STRATEGIC ALLIANCES

STRATEGIC ALLIANCES:

A strategic alliance is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. This form of cooperation lies between Mergers and Acquisition (M&A) and organic growth.

The alliance is a cooperation or collaboration which aims for a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts.

Advantages of strategic alliance:

      Allowing each partner to concentrate on their competitive advantage.

      Learning from partner and developing competencies that may be more widely exploited elsewhere.

      To reduce political risk while entering into a new market.

Disadvantages of strategic alliance:

      Risk of losing control over proprietary information in an intensive sharing information.

      Coordination difficulties due to informal cooperation setting and highly costly dispute resolution.

      Influence cost because of the absence of a formal hierarchy and administration within the strategic alliances.

Proton and Mitsubishi strategic collaboration – Proton to build cars/engines for MMC, parts sharing for small car

Proton and Mitsubishi Motors Corporation (MMC) have jointly announced today that they are in serious discussion for strategic collaboration to further strengthen the competitiveness of both companies. The items being considered for collaboration include the following:

      Joint production of engines in Malaysia

      Consignment production of MMC-brand vehicles at Proton facilities

      Sharing of major parts and components between MMC’s “Global Small” and Proton’s upcoming “Global Small Car”

      Provision of MMC’s future tech such as electric, plug-in hybrid and hybrid vehicle technology

Proton and MMC had “jointly proceeded with feasibility studies since late 2010″ to identify these areas of collaboration that improves global competitiveness for both parties. We previously heard that Proton was talking with Nissan on a collaboration, but it’s clear now that it didn’t work out.

For Proton, this deal will help it expand its line up of cars and make good use of its under utilise production capacity, mainly at Tanjung Malim. For MMC, this is part of a plan to expand its footprint in ASEAN. They already have a presence in Thailand, building trucks, truck based SUVs and the eco car. So perhaps Malaysia can contribute to the cause with a sedan and crossover.