Gulati(1998) defines strategic alliance as voluntary arrangements between firms involving exchange, sharing, or co- development of products, technologies or services.
According to Granell (2000) globalization has become a world-wide pressure for companies to change and it is also seen as one of the most frequent external and significant trends for companies. All around the world, the current trend is that companies attract foreign investment and still increase exports and build on international alliances.
After reading the case study, the alliance formed by Avebe and Noveocan can be identified as joint venture alliance. Both the companies did not hold any equity or holdings in each other's company. They both had formed an alliance to produce a high quality product at a reasonable price and the joint venture alliance was determined by set of clauses in the contract.
[...] Access to global markets can be made easy through strategic alliances. Jarillo (1993) believes that strategic alliances lower the risk of the entry in an unfamiliar business territory. As found out by the researcher after reading various articles and books, he can identify that Avebe and Noveon had formed an alliance to gain a competitive advantage by entering into new and untapped market segments. Avebe had an outstanding position in the printing thickness segment of textile market but not in the reactive die segment. [...]
[...] Due to the diversification, the attention given for textile printing and alliance by Noveon declined gradually. From these above reasons, researcher can ascertain the many reasons for failure of this alliance. Through this case study we can know that, apart from good R&D and better product there should be a marketing team to make the product reach the end customer. And in every alliance communication is the key aspect. Communication can either build or break the alliance. Finally linguistic barrier and cultural gap can create communication log and eventually results in the failure of the alliance. [...]
[...] And dysfunctional conflicts play a huge role in spoiling the performance or relationship in the alliance (Bucklin 1993). Conflicts are the main factors which affects the relationship of the alliance. As found by the researcher, the conflict in the alliance was at low level. During the period of alliance there were no major conflicts in the alliance. The main reason for this was, there was outstanding relationship between the managers of both the companies who were initially involved in the project. [...]
[...] As found by the researcher, at the start of the alliance the communication between Avebe and Noveon was excellent and was characterized by open exchange of information. At starting of the alliance, the communication was carried out through an official meeting two times a year and besides that information was exchanged through phone, fax and email. But communication gap occurred when the people dedicated to the alliance were moved to other positions and companies. At later stage, the communication between those companies gradually stopped and this resulted in the failure in the market. [...]
[...] According to the researcher, Avebe and Noveon had different motto in entering into the alliance. Noveon expected that there will rise in the demand for natural and synthetic blends in the Europe and American markets. On the other hand, Avebe with the help of Noveon's synthetic thickeners wanted to improve their reactive dye printing product by combining their natural thickeners. Both companies had collective objective of improving their technology of the product and to get bigger in the reactive printing market. [...]
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