5 Benefits of Using Strategic Brand Alliance

If you are pursuing an MBA, you must be familiar with the concept of establishing strategic brand alliances. Strategic alliances give a business a competitive advantage over other firms in the niche. How? A company can form a strategic partnership with another organisation based on short and long-term objectives. Joint ventures, franchises, cross-licensing and marketing come under brand alliances.

Now, what benefits does a firm get to enjoy when it enters a strategic brand alliance? Read on to know how the formal partnership can help a company realise its potential. Mention these benefits in your assignment on the same topic to reflect your in-depth understanding of joint ventures, franchises and more.

1.      Access to new target markets

When a company becomes a part of strategic brand alliances, it gets to explore a broader target market. Most importantly, the brand does not have to start afresh. It can use the resources and expertise of the company in the already captured market. When it comes to exploring new markets, several local brands team up with global ones to understands the overseas market and distribution channels without allocating financial resources.

2.      Sharing knowledge and resources

By forming a strategic brand alliance, a small-scale company can learn from the marketing strategies and technical expertise from the larger one. Again, the larger company can establish a local connection with the help of the small-scale firm. This way, it is a win-win situation for both the members in the partnership.

3.      Creating economies of scale

By forming a brand alliance, two firms can create economies of scale. This means the cost advantages that a company gains by ordering in greater volume from suppliers and getting better rebates to save more money. Costs can be reduced, and economies of scale can be achieved when two companies make joint investments on research and development.

4.      Strengthening strategic objectives

In a strategic alliance, one company can partner with a major competitor and utilise the resource both the firms have to offer to double the success. Strategic brand alliances also give the partnering companies a competitive advantage over other firms operating in the same niche.

5.      Sharing the risk

Risk reduction is one benefits that can help a business in alliance survive the dog-eat-dog environment by sharing economic risks. An established company can help a start-up with a similar structure, and goals mitigate the problems arising from unexpected shifts in demand.

That was all about the benefits of forming business alliances. Make sure to go through examples to understand the concept better.

Comments

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