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Strategic alliances and joint

ventures

Presented to Sir

Shahzaib Haider. 01-220102-045

MuzammilAhmed.. 01-220102-038

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Strategic Alliance

An arrangement between two companies that have decided to share

resources to undertake a specific, mutually beneficial project.

Bottom line, strategic alliances are partnerships that stress mutual

problem solving.

Each party in the alliance maintains autonomy.

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Components of a Strategic Alliance

.

Confidentiality agreement

Mission, vision, values statements

Long-term goals and objectives

Plan for implementation of activities

Plan for managing the process and measuringsuccess

Exit strategy

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Why consider a strategic alliance?

Sharing the risk

Sharing knowledge

Opportunity for growth

Focus on your core strength

Access resources

Access target market

Economic of scale

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Characteristics of a Strategic Alliance

May or may not be a contractual arrangement, but this is always recommended.

Long Term Relationship

High Level of Trust

Win/Win (Mutual Advantage)

Top Management Interchange

Continuous Exchange of Ideas

Business Process Re-engineering

Focus on Significant Value-Addition

Mutual Dependency

High Level of Commitment

Increased Capabilities/Capacities

Enhanced Business Opportunities

Improving Shareholders Value

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Examples of a Strategic Alliance

McDonalds and HAVI -sourcing, transportation, distribution

Banking ATM Machines -service, maintenance, collecting

PSO UBL Auto Credit Card 5%* Free Fuel on transactions at PSO Stations

1%** Free Fuel on transactions at non PSO Outlets

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Joint venture

.A joint venture (JV) is a business agreement in which the parties

agree to develop, for a finite time, a new entity and

new assets by contributing equity.

each of the participants is responsible for profits, losses and costs

associated with it. However, the venture is its own entity or

separate.

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Why joint venture?

A joint venture may be formed to:

Run production facilities in another country.

Set up a marketing and distribution presence.

Use complementary technologies held by each participant.

Access new markets and distribution networks.

Increase capacity.

Share risks and costs with a partner.

Access greater resources, including specialized staff, technology andfinance.

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Factors affecting joint venture

International partnership:

differences in language, culture and business practices.

Also consider:

Intellectual property rights.

Financial considerations.

Potential for political instability.

Impact of local law.

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Legal requirements

A joint venture or strategic alliance will need to changewith circumstances.

Agreements should anticipate these changes andprovide a method for change, termination and disputeresolution.

Partner is selected, generally a Memorandum ofUnderstanding (MoU)

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