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This paper will examine the literature on strategic alliances and propose an integrated framework of strategic alliances based on the reviewed material. The paper will examine two theoretical models of strategic alliances, suggested by Vyas et al. (1995) and Osland and Yaprak (1993), respectively. This paper will also investigate literature concerning advantages and disadvantages of entering into a strategic alliance. Finally, the author will suggest an integrated framework of strategic alliances, which includes the motives for forming, the process of forming, and the result of forming a strategic alliance.
INTRODUCTION
Due to increased globalization of businesses strategic alliances are gaining importance worldwide for various reasons which range from market access to reduction of risk. Strategic alliances can be placed on a continuum where contractual agreements lie on one end of the continuum, representing low control and low resource commitment, whereas joint ventures lie on the other end of the continuum, representing high control and high resource commitment (Hill et al. 1990). The decision to enter a strategic alliance should be taken seriously by management because history has shown that alliances tend to be unstable and prone to failure (Berquist et al. 1995). Firms that enter into strategic alliances often focus on the benefits that the alliances will provide without considering costs involved in the formation and maintenance of the alliance. Despite the clear identification of the potential benefits, the costs incurred are often both substantial and often difficult to predict (Das and Rahman, 2010; Morris and Hergert 1987).
Strategic alliances can cause major problems if not handled properly, for example, the failure of the merger between the French firm Carnaud and British Metalbox Packaging. This merger failed primarily due to different decision making styles and competing subsidiaries (Lorange and Roos 1993). The airline mergers between Air France-KLM and Lufthansa-Swiss Air also offered examples of problems mergers and alliances face (Iatrou and Mason, 2009). Failures in strategic alliances, in addition to the increase in the number of alliances in the 80s and 90s, have necessitated research in this area. Researchers as well as practitioners have conducted research in hopes of discerning relationships and linkages, which will facilitate successful interfirm and international strategic alliances.
The purpose of this paper is to examine the literature in strategic...