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Strategic Alliance, a key Business Strategy |
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The last decade has been a decade of change in how businesses manage their resources, obtain funding and do business. Strategic Alliances have become the vehicle of choice for supporting this. Learn How to Identify, Form and Capitalize on Strategic Alliances. |
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| Author: Andrew C. Nester |
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Today's businesses are wholeheartedly embracing strategic alliances. Indeed, 80% of businesses surveyed viewed alliances as a means to:
* Rapidly gain new strategic capabilities and advantages in the market place.
* Reduce the investment cash and ongoing operating expenses normally required to increase revenue and profits.
* Create less dilution and debt, thus more owner value.
Larger corporations are adding alliance specialists to their staff as a key organize function.
An Internet business grows it's revenue faster when affiliate relationships and joint ventures are formed.
These two trends give credibility to strategic alliances being a superior business strategy.
What is a strategic alliance?
An alliance is defined as a relationship between two or more firms, or individuals, involving the sharing of complimentary disciplines, technology, products, services, organizational structures, marketing, financial resources.
Types of Alliances
There are five fundamental types of alliances:
* Funding
* Joint Venture
* Merger, Acquisition
* Products, Services
* Cooperative
Each type of alliance is usually subdivided into several special categories to fit a specific business need.
Each strategic alliance uses varying types of agreements from hand shakes and letters right up through tightly defined legal documents. The needs of the parties involved, the depth of the involvement and the duration of the alliance play a role in the type of agreement needed.
Every alliance has it's own unique blend of economic, strategic and cultural circumstances. Each relationship is unique and should be executed according to it's own set of guidelines and core values of the alliance partners.
In order to determine what type of alliance is needed to support your business goals you must first asses your business goals, strengths and weaknesses, your competitive position, emerging opportunities and the resources needed to achieve your goals.
Alliance Ownership
The ownership in the alliance can take many forms depending on the type, contribution, tax and legal ramifications and the goals of the alliance partners.
Alliance Strategy
After you have defined the type of strategic business alliance needed a strategy and business plan can be put in place. The strategy and business plan should define the following:
* Alliance needs
* Core competency
* Alliance goals and objectives
* Criteria for success
* Partners roles and relationships
* Characteristics of good and bad partners
* Potential candidates
* Operational details
* Deal structure and exit plan
With your business plan and alliance strategy plan in place a proactive search for an alliance partner can begin.
By establishing your own business alliance strategy then working with potential parners to jointly develop the alliance operating plan you lay the foundation for a mutually beneficial relationship.
Qualifying Potential Alliance Partners
Once potential alliance partners have been identified , the next step is to qualify them for:
* Complimentary strengths and available resources
* Cultural and values compatibility
* Organizational planning
* Management structure and commitment to plans
* Flexibility and willingness to truly establish a win, win situation
Reasons Alliances Fail:
* Cultural incompatibility (largest reason)
* Flexibility in adapting to changing needs
* Not understanding the time commitment required to establish and maintain an alliance
* Lack of a written plan
* Poor day to day management of the relationship
Reason Alliances Succeed:
* Good planning, begin with the end in mind
* Being proactive, an early start, it takes longer than you think
* Relationship building
* Synergistic thinking
* An early win, win or no deal decision
* Proper staffing
* Timing and follow through
The end result of any strategic alliance should be that the sum has greater value to all participants than the parts.
About Author
Andrew is a business management consultant providing business strategy planning and coaching to companies of all sizes. Visit our web site http://www.bizstrategies.biz/reports/strategic-alliances-report.html for a free guide on How to Identify, Form and Capitalize on Strategic Alliances.
Copywrite 2008 Biz Strategies, Inc.
You can reach Andrew direct at andrew@bizstrategies.biz or phone 707-355-9221
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