Stonehouse et al. (2004)

Management > Global Strategic Management > Lectures > Independent Research > Stonehouse et al. > Alliances/Integration > Transnational M&A > Problems with integration > Success factors > Collaborative ventures/strategic alliances > Types

Types

Horizontal networks and alliances are intended to strengthen against outside forces. Partners benefit from:

• Shared skills and competences
• Shared technology
• Access to some new market segments
• Reduced risks
• Reduced costs
• Reduced danger from new entrants
• Forces which create synergy
• Advances in vertical relationships

Diversification alliances are into unrelated areas, to take the firm into a "new competitive arena", which is important for the portfolio.

Vertical networks and alliances include benefits such as:

• Benefiting from each other's core competences, which creates synergy
• Improved responsiveness
• Creation of new barriers to entry
• Logistical economies of scale
• Generation of superior information on all activities on the supply chain
• Tying in of suppliers, distributors and customers into the business

There are other methods to distinguish alliances, including:

1. The extent of the co-operation (focused, or complex alliances)
2. Time scale of the collaboration (such as joint ventures)
3. Consortiums (short or medium alliance). Alliance partners generally seek the minimum number of areas for exposure, as this could pose risk

Successful alliances and networks

Strategic management of networks and alliances