what is a strategic alliance 
a strategic alliance is an arrangement between two companies to undertake a mutually beneficial project while each retains its independence the agreement is less complex and less binding than a joint venture in which two businesses pool resources to create a separate business entity a company may enter into a strategic alliance to expand into a new market improve its product line or develop an edge over a competitor the arrangement allows two businesses to work toward a common goal that will benefit both the relationship may be short term or long term investopedia crea taylorunderstanding strategic alliancesat the heart of strategic alliances lies companies striving to be better but may not have the resources to embark on certain endeavors instead of single handedly attempting to build out market opportunities companies can seek out existing resources to leverage personal growth consider the massive clientele base of uber while uber may have an interest in making the ridership experience as strong as possible it may not be feasible for the company to single handedly build out their own repository of music with technological capabilities to be played on demand for this reason uber turned to spotify to enter into a strategic alliance 1on the other hand spotify can boast of a strong technological product however it may seek opportunities to get in front of a wider consumer audience exactly what uber has to offer by forming a strategic alliance in where uber provides the consumers and spotify offers the technology the two companies came together to create a market opportunity that neither entity could have achieved on their own though less formal than other types of agreements a strategic alliance is often still bound with a contractual obligation that legally binds the actions of each alliance member types of strategic alliancesthere are three primary forms of strategic alliances these three types of strategic alliances vary in the degree of financial investment each company makes into the agreed upon joint effort a joint venture occurs when two companies agree to come together to create an entirely new separate company that each of the existing companies become a parent to in 2012 microsoft and general electric healthcare signed a joint agreement to create a new third company called caradigm 2 caradigm was created to develop and market an open healthcare intelligence platform the idea behind the joint venture was microsoft had the technical capability of making such a platform work while ge s healthcare it division had the expertise on the healthcare side an equity strategic alliance may have similar outcome goals as a joint venture however it is funded differently in that one company makes an equity investment into another in 2010 panasonic invested 30 million into tesla 3 the investment was intended to help build a stronger alliance between the two companies and to rapidly advance the electric vehicle market expansion as one of the world s leading battery cell manufacturers panasonic s skillset blended strongly with tesla s ambition of incorporating proprietary packing using cells from multiple battery suppliers a non equity strategic alliance forms when two entities realize mutual benefit exists and no equity transfusion is necessary as discussed below regarding barnes noble and starbucks each member of the alliance simply brings their resources to the alliance for the other party to capitalize upon a more simple contractual obligation is agreed upon for the two entities to pool resources and capabilities together 