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There are also strategic alliances that are formed between companies.
One very simple is a joint venture when two or more firms pool resources
to create a new organization and a new project. For example, in Malaysia
a few of the very large oil and gas companies bunch together due to
storage facility rivaling that of Jurong Island in Singapore. Many companies
can also form a consortium together and it's usually formed for large
projects such as the larger civil engineering work. Once the project is
finished, the consortium dissolves. Franchising is another form of strategic
alliances. A business agrees to franchise its operations to third parties.
McDonalds, Coca Cola, they are both good examples of businesses that
use franchise or even in Singapore there is Ya Kun and KFC and so on.
A franchisee, a person who franchises, is responsible for manufacturing
and selling and sometimes the franchisers usually responsibility for
branding and marketing. But why strategic alliances? Well, when everyone
is an enemy, not everyone who is an enemy is always an enemy. There is
always money to be made and if there is more to be made if they can go
together, people usually work together. And it also allows people to
share risks. For a large construction project, many companies may work
together so that risk can be spread and won't be too risky for anyone.
They can also specialize and take less risky path of the projects for
themselves. They can also pool capital. Projects that have way too high
startup costs may just encourage firms to cooperate and pool their capital.