The Hindu Business Line : Managed well, alliances can create value

Nicholas Piramal has signed a drug development pact with Eli Lilly. New Generation Computing has announced the formation of a strategic alliance with Paxar Corporation. And Foundercontact India has entered into a strategic alliance deal with SMEnetwork India.

"A strategic alliance is a formal and mutually agreed to commercial collaboration between companies. The partners pool, exchange, or integrate specific business resources for mutual gain. Yet partners remain separate businesses." Thus defines Cases in Alliance Management, edited by Jean-Louis Schaan and Micheál J. Kelly, from Sage (www.sagepublications.com). "Alliances can be either equity or non-equity based and typically start with one cooperative agreement that evolves into a portfolio of arrangements built over time."

Why alliances? They are an excellent vehicle to obtain market growth amid the rapidly changing market conditions, notes the book. Also, alliances can help construct broader business systems `by linking a company's internal core competencies with the best of breed capabilities of allies.'

But not all alliances succeed. Almost one in two fail. "Problematic alliances can be result of many factors, including industry dynamics (for example, regulatory changes), new technologies, new entrants, or economic cycles," point out the editors.

"The ability to weather external forces as well as maximise internal alliance potential is heavily driven by establishing a solid alliance foundation that includes experience, mutual trust, strong relationships, and sound business rationale." Alliances that are managed well can create tremendous value, assures the book.

Friendly read!

Structure of state indirect taxes

How much is the cost of collection of sales tax? In Rajasthan, it has been less than 2 per cent of the total sales tax revenue, says Mahesh C. Purohit in State Value Added Tax in India from Foundation for Public Economics and Policy Research. The proportion declined in 2002-03, when it was only 1.18 per cent! It will be useful to compare the cost of collection data of different states.

The book suggests that the structure of indirect taxes levied by States should be as follows:

A comprehensive State VAT; excise on alcoholic liquor, a toll tax on new roads and bridges, motor vehicles tax for regulation of vehicles, and a tax on gambling, horse races and lotteries.

"Also, the State governments should be authorised to levy tax on some of the localised services, including sales tax related services (such as service component of works contract)," argues Purohit.

Informative.

Tailpiece

"At last we managed to get 12 hours of CPE credit! And the debit was... "

"What you paid for the two-day conference?"

"No. Body ache, as a result of sleeping in the chair, during the sessions!"

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D. Murali