1.1 Introduction
Strategic Alliance is a collaborative agreement between two or more companies to develop a joint strategy on certain operation, in which all sides take a win-win attitude. Strategic alliances can be through a joint venture or through short-term collaboration of two or more companies to execute particular projects. Since the implementation of strategic alliances in the construction industry, there has been a great significant impact on financial performance in any approach this procurement model takes. In the globalization era, strategic management has been considered as the most important practice which distinguishes organizations from each other. Strategic management is the key process to achieving organizational vision, mission, strategy and objectives (Pearce & Robinson 2017).
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Globalization provided an opportunity for strategic alliances between organizations from across the world to thrive (Anand & Khanna, 2000; Ekpudu, et al., 2013). The strategic alliance is increasingly becoming popular in strategic management literature and has emerged as an invaluable tool for business development. This is because the strategic alliance is long-term, trust-based relationships that require highly relationship-specific investments in ventures that cannot be fully specified in advance of their execution (Phan & Peridis, 2000).
Strategic alliance is a co-operative arrangement between two or more companies where a common strategy is developed in unison and a win-win attitude is adopted by all parties. Yoshino and Rangan (2015) sees strategic alliances as formal and mutually agreed upon commercial collaborations between companies. In the long run, only profitable firms can survive, while their loss-making counterparts are forced to leave the market and face seizure of their market share by more competitive rivals.
According to (Jongwe, Moroz, Gordon, and Anderson, 2020), it is a mutually beneficial long-term formal relationship formed between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while allowing these parties to remain independent organizations. Strategic alliances can take the form of equity positions or contractual arrangements including but not limited to collaborative agreements, licensing agreements, joint ventures, consortiums, alliances, and other forms of collaboration (Kumar, 2014). One of the most important reasons for participation in strategic alliances is improvement in firm financial performance. Among an array of performance indicators, the majority of authors emphasize the importance of profitability as the key indicator of performance and competitiveness in the long run (Buckley, Pass and Prescott, 1988; Stojčić and Vojvodić, 2012; Stojčić, 2012).
Implementation of strategic alliances procurement in construction industry has one way or the other have many effects on the financial performance on any handle this model. As a relational project delivery model, it contractually binds two or more entities to work cooperatively toward agreed outcomes (Davis and Love 2011, Love et al., 2011, Jefferies et al, 2014, Walker and Lloyd-Walker, 2015). Strategic alliance is generally deployed in large and complex projects with much financial activities, particularly in the infrastructure and construction sector around the world. Inter-organizational projects are executed by a network of diverse firms and organizations that is, a project network (Artto and Kujala, 2008) and are embedded in networks of inter-organizational relationships (DeFilippi and Sydow, 2016).
In such project networks, actors usually have varying objectives, interests and expectations from the project, based on the respective business objectives of their base organizations (Artto and Kujala, 2008). For that reason, a high degree of uncertainty is also likely. To successfully initiate and execute an alliance project, the project organization needs the capabilities to collectively manage such a project. Moreover, the problems related to traditional investment project procurement methods and the pressure to develop construction industry in Nigeria are incentive for seeking new operational models. Traditional procurement methods do not fully utilize the know-how of the various parties in solving various problems facing financial performance in the industry.
Therefore, in Lagos State where the research was carried out, the activities that was conducted is to evaluate the Strategic Alliance on Organizational Productivity.
1.3 Statement of Problems
Investigation revealed that the major problem asides competition facing most firms across the sectors of the economy is the minimum capital requirements as set by the regulating bodies. The policy brought a number of them into forming strategic alliances, while those that could not were either acquired by others or went into liquidation.
Failures arise when partners misrepresent what they bring to the table, fail to commit resources and capabilities to the other partners, fail to use their complementary resources effectively, one organization depends solely on the partners of other alliances for skills, and when partner get less out of the alliance.
In Nigeria, the major problem asides competition facing most firms across the sectors of the economy is the minimum capital requirements as set by the regulating bodies. The policy brought a number of them into forming strategic alliances, while those that could not were either acquired by others or went into liquidation. The challenges of raising adequate capital to acquire enough operational assets, competition among firms producing similar product and in the same market, while others are faced with vertical and horizontal integration challenges to minimize operational expenses that accrues to firms that are into strategic alliances.
1.4 Aim and Objectives of Study
The aim of the study is to evaluate the Strategic Alliance on Organizational Productivity in Lagos State. In achieving this aim, the following specific objectives were laid out as follows:
- To assess the effect of strategic alliance on competition and profitability of an Organization;
- To examine the effect of strategic alliance on innovativeness in Lagos State;
- To evaluate the impact of strategic alliance on Organizational Productivity in Lagos State; and
- To determine whether an Organizational Productivity can use strategic alliance to penetrate saturated.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Can Organizational Productivity be utilized in strategic alliance to penetrate saturated?
- What is the impact of strategic alliance on Organizational Productivity in Lagos State?
- What is the effect of strategic alliance on innovativeness in Lagos State?
- What is the effect of strategic alliance on competition and profitability of an Organization?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: Performance evaluation has no significant effect on organizational productivity in Lagos State
- H1: Performance evaluation has significant effect on organizational productivity in Lagos State
Hypothesis Two
- H0: Strategic alliance does not significantly influence employee commitment to organization in Lagos State
- H1: Strategic alliance significantly influences employee commitment to organization in Lagos State
1.7 Significance of Study
The relevance of the findings will provides social potential for the strategic allies to significantly leverage its member’s resources and capabilities; it will assist partners in an alliance to overcome legal, political and socio-cultural barriers to cross-national transactions. The study will also help in sourcing the required capital and minimizes competition among firms in similar market and it is a tool for penetrating saturated or complex markets.
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
1.8 Scope of Study
The scope of the research is focused on the Evaluation of Strategic Alliance on Organizational Productivity in Lagos State.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Strategic Alliance: It is a co-operative arrangement between two or more companies where a common strategy is developed in unison and a win-win attitude is adopted by all parties.
