Why Strategic Alliances Sometimes Fail


The business community frequently relies upon strategic alliances to create better products, better distribution, and improved customer satisfaction. Unfortunately, many alliances fail. A review of those failures helps current business owners understand what to avoid.

Alliances Turn Into Rivalries 

Although designed to bring businesses together, alliances can in some circumstances pit rivals against one another. Greg Fox from Cisco said in a 2009 businessweek.com article that Cisco’s two failed alliances were with Motorola and Ericsson. Fox said both imploded for the same reason: The partners had turned into competitors because of acquisitions. “The disadvantages outweighed the advantages,” he said. Two others are heading that way, with Dell and Hewlett-Packard.

This potential roadblock is not contained within the technology sector alone. There is a potential for rivalries to form in any business model and at any time. What looks good to start from a strategy standpoint can quickly turn into an all-out business war. Constantly monitor your alliances.

Lack of Vision or Objectives

Teaming up simply for the sake of doing so is a terrible mistake. All business alliances require concrete goals and purpose. Otherwise, they fall into the category of failure quite quickly.

Clarity of objectives desired by all parties in an alliance is a must. They should also have equitable benefits to all sides in order to make them appealing. Lopsided goals lead to dysfunctional alliances.

During the alliance formidable building stage, all companies involved need to create a Conditions of Success document. This document spells out what each company wants to achieve from the alliance in the next 2-5 years. If you start with the end in mind, everyone has the same objective.

Lack of Understanding

Obviously, healthy alliances require healthy communication between all parties. It is as true in our personal relationships as in our business dealings. When communication barriers exist between partners in a business alliance, almost nothing gets done. Set schedules and keep them.

Cultural differences are often part of the problem, even between two companies within the same country. Common problem with young companies and established ones is the age of the founders, which create generational barriers. Learn as much as possible about the partners in an alliance and their expectations before proceeding.

Contact us for more information about common roadblocks in the path of health business partnerships.

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