Answered Essay: Answer the questions below. (Maximum 2 pages per answer) Analyze the pros and cons of each of the types of strategic alliances (long-term contracts, networks, minority ownershi
Answer the questions below. (Maximum 2 pages per answer) Analyze the pros and cons of each of the types of strategic alliances (long-term contracts, networks, minority ownership, and joint ventures) as your means of managing the environment. Based on this analysis, which one would you choose to maximize your chance of securing a stable niche in the fast food industry?
Expert Answer
The strategic alliance can be considered as the management practice through which one or more companies enters into agreement so as to enhance business practices and to develop business. Some of the types of long term contracts and its pros and cons have been discussed.
Long term contracts
Pros
- It enables the organization to reduce costs through sharing the resources.
Cons
- There is no relationship with the parties other than the clause mentioned in the contracts
Networks
Pros
- There is a formal hierarchy authority which binds together a cluster of organizations.
- The coordination is formal which enables the information sharing effective.
Cons
- The involvement of too many companies in the sharing of information can impact the competitive advantage of the organization.
Minority ownership
Pros
- This strategic alliance establishes strong cooperative bondage and interdependencies between two organizations.
Cons
- This can influence the policies and procedures of the organization.
Joint ventures
Pros
- Through this strategic alliance two organizations jointly works for a single new business.
Cons
- The abilities and potential will also be shared.
2. For a fast food organization joint venturing will be effective. Since the competitiveness for this industry is huge joint venturing can benefit in the two organizations in sharing the resources, risks, benefits etc.
