The best strategic alliances between two or more companies are those where company resources complement each other. At the same time, not all contributed resources can be used effectively in an alliance.
There are two major forms of constructive strategic alliances between companies, complementary and supplementary resource alignments.
- Complementary resource alignment occurs when the two companies contribute dissimilar resources that dovetail in a way that creates synergy and add new powers to a working mix.
- Supplementary resource alignment occurs when companies supply similar resources to an alliance. This enables the alliance to increase economies of scale, their power in the marketplace and their pool of financial resources.
The possibility of unconstructive resource alignment may take any of three forms.
- Surplus resource alignment occurs when firms contribute dissimilar resources, but are unable to use the resources completely. For instance, the alliance may have more manufacturing capacity than it needs. It may resemble a company that has grown too fast. The question is, can the alliance maintain itself until the surplus capacity can be used?
- Wasteful resource alignment occurs when the firms contribute similar resources, but the mixed cannot efficiently perform. The problem may be that the management is not able to integrate the resources constructively or stylistic differences between the firms can’t be bridged.
- Monopolistic alliances: Alliances among companies in the same marketplace must be made with caution because of the risk of violating antitrust laws, when the alliance is judged to limit competition. Violation of antitrust law is a felony in most countries. Whereas alliances may increase functional efficiency and increase profits by reducing costs, they are not permitted to force narrowing of price competition or negotiate price levels among supposed competitors.
For over 25 years, 3rd Eagle has been instructing, mentoring and advising companies on how to structure, launch and manage strategic alliances. Please contact us to discuss your situation with us.