India Inc. has embarked on bold M&As to realize its growth and globalization plans - Not all M&A's have succeeded and large-size deals have their own share of risks. Growth can be achieved through `Building' (Organic growth), `Buying' (M&As) or `Bonding'. Bonding through strategic alliances can form a viable alternative to growth plans of corporates. Strategic alliances, if handled well, can unleash value and enable firms to achieve the goal of winning by working together. This article examines some simple strategies to be followed to optimize success through Alliance Management. Collaborative advantage can be optimized by following simple strategies—which revolve around the 4Ps of alliance management—Purpose, Preparation, Planning and Partner selection.

The growth vs. risk debate has been highlighted recently by CRISIL when it released its ratings roundup for the First Half Year of 2007-08 (FH08). It said that, for the first time in five years, it's Modified Credit Ratio (MCR)—the ratio of upgrades plus reaffirmations to downgrades plus reaffirmations—for the FH08 has dropped below 1 to 0.94 times. (Refer Box).CRISIL's MCR is an important indicator of systemic credit quality, and therefore of underlying business fundamentals. Successfully managing and unleashing the planned synergies from these large and debt-funded Mergers and Acquisitions (M&As) is a real challenge for India Inc. especially in the current scenario when cheap assets are rare to find and M&A valuations appear stretched.

In simple terms, both strategic alliances and M&As aim to achieve fusion among firms - to realize certain collaborative/common goals. The only difference between these approaches is the degree of fusion aimed at. M&As result in a complete fusion of 2 or more companies either through amalgamation or absorption. A merger can be viewed as an extreme form of cooperative venture/alliance leading to a permanent and often irreversible marriage.

However, strategic alliances attempt to handle this problem and try to achieve the goal of `winning by working together' with the advantage of flexibility, rapid response and minimal damage in case of failures. Strategic alliances are basically contractual arrangements between two or more firms to attain common goals by pooling resources, skills and competencies - Alliances take a wide range of forms starting with loose/simple agreements on one end of the spectrum to creation of separate legal entities (joint ventures).

Global CEO Magazine, Strategic Management, Mergers and Aquisition, M&A, Modified Credit Ratio, MCR, Amalgamation, Absorption, Alliances Management, Corporate Managements, Alliance Strategy, Research and Devolopment, R&D, Corporate Mergers, Corporate Aquisition.