The number of strategic alliances in the U.S. is surging. More than 20,000 new alliances were formed between 1987 and 1992, compared with 5100 between 1980 and 1987 and 750 during the 1970s. Nearly 6 percent of the revenue generated from the top 1000 U.S. firms now comes from alliances, a fourfold increase since 1987. Japanese firms are far more experienced and comfortable with alliances than U.S. firms. A recent survey revealed that 74 percent of Japanese CEOs think alliances are effective, while only 4 percent think they are dangerous; in the U.S. the respective numbers are 17 percent and 31 percent.

Alliances generally achieve a higher return on investment (17%) than U.S. industry in general (11%). The higher return is a direct result of leveraging partners’ resources and assets, requiring lower investment to produce greater incremental returns. Alliances also showed a greater success rate (60%) than outright acquisitions (50% success) or venture capital arrangements (25% success).

Basic types of strategic alliances include:

• Licensing technology or intellectual property
• Joint research and product development
• Cross-purchase agreements
• Manufacturing arrangements
• Sales/marketing arrangements.

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