An alliance can be defined as the union of people, companies or countries, through which a commitment to help or mutual support is given to achieve a specific purpose, with similar benefits for the parties that comprise it. On the other hand, a strategy is an action plan that defines how an organization will use its resources – tangible and intangible – to achieve a greater competitive advantage in the business environment in which it operates.
Strategic alliances are, nowadays, a modality to which more and more companies resort to share developed and abundant resources in one company, and scarce in another; both in the financial and personal aspects, as well as in the commercial, technical, technological, funds, investments, credibility, prestige and established distribution systems at national and international level.
This way of operating is acquiring great importance in the business world as global competition intensifies in relation to market access, new products, technology, financial resources, manufacturing costs or ecological restrictions.
Strategic alliances are, nowadays, a modality that more and more companies resort to to share developed resources / Image: Luis Villasmil via Unsplash
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When is it appropriate to analyze the possibility of an alliance in a small or medium-sized company?
1. Access to markets. It is common that, when seeking to penetrate a new market, large international companies seek to associate with companies from other countries that -although smaller- have a deep understanding of the market, the local idiosyncrasy and the “handling” of business in their country .
2. Use of technology. To update or improve the technology used in the production processes of a product, companies often turn to a technology partner. These types of alliances generally involve a transfer of know-how in certain technological areas.
3. Marketing of innovations. It is known that important innovations in the world do not necessarily originate in large corporations. There are cases in which large companies have sought to make small or medium-sized inventors their partners in the exploitation and marketing of a certain invention.
4. Minimize risks. Many successful alliances originally present the need for one of the partners to ally with another company (s) to minimize the risks of an investment in new products or research and development.
From experience, it is also known that not all business marriages prosper. Incompatibility of interests, limited understanding of different corporate cultures and different criteria in investment, capital, expansion and savings policies are usually the main reasons why a large part of the strategic alliances in our country do not obtain the maximum synergistic benefit. of such a union.
For these reasons, it is convenient for companies envisioning their expansion, prosperity, or even survival in a strategic alliance, to carefully analyze the following points.
Transparency. The present situation of each company should be clear with the potential partner (s); never hide information about your company and demand that your partners do the same. There are some key aspects that you should keep in reserve.
Strategy. In the negotiations prior to the alliance or association, the strategic motives of each company must be clarified; the way in which they will conduct the critical activities of the joint operation, government regulations and disposition towards the alliance.
Involvement. Negotiations to establish an alliance will be more productive if all the partners and executives of both companies participate. It is not fair to hide motives, internal policies or impose restrictions on future partners. The cosmetics or the concealment of key situations for the merger must be clarified, both internally and in the truthful approach to the potential partner. Many alliances fail because a company was affected by the lies, the breach of the agreed commitments or the presentation of altered information.
Alliances are growing in number and in importance. The reason for its growth is that it is better to have partners to compete. The days when companies were founded, operated and grew with their own financial, human, technological and market resources are over.