The use of strategic alliances as an instrument for rapid growth, by New Zealand based questor companies

Abstract

Businesses in New Zealand are often constrained by the small domestic market, distance from major markets and access to capital, all of which serve as impediments to growth. Consequently New Zealand has a high percentage of small to medium enterprises (SMEs’) that remain small and fail to realize their growth potential.

Alliances have become a core element of today’s business strategies in competing for a market leadership position. This study relates to the use of strategic alliances as an instrument for rapid growth by New Zealand based design led companies (questors). This study examined the experiences of a small number of such companies in relation to their use of strategic alliances. By identifying concepts that positively or adversely affect the likelihood of success of such alliances it is hoped that future questors can benefit from theses findings when developing their own growth strategies. The research approach was to undertake a literature review of the wider topic and postulate a conceptual framework that identifies a number of concepts that are likely to affect success. Validation of the conceptual framework was derived from case studies of questor companies that use or have successfully used strategic alliances as mechanisms to globalize their businesses.

The qualitative technique of semi-structured in-depth interviews was used to gather primary data in response to the research questions. This research indicates that the key contributor to the success or failure of alliances is whether all the parties will benefit equitably from the venture and the relative strategic importance of the alliance to the stakeholders. This finding validates and extends on the study conducted by Sengupta, Castaldi, & Silverman (2005). A new finding of special relevance to New Zealand business was that being design led was crucial to attracting the best alliance partners.

Strategic alliances are not a panacea for every company and every situation. However through strategic alliances, companies can improve their competitive positioning, gain entry to new markets, supplement critical skills, and share the risk and cost of major development projects. This study highlights the benefits of taking a long term strategic approach to the formation of alliances.