Rationale for Strategic Alliances

Faced with increasing competition and limited resources, companies are using strategic partnerships to cooperatively bring products to market. While partnerships focus the complementary strengths of two firms on the market, they can be complex arrangements to manage. Today, rather than one firm doing everything itself, large and small firms are combining their resources in strategic partnerships and focusing those resources on areas of mutual interests.
The Genentech and Eli Lilly collaboration on human insulin is an example of what we mean by a strategic partnership (2). Genentech contributed its novel new source of insulin to the relationship, while Eli Lilly contributed financing, FDA experience, distribution channels, and marketing. This partnership resulted in the product Humulin being brought to market.
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