This is likely to happen since Brio Company, being an established company, is more likely dominate in the negotiation of the alliance terms. It is important that before Plan toys commits to this venture, it must review its business strategy. This will help it define what to expect. It can also study what similar businesses are doing, particularly those that operate in similar markets, this can help it decide on the best approach. It should be realistic about its strengths and weaknesses-consider performing strengths, weaknesses, opportunities and threats analysis to identify whether the two businesses are compatible (Wassmer, Dussauge & Planellas 2010).
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