Strategic alliances : Toly Products Ltd.'s experience : a case study

Abstract

Strategic alliances involve the cooperation of two or more companies in areas considered fundamental to their business. The joining of forces produces the benefits of larger companies without removing individuality. This contributed to the substantial upsurge in alliances abroad, which however did not happen in Malta. In order to research such relationships and highlight their potential benefits, the strategic alliance between Toly Products Ltd. in Malta and Geka Brush of Germany has been analysed. Part 1 of the research findings tackles its general considerations, while part 2 deals specifically with the accounting and financial aspects of this venture. It was found out that companies benefit from a sharp rise in revenue and return on investment as the increase in sales triggers few costs or none at all. Toly's alliance illustrates that it also facilitates a low-cost strategy given the sharing of costs with alliance partners. These advantages surface once certain initial conflicts have been dealt with properly and improve in line with the experience gained. The dissertation findings highlight the fact that certain companies might not appreciate the potential of an accountant's role in a strategic alliance since it does not initiate substantial pure accounting work. However, the involvement of the accountant from the early stages of an alliance is recommended since these relationships will eventually change the firm's financial situation. The accountant may be decisive in observing the competitive environment and recognising when to proceed with an alliance. Finally, the study mentions a number of areas where strategic alliances involving local companies may be successful.