Forming Strategic Alliances with Foreign Companies Research Paper

Forming Strategic Alliances with Foreign Companies - Research Paper Example The domestic company involved does such things because they have the perceptions that entering the world market will increase their sale, it will supplement the capital it needs and that it will fasten the process of adaptation to the environment of the market. The above factors cause a domestic company to respond to its situation by establishing joint ventures that will enhance their business operations in the international markets. Many advantages drive domestic companies to forge strategic alliances that will help them to exploit both the domestic and international markets. Domestic companies perceive a situation in which strategic alliances enhances the entry into the international market. This perception is because the company spends less amount of money to transport products and services as well as to enhance customers to the market. In having a company that is exposed to the international market environment, a domestic company is able to establish customers using those of its partner in the strategic alliance. These customers ensure that the domestic company has footage in the international market and therefore, it increases the changes of increasing its sales (Heidtmann, 2011). Domestic companies forge strategic alliances in order to exploit international market because there is a shared risk in the investment. Sharing of risks in a business venture ensures that one company does not lose it all to the venture that it has entered and therefore, it is able to sustain its operation in the market for a long time. In many instances, the companies that forge strategic alliances invest a lot of money to establish business operation in the international market through advertisement, transports of products and human... Forming Strategic Alliances with Foreign Companies This challenge means that these local companies focus on the alternatives they have so that they can establish their businesses at the world level. In many cases, local companies forge strategic alliances with foreign companies that are already established in the international business so that they can present their products in the global market with ease (Henry, 2008). These local companies have perceptions that the venture into which they enter are beneficial and they will facilitate the individual company to make higher sales than they did with local markets. However, there are many risks that are associated with strategic alliances that companies that forge them need to understand and learn the ways to manage them so that they will not fail in business (Oxley, 2013). An analysis of strategic alliances will exposes the factors that drive domestic companies to desire to forge them as well as show the risks and disadvantages associated with these ventures that may cause the partners to fail. Richter and Pahl (2009) observe that in forging strategic alliances, there are things that drive domestic companies to want to come into partnership. There are numerous perceived incentives that drive partners in strategic alliances to come into a joint venture. However, although there are possible benefits in entering the world market as an alliance; partners need to establish their business operations with a focus on the potential risks that need to be controlled to reduce the probability of failure.