In 30s international cross licensing agreements were widespread in electrical and chemical industries. Next phase were joint ventures with local firms as multinational enterprises expanded overseas. Strategic alliances got noticed in 80s. Unlike other forms of cooperation, these strategic alliances bring together global companies that cooperate in certain areas while they continue to compete in other parts of their business; they involve leading edge technologies and advanced capabilities and are formed to fulfil strategic objectives rather than merely to comply with local legislation.
Alliances forged by rival firms can take on 3 different forms .
- complementary: A firm distributes on its domestic market a product initially developed by a competitor
- Shared-supply: The competing firms develop and/ or manufacture a common element which is then incorporated in their respective products
- Quasi-concentration:A consortium of rival firms develops, manufactures and markets a final product common to all partner firms.
The difference between a joint venture and complementary alliance is that here both the firms are capable of competing on their own, which is not the case in joint venture where the local firm is dependent on partner for technology. After liberalisation most of Indian Joint ventures collapsed with joint ventures partner preferring to start his own in India. There are no known cases of joint ventures upgrading to strategic alliances.
In this background Zen Technologies entered into a Strategic
Alliance with Rockwell Collins (RC), an American firm specializing in
aviation simulation and training products. The partnership will look
to combine complementary strengths in simulation and training to
build on air and ground solutions for the Indian military.
This type of alliances would strengthen Indian design and
technological capabilities while at the same time giving our defence
best of global products.