As we have learnt about the SWOT analysis, no matter how big and strong a company is, it has its own weaknesses and threats. In order to surpass competitions and increase profit, two companies could actually work together, sharing their comparative advantages with each other. This agreement is so-called business alliance. There are several types of business alliances, such as sales alliance, geographic-specific alliance, investment alliance and joint venture alliance.

In the case below, two Japanese-based conglomerates, Sony and Olympus have demonstrated an example of investment alliance in which they agree to join their funds for mutual investment.

According to BBC news, Sony has agreed to invest Olympus 50bn yen ($640m) to take an 11.5% stake in Olympus in return for the investment. The two companies will set up a new business together later this year, which will be 51%-owned by Sony. The new business will be working on developing a variety of new high-tech surgery devices, such as endoscopes used in keyhole surgery. Sony and Olympus merger aims to attain more than 20 percent of the medical-equipment-for-surgery market by 2020, when the sector is predicted to grow to as much as 330 billion yen ($4 billion).

*Olympus had suffered a loss of $1.7 billions from an accounting scandal while Sony has reported losses for 4 straight years. Therefore, both of the companies are seeking for a turnaround strategy to regain profits.

There are some other good examples of business alliance, such as Microsoft-Facebook advertising partnership and Sony-Ericsson partnership. Find out other interesting examples by your own 🙂

Link to the news : http://dawn.com/2012/10/01/sony-olympus-alliance-aims-for-high-tech-surgery/