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Strategic Alliance is a partnership between two or more firms, which join together for a certain time period where each brings different strengths and capabilities to achieve agreed goals. It is done for reducing cost, increasing production, learning, gaining new technology, Research and Development, gaining access to new markets and for gaining value. Strategic Alliance is an alternative to Franchising, licensing, take-over, mergers and acquisitions. It gives greater control over production and marketing through shared contribution and responsibilities. There should be proper choice of partners keeping in view each other's goals, technology, product capability and market penetration. Companies achieve profits and gains in operations, product, access, technology, strategic growth, organization and finance.

Factors for developing Strategic Alliance include increased production, introduction of new products, increased market share, improved customer services, financial stability, supply chain management and innovation. Factors that can affect Strategic Alliance are cultural diversity, changes in market and technology, legal and commercial system, competitors, political factors, government's rules and regulations and taxation policy. Implementation of Strategic Alliances involves stages such as Strategy development, Partner Assessment, Contract Negotiation and Alliance Operations.
While developing Strategic Alliance parties have to face challenges such as retaining high capital cost, ongoing financial support, strong commitment from management, resolving conflicts, allocating resources and choice of best partners. Continuous monitoring, communication and market analysis leads to a successful Strategic Alliance. Drawbacks associated with Strategic Alliance are potential conflicts, limitation on control, cultural diversity, less conducive to change, entry of competitors to new markets and technology. Advantages of Strategic Alliance includes improved production, sales, access to new markets, decrease in market risk, joint promotion activities, increased Research and Development activities, innovation, decrease in risk and improved technology. Better buying/selling relationships and supply chain management is achieved through Strategic Alliance.
Legal obstacles related to Strategic Alliance are establishment of business structure and its operations, equity and agreements between partners. Legal issues regarding Strategic Alliances are defining nature of relationships, property owned, obligations, strategies and decision rights. Strategic Alliances initiates co-operation and collaboration between two companies as they share resources and technology. This helps in reducing cost of products and improved product efficiency and quality. Challenges such as distribution of profits, marketing of products, financing of joint ventures and management can be solved by setting clear-cut and well-defined goals and directions. Failure can be avoided by both parties through commitment, trust, respect, effort and enthusiasm.Separation between partners occurs due to lack of trust, respect, competition, ego and ambitious goals and strategies of their own. Various examples of Strategic Alliances are Nynex Corp and Philips Electronics, Steel Case and Peerless Lighting, United Airlines and British Airways, Swiss are and Delta Airlines, AT&T and NEC, Thomson and JVC, British Petroleum and Mobil Oil.

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