How To Form Strategic Alliances

By Susan Baka,

Perhaps you’ve mastered the art of networking and realized the importance of relationship building with key contacts. But now, how can you leverage these key contacts in a way that can help you grow your business? The answer—form strong strategic alliances with other companies. Whether your business is small or large, creating such domestic or international partnerships can help gain an edge in today’s marketplace.

What exactly is a strategic alliance? It’s any cooperative agreement where companies come together for a specific duration and/or project and add value to each other through the alliance.  Resources, skills and/or capital are pooled for mutual gain.  Agreements can cover things like:
• Start-ups
• Marketing
• Outsourcing
• Research & development
• Licensing
• Production

A tangible growth trend
A visible growth trend
An encouraging growth trend
Growing trend

According to Industry Canada, international evidence suggests that strategic alliances have been on the rise for several decades, with an estimated annual growth rate of 25%. This makes sense in our increasingly global economy. Consider the many potential benefits for your business:
• Diversifying your product/service lines and markets
• Providing access to new markets and product knowledge
• Reducing or sharing potential risks
• Blocking competition
• Avoiding ‘reinventing the wheel’
• Reducing innovation costs
• Shoring up gaps in your business
• Accessing new resources
• Enhancing your capacity to bid on large contracts
• Strengthening customer, supplier and other relationships
• Increasing your export capabilities

Despite the many potential benefits, strategic alliance partnerships can fail without careful consideration by both parties. Here’s how to begin and ensure success:

1. Select your partners carefully. Look for peers and who are like-minded and share your ethics. Viable sources include networking events, online groups or social networking, industry and trade publications, trade associations, government agencies, and even through your banker, lawyer, or accountant. Make sure the alliance is a win-win situation. For example, if you plan on tackling the global market, your potential partner may be international, but may lack the product knowledge you have.

2. Be clear about your expectations and desired outcome. Identify the kind of alliance you want--marketing, licensing, distribution, technology, R & D, etc Calculate the amount of time you can both realistically commit to the project. Determine how much you can afford to invest and lose, should your alliance fail.  You would be wise to negotiate a formal contractual arrangement for further peace of mind.

3. Communicate, communicate, communicate. Many business relationships fail because of faulty assumptions and poor communication. What’s obvious to you may be unclear to your partner, especially if you are dealing across cultures or in different languages. To avoid failure, take notes, have minutes of meetings recorded, and document all agreements and actions to be taken.

4. Set specific timelines. Set trial timeframes to get an idea of your partner’s work ethic, management style, attention to detail, and true commitment. Be cautious about taking things to the next level before testing the waters. If your partner misses the first deadline, how will he or she ever meet future ones?

5. Establish exit clauses. Decide upfront—before anything goes wrong—on an exit strategy that will suit you both should the alliance fail. It’s better to lose a partner in the early stages of a joint venture than to lose your good name in the marketplace. Brainstorm possible best and worst case scenarios.

6. Celebrate your successes. If the partnership is working well, don’t forget to take a breather now and then and enjoy your mutual accomplishments. To maintain both your motivation, it’s important to celebrate the milestones in your alliance, such as the acquisition of your first big corporate account or receiving an award for exceeding industry standards. A lot of work and a little bit of play go a long way in a maintaining a healthy and successful strategic partnership. 

The possibilities for women business owners and entrepreneurs to create strategic alliances are endless. Do your homework, target a strategic and motivated alliance partner, and be prepared for benefits and potential risks that may come your way. It can be a delicate balancing act to maintain your autonomy and preserve your interests.  By sharing resources, costs and risks, your strategic alliance may catapult your growth in a way you might never achieve on your own.

source: http://getgrowingforbusiness.scotiabank.com/articles/how-form-strategic-alliances

Benefits of Strategic Partnership

Associations enter into a strategic alliance or partnership with other associations or for-profit entities for many reasons. Typically, the objective is to exchange or publish information, hold joint meetings and/or trade shows, offer education and training programs, sell products and services, promulgate industry standards, and/or monitor policy issues.
Partnerships and strategic alliances can help to make an international program more successful. These partnerships can be informal, such as using the expertise of a counterpart organization or government agency to strengthen your association's own capacities such as attracting international attendees to a meeting you sponsor. Or, they can be more formal (and perhaps on-going) alliances to help distribute, for example, one or more of your association's products on a worldwide basis. Potential partners include counterpart associations, government agencies, publishers, association management companies, universities, or other for-profit entities.
In Global Imperatives: 12 Attributes of Effective Decision Making and 9 Dimensions of Success for U.S.-based Associations published by ASAE in 2011, the author, Mohamadouu Hayatou states that the most common way to grow internationally is through the formation of a strategic partnership network. Strategic alliances can take different forms and have different objectives depending on the nature of the association, its products, services, and resources. The nature of a strategic alliance is also highly influenced by the local market conditions including the state of the competition. By and large strategic partnerships are designed to achieve one, or a combination, of the following goals:

1. To distribute products or services to a set of customers. This represents a straightforward distribution or licensing deal.
2. To jointly develop products and services for the local market. In this model, the association will find organizations that have products, services or skills complementary to theirs and join forces to develop products for the local market. Although it is not uncommon to see this model apply to content-based products, it is more often seen in the organization of events such as a tradeshow.
3. To work with local or regional counterparts to drive a common agenda. This model, also known as co-opetition (collaborating with your competition), is often seen when the two associations are joining forces to push forward an aggressive advocacy or legislative agenda for the benefit of both association’s members.

A partner in another country can offer local contacts, language capabilities and knowledge of the cultures, protocols and business styles. To most effectively form and utilize these alliances, however, the organization should determine some initial goals. Many other ideas for joint ventures are also possible based on your association's interests, contacts and creativity.
In general, here are some of the most common benefits and cautions of strategic alliances and partnerships:
Benefits

• Can capitalize on the individual strengths of each participating organization.
• Can provide local contacts and links to local communities/stakeholders who may be critical to the success of the program you want to launch or implement.
• Involves shared responsibility for the development and execution of a particular program or service.
• Limits a participating organization’s liability to the scope of project involved.
• Provides reduced-cost opportunities and expertise for each participating organization.

Disadvantages
Some cautions or challenges that an organization may encounter in pursuing strategic alliances or partnerships include:

• Usually limited in scope to the objectives of the alliance or partnerships
• Can become ineffective if one partner doesn’t perform at the expected level or fulfill its obligations to the agreement.
• Can consume more human and financial resources than were anticipated.
• Can require a significant time investment to develop an effective alliance or partnership.
• Can result in a loss of flexibility for the organization to take quick action in another area that may be in the organization’s better interests than the area they are pursuing with a given partner.

QUESTIONS TO ASK:
Before entering into a strategic alliance or partnership, ask:

• Does it extend the association’s reach by opening up and developing new markets?
• Does it help members gain access to additional industry intelligence and knowledge of other markets?
• Does it increase the association’s revenue? Will it contribute to the bottom line?
• Will it amplify the association’s resources? Will it leverage or reuse an already existing resource?
• Does this alliance have relevance for the association and its mission? Will it increase the value of the association within the industry or profession?

source: http://www.asaecenter.org/AboutUs/content.cfm?ItemNumber=137633

We Did it Ourselves

“A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: We did it ourselves.” 

-Lao Tzu ancient Chinese philosopher and author of tao te ching 

Source: http://www.entrepreneur.com/slideshow/225835#1