Analysis of Business Alliance

Formation of business alliance is one of the ways in which two or more Organizations with similar objectives are able to cooperate in a certain business activity. The alliance formed is geared towards benefiting each member of the alliance in a way that no one complains that the other party is reaping big time from the alliance. There are many reasons which make businesses to forge partnerships. First and foremost, when businesses with similar objectives cooperate in a certain area, they are able to utilize the human capital skills of each other. These skills are usually hard to find and can’t be quantified in monetary terms.  Another reason which informs business alliances is the economies of scale which arise as a result of such association.  With pulling together of resources, Companies are able to reduce the cost of production.

Moreover, partnerships enable the parties involved get access to new international markets. This is especially the case if the members of the alliance come from different countries. For example if Company X is in Europe and Company Y is from South America and the two forge an alliance, they are in a position of accessing new markets. Quality products will be produced as a result of this alliance. This will go a long way in ensuring that the products are competitive in the global market which has a trickledown effect of increasing market size as well as revenues. Sharing the research and development costs is also a major reason why business organizations prefer to form formidable alliances. In doing this, they are able to spread the risks involved in trying to come up with a better way of doing things.