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32 cons of strategic alliances trust and honesty are

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3.2 Cons of Strategic Alliances Trust and honesty are vital factors in determining the success of a strategic alliance. Therefore, it is important for partners of the alliance to communicate their goals and 3
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expectations clearly (O'Dwyer, Gilmore & Carson, 2011). One of the major challenges faced by an alliance is cultural clash or cultural differences (Russo & Cesarani, 2017) as it often leads to more problem in forming these alliances. These cultural clashes oftenly occur between Asian and Western companies as they have vastly different organizational structures and management practices. Furthermore, Alliances can create unnecessary expenses by obstructing the chance of participating with adversary organizations, in this manner potentially notwithstanding denying the organization diverse financing choices (Strategic Alliances, 2018). Alliances organization are burdened by postponements in arrangements due to issues of coordination and an alert opponent may exploit this shortcoming in-worked in any collusion further bolstering its incredible good fortune (Strategic Alliances, 2018). 4. Formation of Strategic Alliances Problems concerning strategic alliances can be avoided by planning the alliance from the beginning and build the alliance step by step(Lorange & Roos, 1991). There are many ways of explaining the formation and managing process of an alliance. One model of explaining the formation is by dividing the process in to three phases; the strategy phase, the design phase and the manage phase. (Parise & Sasson, 2002) 4.1 Strategy phase 4.1.1 Strategy development: The first step in the formation of an alliance is for the company to develop a strategy. Before creating a strategic alliance, the company need to be sure with their vision as to why they want to enter into an strategic alliance and what outcome they would like to see. When developing the goals and objectives of the alliance, the company should have their general vision in mind. (Lorange & Roos, 1991) Before starting to look for a company to partner up with, the company should decide what role it is going to play in the alliance, what resources and capabilities it has. It is essential to ensure that the management possesses all necessary knowledge about the company’s strengths and weaknesses before seeking for potential partners. (Parise & Sasson, 2002) At this stage the management should make sure the firm has the necessary resources and competencies necessary to engage in an alliance or not. It is also important to take 4
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organizational culture into consideration. If the culture is very closed it could be a good idea to consider how to change the culture because it will be harder to manage an alliance with a close organizational culture. (Harper & Harper, n.d.) 4.1.2 Partner selection: When the company has a clear strategy, a well-defined mission and a vision of an alliance in mind and after evaluating the pros and cons of forming an alliance, the next step is to find a partner.
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