Strategic Alliances Essay Example | Topics and Well Written Essays - 750 words

Strategic Alliances - Essay Example Risk taking is ubiquitous feature among the organizational managers these days. Strategic alliance is a kind of concept in which risk is an integral factor while developing such decisions. Strategic Alliance is an â€Å"an agreement between firms to do business together in ways that go beyond normal company–to–company dealings , but fall short of a merger or a full partnership† (Khurana & Singhal 2010). Any business decision involves planning and there is always a threat of failure of the plan. The move taken even after knowing the risks and evaluating their effects can be termed as risk. Similarly, strategic alliance is a kind of business decision which would involve amalgamation with outside companies not on a full partnership basis but a little different from daily intercompany dealings (Das & Teng, 1999). There may be a number of situations at risk as a result of the strategic alliance between two companies. The performance of the partner company, cooperation among the companies and the opportunistic approach of the companies involved among others could be the probable circumstances rendering risk to the decision in practice (Alders, Van Liere, Berendsen, & Pieters 2010). However, largely the risk situations can be categorized into four categories namely; the contextual risk, the transactional risk, the relational risk, and the performance risk. The contextual risk involves the risk influenced by the market scenario like meeting of the demand in the market, the competition faced by the company and also the technological and the regulatory influences. Thus, this can be also referred to as the external risk (Alders, Van Liere, Berendsen, & Pieters 2010). The transactional risk involves the importance of cooperation between the partners involved in the alliance. A proper cooperation and sharing of mutual trust can pay off to minimize risk to a great extent. Therefore, this may be referred as internal risk (Alders, Van Liere, Berendsen, & Pieters