Explain what is Strategic Alliance and the major reasons for seeking such alliances.

Strategic Alliance:

• A long term agreement between two or more firms for a certain period of time to achieve mutual benefits

• Partners agree to cooperate in carrying out business activities to create new strength and capabilities

Some of the major  reasons for seeking strategic alliances:

1.            Improve production efficiency

2.            Gain access to new technology

3.            Gain access to new market segments

4.            Build credibility and brand awareness in the industry

5.            Improve their competitive position in the industry

6.            Increase their capital for new product development

7.            Lower risks for Research and Development

8.            Exploit partner’s skills and assets

9.            Overcome protection barriers

10.          Achieve economies of scales