STRATEGIC Joint ventures This occurs when the mother company




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A strategic partnership/alliance is when two or more entities
come together to fulfil a particular objective while at the same time remaining
independent. Organization get into strategic partnerships for many reasons with
the common one being seeking to improve on performance and efficiency. In a
typical setup both companies should benefit from the arrangement. This study
seeks to analyze such partnerships, how they do it and how it affects organization
performance. It furthers looks into how the differences of these companies
affects the alliances and in turn their performance.

There are a number of reasons that drive companies to form
partnerships, some of these reasons include:

market entrants


overcome local or international competitors

form economies of scale

Strategic partnerships usually take three dimensions mainly:

1.      Joint ventures

This occurs when the mother company forms a new company. For
example, company X joins company Y in creating company Z. In addition to this
if both companies have 50-50 stake then it’s called an equal joint venture
(50-50). However, if one company owns more shares than the other then it is
classified as a majority owned joint venture.

2.      Equity alliance

In this case one company acquires a certain percentage of
another company’s equity. For example, if company X buys 30% of company Y then
a strategic partnership will have been formed.

3.      Non-equity alliance

This type of alliance is when two or more organizations sign
a contractual agreement to pull their resources together to attain a certain

Objectives of the study.

The study was mainly done to provide a comprehensive review
of how companies form alliances and how it affects their performance. It also
seeks to further explore how efficiently these companies work as partners and focus
on areas of good practice that can be emulated by other companies.

This study also has some sub-objectives as follows:

measure the success of strategic alliances in relation to performance.

evaluate the survival and duration of the alliances.

strategic alliances have been used as tools to gain competitive advantage.

evaluate the challenges faced by strategic alliances.


Conceptual Framework

This study seeks to investigate how crucial Strategic
alliances are in increasing the performance of Organizations. It was based on the
assumption of Weiners attribution theory that linked internal and external
factors to organization performance.

For example, Organization can help improve their performance
by forming strategic alliances (External). On the other hand, strategic
alliances can only succeed when proper measures are put in place; such measures
include resource allocation, decision making, staffing, motivating and proper
planning (Internal).