Achieving Success through Strategic Alliance

In today's rapidly changing global economy, partnering has become a way for businesses of all sizes to achieve next level success. This is especially true for a company with partners that complement their business. Worldwide, there are over 20,000 alliances formed between organizations. In the United States alone, 60% of the top CEO'S approve of alliances. And of those CEO'S who approve, 35% of their company's revenue comes from alliances.

Companies form alliances for different reasons, and these are just a few:
· to gain a certain market share
· to achieve a competitive advantage
· to further define customer requirements
· to satisfy funding constraints
· to share expenses
· to compete in the global marketplace
· to become more technologically advanced

Gaining Market Share
A company can gain market share by forming an alliance with a complementary business. For example, an automobile company and a financial services firm can form an alliance to jointly advertise the sales and financial options available on purchasing and leasing an automobile. In such a scenario, the financial services firm would handle financing and the automobile company would provide the cars and the services. The automobile company handles the sale of the cars and the financial services firm handles financing. This is a “win-win” situation because marketing costs are shared and both firms increase their market share.

Achieving Competitive Advantage
In order to achieve competitive advantage, companies can seek out other organizations to share resources and enhance the product line of both companies and set them apart from other companies. For example, a software firm with specific and exclusive expertise can partner with a reseller that has network expertise. When they come together, both companies will have a competitive advantage in their specific markets. This enables each company to reach the maximum return on investment.


Defining Customer Requirements
Companies can pool resources to better define customer requirements. Resources, such as human capital, infrastructure and technology, utilized in a cost-effective manner, can exceed customer requirements. In return, this type of alliance will assist with building a loyal customer base for all parties. A loyal customer base can reduce customer acquisition costs and enhance bottom-line performance. In this case, all companies build a strong brand, enlarge market share and boost profitability.

Satisfying Funding Constraints
When companies can come together who are limited in capturing their individual maximum potential, they can form alliances and pool resources (such as capital and credit) to build a profitable organization. Here, companies can optimize business opportunities and increase funding operability.

Sharing Expenses
Companies can partner to have joint operations and processes for cost reductions by increasing size. One example is that consortiums can be formed where purchasing power is increased and the savings flow straight to the bottom line! Other examples include companies who join in efforts with advertising, accounting, etc.

Competing in the Global Marketplace
Forming strategic alliance with complementary organizations in international markets can expand your company globally and economically. Alliances formed with international companies can offset barriers including: lingual, cultural, political, etc. These alliances will also allow your company to develop a contact base in foreign markets.

Becoming Technologically Advanced
Forming alliances can assist companies to become technologically advanced. High-tech companies can develop “win-win” situations using the most modern technological advancements. To illustrate, forming an alliance with an internet service provider can aid your company to gain market share through using the Internet. Both companies can capitalize on the individual services that are complementary and that affect success. This is an ideal situation for a company to find itself.

Strategic alliances take on many forms. There are mergers & acquisitions, strategic teaming arrangements, joint ventures and sub-contracting. With any alliance the deal must be a “win-win” opportunity for it to be a best-fit solution. Discovering value in alliances is the key to long-term success. Each company in an alliance must stay focused, be a team player, measure progress, and define objectives and strategies. Having synergy will assist in achieving the maximum value in an alliance. Each party in an alliance must have confidence in the integrity of the players.

Forming strategic alliances is one of the best strategies for businesses in the new millennium. Alliances will add value to a company. How? Alliances will allow companies to take advantage of capabilities, provide new opportunities, risk sharing/management, and enhance growth and profitability.