What motivates a firm to seek an alliance? What are the costs associated with alliance? Discuss using at least one example.

... In response to the question: What motivates a firm to seek an alliance? What are the costs associated with alliance? Discuss using at least one example. Introduction: Alliances are a strategic tool that, illustrating it on a chart that matches formalization with the degree of commitment, is located between spot sales and vertical integration (Grant, 2002). There are however other, less popular options businesses can take such as implicit contracts. Alliances cover the majority of the firm relationships that lie between the two poles such as informal supplier and customer relationships, vertical partnerships, joint ventures, technology- sharing arrangements, joint research and development, shared manufacturing and joint marketing and distribution arrangements (Grant, 2002). As early as the 1960's researchers from the Harvard Multinational Enterprise project observed international joint research alliances (Lunden and Hagedoorn, 2001). The number of new alliances has grown by 20 percent every year over the last two decades (Ernst, 2002).

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