Business alliances

It is common in business that a company makes alliances with another company to reach some goals and gains benefits for both companies. In the strategic alliance, there will be a relationship built between two or more corporations or business units, in which they will exchange some information and resources.

According to White & Bruton (2007)*, alliances are divided into some kinds according to some dimensions, such as formality, duration, and location. Based on formality, alliances can be classified into joint ventures (formal alliances), franchise agreement (formal alliances), consortia (informal alliances), licensing agreement (informal alliances), subcontracting (informal alliances), and informal understandings (informal alliances). If two or more companies combine their equity together and form a new third entity, we can say they do joint ventures. This type alliance has specific contribution and obligations, such as agreement about profits both of them can get. The company which joins the joint ventures is willing to know the details about what each party will do and what they can expect. But, probably, this type of alliance can have problems deals with strategic drift and culture clash since they are from different companies with different places. We cannot say which alliance is better to do since it can be different according to some situations and conditions when we start-up new businesses or when we conduct our own businesses.