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Organizational Theory

Essay by   •  October 2, 2012  •  Term Paper  •  1,117 Words (5 Pages)  •  1,523 Views

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With the current economic situation, an organization needs to survive and grow in all aspect. And it all depends on their environment for the resources. The supply of its resources depends on the complexity, dynamism and richness of the environment. The reason why an environment gets poorer is due to loss of customers, or the rise of a new competitor, therefore the resources then becomes scarce and uncertainty arises. Business organizations tries to avoid the scarcity and the uncertainty by accessing resources to be as predictable as possible in order to survive in the business. So, according to Resource Dependence Theory, the motives of the organization is to minimize dependence on other organizations for the supply of scarce resources in its environment and to find ways to influence them to secure the needed resources. (Jones 2010) The more the dependence of one organization to another, the weaker and poorer it will be, and the other company will be more powerful than ever and can also take advantage of the dependent organization if they want to.

So in order to manage the resource dependence, there are various strategies that were developed in order to control access to scarce resources. One of them is establishing strategic alliances. Strategic alliances has been increasingly common in managing interdependencies between organizations on one country and other countries as well. Here are the bottom-line benefits with strategic alliances:

With the power of strong strategic alliances, any business organization can significantly increase its revenues, while simultaneously declining the costs. Strategic alliances' effectiveness derives from the value of collective resources; for example, two companies share the cost of a research study - both obtain the same benefit, but at half the original cost/expense.

The greatest advantage to a strategic alliance, however, is the exponentially increased number of clients a business can reach - taking the business to the second power, and now imagine how much revenue the business can generate with the third power, fourth power, and so on and so forth and it goes beyond.

With a properly created strategic alliance, you can expect to gain:

* Instant exposure to a greater target audience and client base

* Doubles the sales force for the products virtually overnight

* Reduce marketing expense, with an increase in client reach

* Increase virtual inventory and product offerings

* Boost the levels of sales volume, revenues, and profit

* Augment the levels of knowledge and expertise with information exchange

The benefits to developing a strategic alliance runs deep as well, but like any aspect of business, it requires good planning and management. An improperly executed strategic partnership will be doomed to fail from the beginning. Like any other relationship, a strategic partnerships needs management, communication, and trust.

Advantages Of Strategic Alliance

When a company has built strategic business alliance with other partners, they are preparing them enjoy the following benefits/advantages. (particularly for foreign partners)

1. They gain better access to attractive country market from host country's government to import and market products locally

2. Take advantage of partner's local market knowledge and working relationships with key government officials in host country. It is very important to get working relationship with local government officials, (social capitals).

3. Capture economies of scale in production and/or marketing, when they operate together, they can use the same machine or equipment to produce products and use the same marketing channel for both products.

4. Fill gaps in technical expertise or knowledge of the local market; they can learn technical knowledge from each other.

5. Share distribution facilities and dealer

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