Business alliance

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A business alliance is an agreement between businesses, usually motivated by cost reduction and improved service for the customer. An example of this is code sharing in airline alliances. Many, if not all, large airlines participate in one or more business alliances.

Bounded by a single agreement with equitable risk and opportunity share for all parties. Usually managed by a totally integrated project team.

Kuglin and Hook (2002) define five basic categories or types of alliances:

  • Sales alliance
  • Solution-specific alliance
  • Geographic-specific alliance
  • Investment alliance
  • Joint venture alliance

In many cases, alliances between companies can involve two or more categories or types of alliances. A sales alliance occurs when two companies agree to go to market together to sell complementary products and services. A solution-specific alliance occurs when two companies agree to jointly develop and sell a specific marketplace solution. A geographic-specific alliance is developed when two companies agree to jointly market or co-brand their products and services in a specific geographic region. An investment alliance occurs when two companies agree to joint their funds for mutual investment. A joint venture alliance occurs when two or more companies agree to undertake economic activity together (Kuglin and Hook, 2002).

[edit] References

  • Kuglin, F.A., Hook J. 2002. Building, Leading, and Managing Strategic Alliances: How to Work Effectively and Profitably With Partner Companies. American Management Association

[edit] See also

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