What You Need to Know About Strategic Alliances

What is a strategic alliance? What are the risks? What are the common mistakes? What is the importance? How can strategic alliances end? What are the criteria? How should strategic alliances be managed? What are the different types?

Here is what you need to know about strategic alliance. Continue reading below to see a list of alliances and what considerations you must evaluate. Ask some of these questions before you start your alliances.

What is a strategic alliance?

According to Peter Simoons, a strategic alliance is a strategic cooperation between two or more organizations, with the aim to achieve a result one of the parties cannot achieve alone.

What are the different types of strategic alliances?

  • Cartels – Large corporations unofficially unite to control pricing and production in a marketplace to limit competition. Usually illegal in many parts of the world.
  • Franchising – A franchisor gives the rights to use the name and corporate concept to a franchisee who pays a fee. The franchisor controls the pricing, marketing, and general corporate decisions overall. The franchisee receives a brand and a process.
  • Licensing – A business paying a fee to use a company’s technology or production processes.
  • Industry standard groups – Businesses that enforce technology standards according to own production processes.
  • Outsourcing – Another company performs tasks not central to own core competencies.
  • Affiliate marketing – One partner provides sales in exchange for agreed upon condition.

What is important to you?

  • Navigate change in markets and conditions.
  • Advance products and services.
  • Enter new markets.
  • Influence tech.
  • Research and development

What are the criteria of your strategic alliance?

  • Important to the success of business goal.
  • Important to the growth and/or protection of competitive advantage.
  • Blocks a possible threat.
  • Creates calculated choices.
  • Lessens a large risk.

How should your strategic alliances be managed?

  • Visibility & accountability
  • Shared metrics
  • Relationship building
  • Trust
  • Adaptability
  • Allocating resources in the most efficient way possible

What are the risks of forming a strategic alliance?

  • Financial difficulties
  • Unseen costs
  • Useless management
  • Actions outside range of agreement
  • Data leaks
  • Damage to capabilities
  • Loss of working control
  • Partner confinement
  • Partner product and or service failed
  • Partner unable or unwilling to supply key resources
  • Partner’s poor performance
  • Partner gains better placement

What are some common mistakes?

  • Little dedication
  • Inadequate operating adjustment
  • Tactical flaws
  • Poor flexibility
  • Not focusing on customer value
  • Focusing on internal cooperation issues
  • Lack of planning
  • Concealed program
  • Not understanding the complexities
  • Unrealistic expectations
  • Wrong outlook of public opinion
  • Miscalculated difficulty
  • Hasty conduct
  • Over dependence
  • Legal problems

How can a strategic alliance end?

  • Natural end – Accomplished goals.
  • Extension – Extend collaboration for a product or extend alliance to new products or projects.
  • Premature termination – Objectives have not been reached.
  • Exclusive continuation – One partner leaves the alliance and the other partner can continue the project on their own.
  • Takeover of partner – One of the partners gets acquired.

This article is to generate thoughts. If the gears have been turning, let us know what you think.

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