It is no longer an era in which a single company can dominate any technology or business by itself. The technology has become so advanced, and the markets so complex, that you simply can't expect to be the best at the whole process any longer.
Strategic alliances are partnerships between two or more firms which decide they can better pursue their mutual goals by combining their resources - financial, managerial, technological - as well as their existing distinctive competitive advantages. Alliances, often called cooperative strategies, are transition mechanisms that propel the partners' strategy forward in a turbulent environment faster than would be possible for each company alone.2 Affiances typically fall under one of three categories:3
Joint ventures - when two or more companies create an independent company; an example is the Nuumi corporation, created as a joint venture between Toyota and General Motors, which gave GM access to Toyota's manufacturing expertise and provided Toyota with a manufacturing base in the United States.
Equity strategic alliances - in which two or more partners have different relative ownership shares (equity percentages) in the new venture. As with most global manufacturers, Toyota has equity alliances with suppliers, sub- assemblers, and distributors; most of these are part of their network of internal family and financial links.
Nonequity strategic alliances - when agreements are carried out through contract rather than ownership sharing. Such contracts are often with a firm's suppliers, distributors, or manufacturers, or they may be for purposes of marketing and information sharing, such as with many airline partnerships.
Global strategic alliances are working partnerships between companies (often more than two) across national boundaries and increasingly across industries. A glance at the global airline industry, for example, tells us that global alliances have become a mainstay of competitive strategy:
Not one airline is competing alone; each.major U.S. carrier has established strategic links with non-U.S. companies. Delta is linked with
Swissair, Sabena, and Austrian; American with British Airways, U.S.
Airways, JAL, and Qantas; Northwest with Continental, KLM, and
Alitalia; and United with SAS, Lufthansa, Air Canada, Thai, South
African Airways, yang, Singapore, Air New Zealand, and Ansett
Australia.4
Alliances are also sometimes formed between a company and a foreign government, or among companies and governments. The European Airbus Industrie consortium comprises France's Aerospatiale and Germany's Daimler-Benz Aerospace, each with 37.9 percent of the business; British Aerospace has 20 percent, and Spain's Construcciones Aeronauticas has 4.2 percent.
Alliances may comprise full global partnerships, often joint ventures, in which two or more companies, while retaining their national identity, develop a common, long-term strategy aimed at world leadership. The intent of the DaimlerChrysler global partnership was to achieve these kinds of objectives, though by 2001 it had run into problems (see the opening profile). Whereas such alliances have a broad agenda, others are formed for a narrow and specific function including production, marketing, research and development, and financing. More recently, these include electronic alliances, such as Covisint, which is redefining the entire system of car production and distribution through a common electronic marketplace (featured in the accompanying E-Biz Box).
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