Strategic alliances can increase market share, reduce competition, improve expertise, and open the door to new funding opportunities – but not all strategic alliances are created equal. The truth is that sometimes a strategic alliance can cause more harm than good if the partner company has different goals, gets more than it gives, or otherwise fails to live up to its side of the deal.
Before you set up a strategic alliance, ask yourself these questions first:
- What is the current situation? In other words, you need to figure out where your business is right now. If your company is under threat from a larger competitor or you find you need help in handling where your business is at right now, a strategic alliance could be a great idea. If not, it cost you more than it’s worth.
- Where would you like to be? If your company needs to be able to adapt to a new technology or market but lacks the know-how to do so efficiently, a strategic alliance can help. Strategic alliances can also help you expand operations sooner than you may have been able to otherwise and can help build a larger presence overall. Even without actively pursuing these goals, strategic alliances have a way of pushing everything forward. Make sure you are ready for that.
- What will happen if you don’t do anything different? Is there a down-side to not coupling with another company? If your company is already fairly stable and enjoying enough growth to stay ahead of the market, a strategic alliance may not make that much of an improvement. The place your company would find itself in five years may not be much different if it is already doing well.
- What are the driving forces toward making a change? Put simply, what do you want to get out of a strategic alliance? Are you looking for a partner to help you expand or a short-term strategic alliance geared towards a limited time promotion or event? Understanding what you hope to gain from partnering with another company can help clarify the role you see that other business playing.
- What are the forces restraining your decision? If you are having a hard time making the commitment towards a strategic alliance, take a look at your reservations. Are you worried about losing control? Do you trust the other company will live up to its side of the deal? Do you have proprietary knowledge that a strategic alliance would place at risk? Many of these issues can be overcome with careful planning and a few extra contracts, but it is important to understand the role reservations play when making a decision like this.
- Is a change possible or even advisable at this point? You may not be at a good point to consider developing strategic alliances. It is very possible that it would be better for your company if its operations remained consistent for a little while. You need the right staff and the right frame of mind to create and maintain a successful strategic alliance. If you are not in place to reciprocate fairly with a partner company, be it in time or resources, it may be better for everyone if you hold off on developing a strategic alliance.
Are you considering a strategic alliance for your business? Contact us! We can help make sure that you find the right fit for your business and develop a plan to make that strategic alliance work for your company’s goals.