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Why might
a firm form a strategic alliance with a competitor? What are
the strengths and weaknesses of this approach to the development
of new technological knowledge?
Over the past years, there have been an increasing number
of firms forming strategic alliances. A 'strategic alliance'
can be defined as a partnership, in which efforts are combined
in order to achieve a common goal. The main theory behind
strategic alliances is that they allow firms to increase their
leverage without bearing all the risk. According to Johnson
and Scholes ,[1] "Organisations cannot always cope with
increasingly complex environments (such as globalisation)
from internal resources and competences alone. They may see
the need to obtain materials, skills, innovation, finance
or access to markets, and recognize that these may be as readily
available through cooperation as through ownership."
Bailey and
Koney have divided the various types of strategic alliance
into four main categories, including: 'cooperation,' 'coordination,'
'collaboration' and 'coadunation.' Figure 1 in the Appendix
describes the main features of the types of alliance in each
category, and Figure 2 in the Appendix shows which types of
alliance fall under which category. For example, 'consortia'
and 'networks' fall under 'collaboration.' Figure 3 in the
Appendix describes some of these terms. It should be mentioned,
however, that Bailey and Koney have taken a very broad view
of different types of strategic alliance. Many would disagree
that some of the terms they have used would fall under the
definition of a "strategic alliance." They categorise
mergers, for example. However, Bailey and Koney are useful
as an introduction to the topic. Tidd et al are more specific
in their discussion of strategic alliances, focusing on 'co-option'
alliances and 'co-specialisation' alliances. These are described
in Figure 4 in the Appendix. …
 Firstly, a firm may form a strategic alliance with a competitor
in order to challenge other competition. Although a failure,
an example of this is The U.S. Memories alliance of the 1980s.
This involved seven of the largest US semiconductor manufacturers
(such as IBM and Hewlett-Packard). They set out to counter
the Japanese dominance of producing random access memory chips.
A further motivation for a firm to form a strategic alliance
with a competitor is in order to acquire knowledge and share
technologies. An example of two firms engaging in this is
Philips and Sony in their joint development and marketing
of the CD. Philips had developed the prototype for the CD
player by 1978, but appreciated that it would be difficult
to produce and market it alone. Sony offered Philips access
to complementary technologies. For example, Sony eliminated
500 components, making the CD player smaller. Besides offering
help with development, Sony also offered Philips access to
the Japanese market. Access to markets is another reason why
a firm might enter into an alliance with a competitor.
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