Answer to Question #278367 in Management for Harbi

Question

Strategic Alliances and Networking helps to enhance the Business Competitiveness of a Firm. Please discuss how and why it happens.

Answer 1

In the context of business organizations, strategic alliances refer to the agreements between companies to cooperate or work together in areas such as manufacturing, product development, or the sale of products or services. Networking, on the other hand, refers to the practice of establishing and maintaining long-term and mutually beneficial relationships between organizations. Strategic alliances and networking can be important for organizations that seek to create and access (or unlock) capabilities they so need to explore and seize new business opportunities. Specifically, this enhances the competitiveness of the organization.

Alliances and networking enhance the competitiveness of the organization in many ways. Firstly, they increase the potential for accelerated speed-to-market. Through alliances and networking, the overall time-to-market along with initial investments are reduced due to incremental development of both products and services. Organizations easily leverage small and fast feedback and iterative learning cycles that allow them to learn and adapt faster. As a result, the speed-to-market increase hence beating the competition. Secondly, strategic alliances and networking reduce capital requirements and risks. With the increased pace of innovation characterized by regulatory uncertainties and ballooning valuations, alliances and networking become valuable alternatives to mergers and acquisitions. As a result, business organizations manage or assume fewer risks hence enhancing competitiveness.

Lastly, strategic alliances and networking allow organizations to benefit from shared knowledge, resources, and expertise. That is, organizations get to easily combine their best to realize a robust intersection of product development, sales, and marketing knowledge. As a result, the involved organizations become more creative in their approach to business and new opportunities hence enhancing competitiveness.