Determination of Factors Contributing to Success in Strategic Alliances

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DETERMINATION OF FACTORS CONTRIBUTING TO SUCCESS IN STRATEGIC ALLIANCES By CLAIRE REVELL University of Groningen Faculty of Economics and Business Bsc International Business and Management June 2010 Version 3 Bachelor Thesis Supervisor: C. Quispel Group:3 Sint Lucasstraat 8 9718 LR Groningen (06) 47820628 c. a. [email protected] rug. nl student number: 1538276 DETERMINATION OF FACTORS CONTRIBUTING TO SUCCESS IN STRATEGIC ALLIANCES Author: Claire Revell (Rijksuniversity Groningen 2005 student) Abstract In this research study the emphasis is drawn toward determining the factors contributing to success of strategic alliances. These factors will be uncovered by analyzing the internal and external factors influencing strategic alliances and the phases through which these alliances evolve. In order to provide this research study with a practical element two case studies within the airline industry have been incorporated, namely the Swissair Qualiflyer Alliance and Star Alliance. These case studies represent a successful and an unsuccessful alliance, which are analyzed on a basis of the provided literature study, in this case the phases through which these alliances evolved and the internal and external factors affecting the alliances. After evaluation of the case studies numerous supportive results were identified, contributing toward establishing determinant factors, which emphasize the importance of a successful implementation of the different phases, however limitations affect the reliability of this study, due to the lack of evidence found in various different phases. Keywords: strategic alliances, internal and external factors, strategic alliance phases Introduction In past years a visible increase in the amount of strategic alliances, concerning firms with varying economic objectives, was observed (Das, Teng 2000). Strategic alliances are the “relatively enduring inter-firm cooperative arrangements, involving flows and linkages that utilize resources and/or governance structures from autonomous organizations, for the joint accomplishment of individual goals linked to the corporate mission of each sponsoring firm” (Parkhe 1991, p. 2). The amount of strategic alliances has recently doubled, predicting additional raise in the future (Booz, Allen, Hamilton 1997). Especially alliances in the form of non-equity based, which are defined as two or more firms developing a contractual-relationship in order to establish competitive advantage by combining resources and capabilities (Globerman 2007), have increased in importance which is visible in non equity alliances accounting for 80 per cent (Hagedoorn 1996). Strategic alliances provide firms with the opportunity to recognize synergies through combining operations, such as in research and development, manufacturing etc (Aaker 1995; Addler 1966). The growth of strategic alliances is related to growing competition and globalization (Das, Teng 2000). This is in alignment with Doz and Hamels (1998) view which states that globalization as well as changes in economic activities is a consequence for the growth in strategic alliances, which is visible in various different industries (Hagedoorn 1993). The primary reasons for the growth of the number of alliances is 1) the ability of cost savings in executing operations 2) the ability to access particular markets 3) the reducing of financial and political risk in addition to cheapest labor and production costs (Wheelen, Hungar 2000). A strategic alliance by definition is a hybrid organizational form which Jensen and Meckling (1991) refer to as a network organization.

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