Perhaps today more than any time in the past,companies are realizing they must attain a strategic advantage to prosper and grow, or be "squeezed" by aggressive global competitors into eventual expiration.
Companies are finding themselves with three basic options to prosper:
1. Internal expansion, though companies may lack the resources to "go it alone".
2. Acquisition or merger, both of which require significant financial resources and have a very high rate of failure.
3. Forming alliances or partnerships, whereby companies are able to leverage resources in creative ways.
Cooperative partnerships are one of the oldest forms of business, and are expected to play an even more dominant role in the future.
The Japanese have always viewed alliances/partnerships as an integral part of their business culture - relying heavily on both informal (shudan) and formal (keiretsu) relationships.
A strategic alliance is a collaboration in which two or more individuals/companies join forces and leverage their respective strengths to pursue an agreed upon common goal/objective, or to address a stronger competitor. Each lends its respective "talent" to the alliance. However, each remains independent.
Alliances may take many forms, from a loose informal agreement - such as joint purchasing - to a formal equity partnership or joint venture. Most alliances involve products, markets, and technology (or combinations thereof) as illustrated in this diagram from "Business Alliances Guide".
Alliances may be relatively flexible, perhaps beginning with a simple joint marketing arrangement which eventually may be modified and become "multipurpose" as marketplace conditions change. Also, an alliance may be established for a specific project and then discontinued, or remain "evergreen" until one or both partners decide to terminate it.
Companies should consider entering into alliances to achieve specific strategic goals, leverage resources, and reduce risks while increasing rewards. Alliances should not be a happenstance occurrence.
In order for an alliance to succeed, it is essential that:
- You find the right partner. This is no different than looking for a marriage partner. First you "date," then get engaged after getting to know each other. That being said, there must be a clear provision for divorce.
- Good "chemistry" is vital. Your strategic goals, sense of direction, philosophies of doing business, management styles, and cultures should be compatible.
- There needs to be a spirit of trust, cooperation, and integrity between parties. A cooperative working environment, an agreed upon decision making and conflict resolution process and excellent communication is essential for a strong alliance.
- The alliance must be of significant importance to the senior management or business owner who will "champion" it and not address it "only as time permits".
- Above all, both partners must be "winners." No plan or formal agreement will compensate for this fundamental flaw. The following is an example of such a flaw which led to failure: Singapore Airlines announced that they were ending their equity partnership with Virgin Atlantic. The relationship, according to the Wall Street Journal, which was initially described as a "marriage made in heaven" was "rocky" never quite bloomed the way both partners envisioned. The goal of their alliance had been to offer customers a wider choice of destinations. However, cooperation between the carriers was very limited, and thus their vision never materialized.
Strategy 1 has extensive experience building alliances, joint ventures and acquisitions. Let us assist you in forming a successful alliance by identifying the right potential partner, guiding you through the "courtship", helping to structure a strong win-win agreement, and working with you to achieve your desired goals.
Remember- "Coming together is a beginning; Keeping together is progress; Working together is success. " ~Henry Ford
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